How Optimizing Routes Reduces Freight Costs

route optimization

As operational costs rise, costs of goods increase, and fewer drivers continue to drive shipping rates north of affordable, therefore shippers are actively seeking creative ways of reducing their controllable expenses. While many companies consider shipping a non-controllable, the truth is that route optimization is one of the best ways of controlling your costs of moving freight. Whether you are routing FTL, LTL, multimodal or parcel, shippers in multiple industries can optimize their routing of freight easily by following a few best practices.

In today's blog post, we are are going to talk about how you can save time and money by optimizing routes for your carriers.


Freight Consolidation

Everyone knows that reducing the amount of steps needed to complete a task is a sure-fire way to save resources. For shippers this methodology equates to consolidating or combining shipments to and from your business. Shippers main expense is paying for items being sent to them from suppliers, vendors, and manufacturers. If you can work with them to consolidate those freight shipments inbound, you can save quite a bit of money. And contrary to popular belief, working with suppliers to consolidate shipments is easier than you’d think.

However, simply streamlining the amount of shipments inbound is not enough to make a huge impact. Outgoing freight consolidation is also a great way of impacting the bottom line. However, since most recipients pay the shipping bill – how does outbound freight consolidation make a difference for shippers? The answer is quite simple – it’s exceptional customer service. If you save your customers money – they are more likely to continue using your services in the future. More business equates to increased bottom line profits – which in the end; helps to accomplish your fiscal goals.


The Right Mode for the Right Service

Shippers have more flexibility than ever with selecting a shipping mode for the movement of freight. By setting up a shipping plan and optimizing routes, a company can complete the research needed to determine which mode is best suited for each shipment. For example, if you have smaller commodities that can be shipped via parcel mode, creating a system of reliable carriers and service commitment levels that meet the needs of your customer – without breaking the bank, is just as impactful as consolidating freight. This method works for all modes – including LTL, FTL, Intermodal, Multimodal, and Parcel.


Strengthen Carrier Relationships

If there is a constant theme in business, it’s that volume cures all. Whether it’s purchasing full truckload of supplies or working with the same carriers, building positive relationships within your network is one of those route optimization best practice. Shippers and carriers who build solid relationships based on constant or repeat business help each other by creating shipping rates that are fair for each party. If your business needs to send shipments on a weekly basis, set up a weekly shipment contract with a specific carrier. In fact, you’ll quickly discover that if a carrier visits your business frequently, and you work with them constantly, your rates might get lower over time.


Work with an Experienced 3PL

The ultimate goal of optimizing routes is to reduce resources consumption and excess spending. There are various steps that any shipper can follow to accomplish this task. However, working with an experienced professional who understands the ins-and-outs of supply chain optimization is a home run. The best resource for reducing your shipping costs across the board is by working with an experienced 3PL. A third-party logistics provider like Redwood Logistics has years of experience working with all sorts of clients. From companies like retailers, manufacturers, distribution networks and all parties within the supply chain... we've done it all!

Chicago-based Redwood Logistics is a next-generation, strategically integrated logistics provider that believes every company’s needs are unique. For more than 15 years, we've been providing freight solutions and sharing our expertise across North America.

Here at Redwood Logistics, we are focused on making our customers more successful in their markets. We do this by employing talented and motivated professionals, proven processes and cutting-edge technologies. All in an effort to optimize their supply chain management efforts.

If you’re looking to save money and improve your supply chain's efficiency, drop us a line today!