Freight Costs and what you need to know to get the best pricing and service every time!
Freight Costs have been fluctuating widely lately due to the Corona Virus outbreak and associated business shut-downs. Even without these added layers of complexity, freight costs and/ or understanding the key drivers in freight costs, can offer you a competitive advantage. So read on and let us tour you through some of our tips and tricks for getting the most fair cost of freight every time!
Properly Classifying your Freight to achieve better freight costs
Classifying freight and the associated NMFC codes can be tricky. Even if you have worked in the logistics and freight industry for 13 plus years, and have all the tools it can still be challenging. The NMFTA or National Motor Freight Traffic Association came up with a set of standardized classification system for all commodities called NMFC codes. These categories and codes allow both shippers and carriers to agree to what is being shipped and how much the associated freight cost or cost of freight should be.
However, there are so many classification and nuances to these NMFC codes, it can be challenging to pick the most correct category. If companies and their logistics teams categorize their products incorrectly, it can also lead to freight cost adjustments or rebills after the fact. This can cause all kinds of extra work and unanticipated increases in the cost of freight that can be hard to absorb or pass along to clients. By better understanding freight classification and NMFC codes, your shipping team and company will be better able to control its freight costs.
Packaging, Weights, and Dimensions to achieve better cost of freight
The way products are boxed and packaged for shipment can have a major effect on your overall freight costs also. Many products are even density rated so you have to know the exact pounds per square foot of both your boxed and palletized shipment to properly rate your freight shipments. There are also opportunities to choose lighter more compact shipping boxes, crates, etc and lower your overall freight costs. By better understanding your products, weights, and dimensions of packaging you can help drive down your overall cost of freight.
Negotiating with Carriers Directly to achieve better cost of freight
Negotiating your cost of freight can be done in a variety of ways. Larger companies negotiate directly with Carrier using their established buying power. Freight Costs Tariff negotiations primary focus on:
- The overall discount level carrier will give you. The greater the discount the lower the overall cost of freight
- Final Freight Class Carriers will move your freight at. The lower the freight class the better the price
- Accessorial prices and exemptions. This can include needed yet costly add on sservices like liftgates, residential delivery, etc.
By better understand the main drivers of the cost of freight, companies can better negotiate the best possible rates and terms for their particular cost of freight needs.
Leveraging a 3PL Freight Brokerage to achieve better freight costs
Not all companies are large and have historic freight buying power to negotiate directly with carriers. However, by teaming up with an established 3PL freight brokerage small to medium size companies can still achieve large freight cost discounts and favorable terms. Working with a 3PL freight brokerage can also allow you to work with the best and most economical carriers in each lane you ship. Technology forward 3PL Brokerages in many cases have easy to use robust online software. Allowing you to quickly and easily quote, book, and track your freight costs with top carriers with 1 simple software.
Example of Freight Cost choices using a 3PL Freight Brokerage FMS software
Conclusions on how to better your cost of freight
Freight cost can be very volatile, and even more so lately during the covid 19 outbreak. However, if you understand the main cost drivers you will always be armed to negotiate the lowest and most advantageous freight costs and tariffs. It is also a bit of an ongoing process, so even if you don’t have the best freight costs or rates now. It doesn’t mean you can’t continue to negotiate for better pricing and service levels long term.
Easy Logistics can help you drive down and maintain your cost of Freight long term!
If your firm would like our help achieving better overall freight costs we would be happy to help. Our clients currently get the best cost of freight and rates based on our aggregate $2 billion-plus in annual freight spend. Our easy to use freight management software Carrier Rate is one of the industry leaders. Additionally are carrier network has so many options you will also achieve the best freight cost and carrier selection no matter where you need to ship in North America! Give us chance we can drive your cost of freight down significantly, all while making the process easier and more automated!