Managing Total Shipping Cost
Fluctuating freight costs pose a significant challenge for companies striving to maintain a healthy bottom line. While low freight prices are hard to ignore, they don’t mean much if the margins they enable are eaten up by higher fees or penalties later.
In trucking, quality and price are closely related. Many things can go wrong in a single journey, from late pickups to weather problems, to equipment malfunctions, to damages, to late delivery, with each one resulting in additional back-end charges. Selecting the right carrier can optimize your LTL freight shipping costs and empower your business to navigate these challenges with confidence.
The era of paper bookkeeping made it harder to see your total shipping cost over the long term. Digital platforms give shippers a 360-degree view into the total cost of their transportation.
Just as carriers calculate each shipper’s situation into the transaction to arrive at a quote, shippers should be doing the same thing on their side. Factor in not only the initial quote, but the final amount paid, known as the “Total Cost of Transportation.” This could include:
- Accessorial charges
- Damages
- Additional fees or upcharges
Maintaining Brand Value During Economic Ebbs and Flows
Well-known, established companies have successfully navigated downturns by focusing on their foundational principles and values. Maintaining relevance in their markets had little to do with competition or price. In this episode of Cargo Shorts®, we focus on understanding the brand value in the market and how building good relationships with partners drives business success.
Using Total Cost of Transportation to Evaluate Carriers
Focusing on quality might feel like a luxury, but shopping for transportation isn’t a trip to a wholesale store.
Any time a freight carrier competes solely on price, they put themselves at risk. It’s the ultimate short-term strategy: a lever that can be pulled only once. Typically, it’s the last move that is made before a product is commodified, often provoking a classic race to the bottom.
“If you’re using price to win business, you’re probably doing something wrong,” says Thom Albrecht, chief financial officer at Reliance Partners and former equity analyst at BB&T Capital Markets. “Trucking is about constant reinvestment. Asking a carrier to cut their rate means asking them to cut capital spending. You might not see the impact today, but the quality of service will suffer down the line. Cutting rates hinders a carrier’s ability to increase capacity, to improve equipment, and to provide efficient, reliable services.”
Here are some other factors that shippers should consider when evaluating carriers:
Service times: Carriers’ transit times should align with your needs as a shipper. The carrier should clearly be able to demonstrate and communicate how it will get your shipment there on time.
Technology: Carriers should use modern technology to track shipments and communicate with shippers. With the improvements of API and EDI, this process can be automated.
Customer service: Carriers should have a responsive customer service team that is available to answer questions and resolve problems, in whatever way you prefer, online, in-person, or over the phone.
By considering all these factors, shippers can make informed decisions about which carriers to use. This can help them to achieve their transportation goals and improve their overall business performance.
Get Support with LTL Shipping Costs
Accurately estimating freight costs goes beyond comparing up-front quotes from carriers. Delays and damaged shipments can add additional costs. Carrier investments impact customer relationships as well. Ensuring timely, intact shipments is crucial as any delays or issues may be perceived as a negative reflection on your service rather than the carrier's.
To navigate these complexities and improve your cost-efficiency, consider getting personalized advice from your local Solutions Specialist. Our team can work with you to discover ways to streamline your shipping processes and protect your bottom line. Taking these steps will not only help control costs but also empower your business to thrive in a competitive market.