Stressing over high transportation costs? How to uncover savings

Posted by Harriet Mills on May 22, 2015 5:14:43 PM

Cost Savings How to uncover cost savings

 

Logistics, inventory and transportation costs are in a constant state of flux. Numerous variables influence pricing, and if you work in supply-chain management, you know how stressful it can be to try to eliminate high costs so you can boost your bottom line while maintaining product and brand integrity.

Changing fuel prices, the current driver shortage crisis and the ever-fluctuating availability of transportation routes can turn what once may have been reasonable negotiations and pricing into a nightmare. Many companies find that additional investments are necessary to remain competitive and keep the supply chain fluid.

Rather than investing money in-house, more and more companies are choosing to find a 3PL provider to do the work for them. Quality 3PL providers will save you time, money and stress while providing expertise so you can achieve the coveted "six rights of logistics":

  • The right product
  • The right amount
  • At the right time
  • At the right location
  • In the right condition
  • For the right costs

When you work worth a 3PL you can expect the cost to be broken down into a variety of categories. There will inevitably be upfront costs for creating a plan and coordinating a team to meet your supply chain needs. There will also be estimated costs based on the volume, timing and staffing necessary for your freight shipments.

Ask questions of your 3PL provider and set expectations at the onset. You can negotiate with a 3PL just like they negotiate on your behalf to get you the best price on the best freight routes. Always ask about different ways to save. If you have a solid relationship with a trustworthy 3PL you'll always get an honest answer. Furthermore, make sure to understand how the 3PL plans to evaluate pricing in the future and what they are doing to continuously improve service and costs.

In addition to partnering with a 3PL and asking questions, there are a few specific transportation services that can help you cut costs, if appropriate for your needs. First is less-than-truckload shipping. Rates depend on different factors such as weight, class, pickup and drop-off locations, and fuel surcharges.

Refrigerated LTL shipping is a specialized field at Choptank Transport. In fact, we have a separate department dedicated to clients' needs for nationwide delivery. These shipments are lumped with other LTL shipments in order to fill a truck and reduce costs.

Another option to ask about is the railability potential of your shipments. In the past, railability was only applicable for long hauls. Fast forward to today and thanks to improved infrastructure, new tracks and modern hubs, railability and its associated cost savings is available for loads that have to travel 500 miles or more.

A final option to consider when trying to cut costs is intermodal shipping. This refers to freight that is moved using more than one form of transportation, such as sea, rail and air. Intermodal has recently grown in popularity because it is efficient and cost effective. Ask your 3PL if it makes sense for your needs and budget.

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