Yesterday, I spoke at the Chicago Traffic Club’s Annual Education Summit about how anticipated freight issues could affect companies’ 2027 freight budgets.
That led to some interesting conversations. Some companies shared that one scenario they’re preparing for is the possibility that their truckload rates could increase by as much as 25% to 30%.
So here’s a quick question: In preparing your company’s freight budget for 2027, have you considered how a 25% increase in truckload costs would affect your operations and profitability? And they are forecasting smaller, but still double digit increases for their LTL and parcel freight.
For me, this raises a practical concern: If your budget assumes a much smaller increase, what are you doing now to prepare for that possibility—and identify savings that could help offset it?
Folks, nobody enjoys explaining an unfavorable budget variance. Especially when there were opportunities to address some of those costs before they hit the financial statements.
Let me give you an example. One shipper had a longstanding requirement: Orders received by one had to ship by five. When our Supply Chain Edge consulting team identified opportunities to reduce costs, the initial response was, “That will never fly. That’s the way we’ve always done it.”
But when we examined the facts behind that requirement, one operational change reduced their freight costs by 8%.
That’s why we encourage companies to examine their freight and supply chain operations and ask three simple but powerful questions.
First: “Is our company’s supply chain built on assumptions or facts?” Second: “How much are the assumptions about our shipping practices costing us each year?” Third: “Instead of carrying those costs associated with those assumptions into our 2027 year’s budget, are there 'fact based' changes we could make that would lower our costs and improve our margins?”
Here’s a practical starting point to begin using a “fact based” supply chain: Pick one shipping requirement your company has followed for years. An order cutoff. A delivery commitment. A supplier’s routing instructions.
Ask who requires it, whether that requirement still applies, does the customer value this requirement and what does it costs you to meet it. Review actual orders and freight bills to determine whether a different shipping schedule, service choice, or consolidation opportunity could reduce costs while meeting customer needs.
At TranzAct, we help companies do that work. Our freight audit and payment services provide accurate data and controls over what you pay. Our Constellation TMS automates manual shipping processes into practice fact based decisions consistently. And our Supply Chain Edge consultants bring the experience to identify opportunities and help implement changes.
We also understand that your people are busy. Knowing there may be savings doesn’t mean your team has time to find and capture them. But is doesn’t also mean that you can afford to ignore them. TranzAct can help.
Before you have to explain your next unfavorable freight budget variance, call or email TranzAct and ask for a 30-minute freight budget discussion with our Supply Chain Edge team.
And if you’ll bring one cost concern or shipping requirement you’d like to address, we will help you define what to examine, identify the information needed, and establish the next steps to evaluate potential savings.
You don’t have to wait for an unfavorable variance to start asking better questions. Working together we can reduce the financial impact of predictable surprises.
We’re on your team, and we’re here to help.
Here's how to get in touch:
☎️ Give us a call at 630-833-0890
✉️ Send us an email at solutions@tranzact.com
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🕑 Schedule a conversation with a member of the TranzAct team