If you’ve been feeling like your freight budget is under attack, you’re in good company! Whether you’re looking at the ocean, parcel, LTL, truckload, or air markets, capacity is tight and prices are soaring.
Recently I was having a conversation with a friend who manages a nine figure transportation budget and is facing the cost increases that most companies are seeing right now. With ocean rates having more than doubled in the past year, air rates through the roof, and his truckload and LTL carriers seeking eye popping rate increases, suffice it to say, his freight budget numbers are getting a lot of attention in the C-Suite.
He acknowledged that he and his team are getting some heat and questions about what they are doing to control freight costs.
Since we’ve been good friends for many years, we have always been able to have candid and truthful conversations. So I took the liberty of asking him a question that caught him a bit off guard: “How serious are you about controlling your freight costs?” He looked a bit stunned and responded: “Are you kidding, you know I am very serious about that and why would you even ask that question?”
I explained that since virtually every C-Level and transportation executive has the same answer as him, a.k.a. “Yes, I’m serious about controlling my freight costs” I was prepared for his response. That’s when the conversation got real interesting. I asked him several questions that are based on the best practices of companies who really are serious about controlling their freight costs. For example:
Does your company have a written transportation spend management plan that articulates how your company manages its transportation, logistics, and supply chain areas?
Do you periodically get people from throughout your organization together to discuss how their decisions and processes impact your freight costs?
Do you have common and relevant KPIs that everyone can review and confirm that your company is doing the right things to control freight costs?
After getting quick “NOs” to these and other questions, he got the message and understood the reason for my question: His company says they are serious about controlling their freight costs, but he acknowledged, they have lots of room for improvement. We then had a very productive discussion about things that he and his team could do on an immediate basis to get their arms around spiraling freight costs.
We sense that there are many of you in our Two Minute Warning audience who can identify with my friend. It’s not easy to manage freight costs - especially now. That is why we want to remind you that you have friends here at TranzAct that can help you. We encourage you to take advantage of the free resources we offer and talk to us about our Rapid Assessment process or simply send us an email.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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