In recent weeks, we’ve been sharing things that carriers have implemented to drive-up rates and increase your shipping costs, including changes in UPS' peak season surcharges and the impact of more LTL carriers’ focused on density-based pricing.
So it's not too surprising that we heard from some shippers who asked us to revisit a topic we addressed in a relatively recent Two Minute Warning: Shippers can still reduce their freight costs even when carriers are raising their rates. The point of that message was to underscore the fact that shippers have options.
Option A is to just sit back and let your budget balloon out of control when your company gets hit with peak season parcel surcharges, escalating LTL rates, or other cost increases. Option B is to take a step back and ask: Is there a strategic and better way to be managing the flow of freight into and out of our company?
Here's a "BIG SECRET" that we've been shouting about for years: When shippers adopt this strategic approach to managing their freight spend, the positive results can be stunning.
What does it mean to "think strategically?" First, you need to understand and accept the fact that you have procurement, sales and operations personnel making important decisions about how much freight your company will consume. But these people know very little - if anything - about issues that affect your company's freight costs.
The procurement folks are focusing on up front prices; the operations folks are concerned about when it will be there; and the sales people are telling you what needs to be done to satisfy the customer. These are the rules of the game and the logistics team is tasked with getting the lowest possible rates to stay in the game.
Strategic shippers view things differently. They understand that if they want to lower their logistics, transportation and supply chain costs, they need to examine their practices and processes and ask some important questions such as:
Are we focused on doing things right or are we unfocused and/or doing the wrong things?
What if we changed the rules of the game by helping the executives in these various departments understand how the decisions they are making impact the freight costs we incur?
Over the years, we have proven that when shippers ask these types of questions and then use good data, great technology and available expertise to become as efficient as possible, they can reduce their freight costs by as much as 8%-12% even in today’s environment when their carriers' rates are going up.
Consider the alternative. If you continue being a "status quo" shipper and resistant to changing your supply chain and logistics processes, with these UPS and LTL changes and other things that are going on, your company's freight costs could increase by as much as 8%-12% this year and on into 2025.
TranzAct has a wealth of experience in helping shippers adopt a holistic and strategic orientation. It starts by considering how your company’s internal operations and your company’s freight spend are impacted by decisions that are made in regard to how customers and suppliers are managed.
With this holistic approach in evaluating a company’s logistics and supply chain processes, executives in the sales, operations and procurement areas can understand the process in asking for support in evaluating how their decisions will impact your company’s freight costs, service capabilities and carrier relationships.
For those “Doubting Thomases” who want more practical examples of how strategic shippers can reduce their freight costs and increase their profitability, here’s a challenge: Send me an email, give me a call or better yet, let’s get together for a one-on-one conversation via Calendly so we can share can give you some more practical examples of the savings, benefits and some other great things that can happen if your company is willing to consider changes in becoming more strategic in improving your logistics and supply chain processes.
We have helped scores of companies like yours determine the best methods and tools to realize maximum financial benefits and service levels from their transportation and logistics operations. And we'd welcome speaking with you. Won't cost a dime and could save you a bunch of money.
Simply send me an email or schedule a time for us to meet.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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