freight costs

Freight Costs Management: Tips for Shippers in 2024

So far the 2024 transportation industry has been nothing short of a whirlwind roller-coaster ride in terms of economic uncertainty, from see-sawing fuel costs to multiple severe supply chain disruptions. All of these factors have shed some light on the extreme importance for shippers to manage freight costs effectively to be sure they stay profitable and competitive in this tricky landscape💰.

If this sounds daunting to you, and you’re trying to get your head around effective freight budget management. Then don’t worry, we’ve got your back! Because, this blog aims to guide shippers with steps to manage freight budgets, using in-depth planning and savvy decision-making, you can carefully keep expenses on track. And we’re here to guide you onto that path of excellent freight costs management with some straight forward actionable tips.

Why Is Managing Freight Costs Super Important For Your Business?

There are all kinds of benefits to effectively managing freight budgets, just like any other budget. Let’s cover some of the more obvious…

Saving money

Transportation costs can rack up an incredible amount from anywhere between 5% to 50% of a product’s total cost, which is huge when you think about it. Therefore, it’s super important for shippers to budget according to their specific freight needs. To maintain and potentially increase profits, by factoring in shipment costs to the pricing of goods.

Cash Flow Management

Unexpected costs can add a ton of strain to a company’s cash flow. Again, this highlights the importance of good freight budgeting to minimize and be prepared for costs that aren’t accounted for.

Competitive Advantage

When you make a saving, that saving can then be passed on to your customers. So, where possible reducing shipping costs helps your business to stay competitive on pricing and hopefully, as a result, increase sales 💪.

So, How Can You Start Managing Freight Costs Immediately?

To make sure you’re managing freight costs effectively, you must first build a realistic transportation budget. You can do this effectively by:

Predicting Realistic Freight Volumes

Accurately forecasting your shipping needs is essential, if you want to achieve good freight budgeting. Now this can be tricky, because who knows what’s going to happen, right? However, if you look at historical data, seasonal trends and anticipated business changes then you can make much better-informed predictions. Ultimately when you can, you’ll want to avoid unexpected last-minute shipments as they tend to come with a hiked up price tag.

Shipper & Carrier Relationships

When you team up with shipping partners and form a great relationship through consistent shipping patterns or long-term agreements then you’re in a position where you can begin to negotiate better rates, and greater flexibility and as a result potentially even receive a prioritized service when capacity allows 👱‍♂️🚚.

Understanding Industry Trends

Technology is your friend, not your enemy!

Technologies like ‘Transportation Management Systems (TMS)’ can streamline processes and enhance visibility into your shipments to provide real-life data to analyse and make further optimizations. Not forgetting ‘Load Boards’ too that are fantastic at connecting shippers with carriers to compare competitive rates and view available capacity with each company 💻. These technologies make budgeting the movement of freight much more simple.

Don’t Overlook Extra Charges

Budget always need a certain degree of flexibility and that includes your freight budget. This is to account for accessorial charges for services like specialized handling, layover and detention because these can very quickly derail your freight cost management. Make sure there’s always a buffer to absorb unforeseen charges.

Keep Up To Date On Fuel Charges & Freight Rates

With constant fuel price fluctuations and ever-changing freight rates for one reason or another, (we’ve written a super helpful blog “What Factors Can Affect Freight Rates?” that you should definitely go and check out after you’ve finished reading here) makes budgeting freight costs quickly become a HEADACHE 🤕. Be sure to partner with a logistics company that understands the importance of a budget and who can work closely with you to find the best solutions possible, with no detriment to the service provided⛽️📈.

*At PEI we send all of our customers a weekly newsletter, which clearly states the most recent fuel surcharges so no one is left in the dark and can factor the newest rates into their budgets! 📧

Shipping Mode Selection

Carefully select the shipping mode that suits your freight needs. Whether that’s FTL, LTL, PTL, or EUV you can significantly reduce your shipping costs by weighing up the volume of your freight with the urgency of the shipment and using the most appropriately suited and cost-effective option. By working this out early on, you can budget accordingly 🚛.

3PL Partnership

Partnering with a 3PL definitely has its advantages, although they may work out slightly more expensive, a 3PL can handle your freight management for you. They’ll optimize your operations and find you the best solutions possible using their experience, knowledge and resources. Which in the long run could work out more cost effective and extremely beneficial in many ways.

Freight Auditing Regularly

Auditing freight operations regularly can provide valuable data insights like shipping patterns, and carrier performance and it can also uncover billing errors like accidental overcharges, incorrect freight rates or duplicate charges, etc. It’s also great at highlighting areas for improvements, like opportunities to optimize shipping processes and negotiate more favorable contracts. Overall freight auditing is great at improving budgeting accuracy 🧾.

Conclusion

 

Don’t let unpredictable shipping expenses eat into your profits. Adopt these simple tips and tricks and you’ll be a pro at managing freight costs in no time! With these steps implemented, you can proactively manage and control freight costs to improve profitability through the rocky economy of 2024 and beyond. Keeping yourself informed of industry trends, embracing technological advancements, planning and reviewing data are the keys to success in this ever-evolving world of logistics.

Why Choose PEI For Your Shipping Needs?

Why should you work with us at PEI? Well, in short, we offer a menu of services and we’re extremely transparent with our customers in everything that we do including all of our costs. You’ll never be in the dark with us and we can help you to plan your toughest consignments and help you to budget for future shipments 😄.

 

Need help with any of your specialized shipments?

At PEI we’re experts in dealing with specialized freight and can handle yours with any custom requirements.

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