Struggling with high road freight costs or unreliable trucking services? There are key factors you need to consider.
Find out how to identify and address common issues.
Check out the video below for essential tips!
6 Road Freight Tips
Let’s delve into the world of freight, specifically road freight. Why this focus? Well, during my recent travels and discussions with clients at Logistics Bureau across Southeast Asia, Western Australia, and the East Coast, I’ve noticed recurring themes in our conversations about road freight. So, here are six key points to consider for optimizing your road freight in the coming year.
1. Number of Carriers
Managing the number of carriers is crucial, especially in Australia where it’s tough to find a single freight carrier capable of handling national deliveries. Companies often use multiple carriers due to decentralized management, leading to inefficiencies and missed opportunities for cost savings. Some businesses have over 100 carriers because branch managers organize local freight independently. Rationalizing the number of carriers can lead to significant cost savings and improved service. Assess whether your current number of carriers is justified, and consider if centralizing management could offer better rates and service.
2. Freight Carriers Relationship Duration
Long-standing relationships with freight carriers can be beneficial, providing stability and mutual understanding. However, it’s vital to periodically review these relationships to ensure competitiveness and access to innovation. Some companies stick with the same carriers for decades without evaluating their performance or exploring market options. Regular benchmarking and market testing can help ensure that your rates and services remain competitive.
3. Ownership Models
Deciding between in-house transport and outsourcing is another key consideration. In some cases, a hybrid approach can be most effective, especially for specialized transport needs. For instance, if you have routes with consistent high utilization, running those legs in-house or owning the assets might be more cost-effective. Exploring hybrid options can provide flexibility and cost savings.
4. Rate Structures
Optimizing rate structures can significantly impact your transport costs. Simplify the task for carriers by presenting freight in a way that’s easy to handle, reducing costs. Additionally, examine how you’re being charged—per pallet, per cubic meter, or weight-based rates—and ensure these structures work in your favor. Tailoring rate structures to match your freight patterns can lead to substantial savings.
5. Asset Utilization
Ensure that the transport assets provided by your carriers are well-utilized in terms of time and capacity. Changes in your freight needs over time may not be reflected in the current fleet. Regularly reviewing asset utilization can help identify opportunities for better efficiency and cost-effectiveness.
6. Contract Terms
Finally, scrutinize your contract terms. Surprisingly, many companies still operate without formal freight contracts, relying on informal arrangements. Ensure your contracts cover critical aspects like fuel surcharges, labor rates, and other cost factors. Detailed contracts can prevent unexpected expenses and ensure clarity in your agreements.
If you have questions or need assistance with your freight contracts, visit Logistics Bureau website: https://www.logisticsbureau.com/freight-contract-negotiation-consultants/
Related articles on this topic have appeared throughout our website, check them out:
- 10 Freight Management Mistakes and How to Avoid Them
- Freight Benchmarking: What Is It? Why Do It?
- 12 Smart Ways to Reduce Your Freight Costs
- Do You Know When it’s Time for a Freight Review?
- Is it Time for B2B Freight Providers to Learn From B2C?
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated January 10, 2024, under the title “Road Freight 2024: What to Check to Improve Transport Costs & Service“.
