An interesting fact to start us offdid you know that transportation costs account for about 50% of total logistics costs? It’s a significant chunk of change, making the task to reduce freight costs an absolute priority for any logistics and supply chain management firm.
Keep reading to find out about four practical strategies that can teach you how to reduce transportation costs in the supply chain.
1. Optimizing Load and Route Planning
The first and perhaps most effective way how to reduce freight costs is through optimizing load and route planning. Each trip a freight vehicle makes costs money, not just in fuel but also in wear and tear on the vehicle, driver hours, and more. Therefore, ensuring that each trip is as efficient as possible is key. This can be done through route optimization software which selects the most direct routes, avoiding traffic and road works.
Load planning ensures that each vehicle is filled to its maximum safe capacity. Underfilled trucks mean more trips and, therefore, more costs. Therefore, load and route optimization can significantly reduce transportation cost in logistics.
2. Investing in Technology
Our next tip on how to lower the cost of moving things around is to use technology. Putting your money into a good Transportation Management System (TMS) can be really worth it. A TMS helps people who manage logistics plan and do the moving of goods from one point to another.
This system makes the process smoother, showing clear details about daily tasks, where the delivery is, and the cost of freight. By seeing everything clearly, it’s easier to spot parts that aren’t working well. Spotting and fixing these issues can save a lot of money as time goes on.
3. Implementing a Consolidation Program
Another strategy to reduce logistics cost of transportation is implementing a consolidation program. Instead of sending out multiple smaller shipments, it can be more cost-effective to consolidate these into a single larger shipment.
This approach, known as freight consolidation, reduces the number of trips needed and thus, cuts down on fuel and labor costs.
4. Building Strong Carrier Relationships
Lastly, people sometimes forget that making good relationships with freight carriers can help lower costs. When we have a good and trusting relationship, we often get better deals, better service, and more value.
Freight companies like it when customers keep coming back. They’re usually open to giving discounts to those who are loyal. Plus, they’re likely to give top-notch service, which lowers the chances of mistakes or delays that can cost more.
Reduce Your Freight Costs with an Effective Strategy
Finding ways to lower freight costs is a constant job. It needs careful planning and regular checks on how well things are going. By making sure loads and routes are planned well, using technology, grouping shipments together, and building good relationships with carriers, companies can cut their costs a lot.
These strategies don’t just help in cutting costs, but they also make the whole process run smoother and become more dependable.
Ready to analyze your freight costs? Try our Trans$aver Analysis now!
