In the freight industry, shippers of all sizes are constantly on the lookout for ways to manage their daily spend and how to reduce freight costs. Especially for those in purchasing and procurement roles, understanding how certain factors affect shipping costs across the board can be vital to career success. We've compiled some of the top influences on freight shipping rates to help you move towards a shipping strategy that fits your budget and business needs, and put together a brief explanation of how a third-party logistics (3PL) provider can help you reach your goals.
Here are four considerations when learning to manage your freight costs with the help of 3PL services.
1. Understand How Your Freight Shipping Costs Are Calculated
Understanding how shipping companies rate your freight will help you prepare and budget before it's even time to ship. When calculating freight shipping rates, companies consider an array of factors, some of which may be outside their control. Rates are typically calculated by analyzing:
- The shipment's product type and classification code — A shipment's NMFC code and associated freight class help the carrier identify how difficult the freight will be to ship. The more difficult a shipment will be (I.e. packages that are bulkier, oddly shaped, or more fragile), the more it will cost to ship.
- The shipment speed and distance — Just like with more complex shipments, freight with a faster turnaround time or a longer distance between pickup and delivery points usually costs more to ship. For example, an overnight shipment will likely cost much more than one on a more relaxed time schedule, and FTL freight traveling cross-country will cost more than if it was traveling across town.
- Specialized services — Additional fees will also apply for specialty freight shipments, like those that require refrigerated or high-security equipment. Consider the additional services needed for your commodities before booking a shipment!
2. Plan for Additional Freight Shipping Fees and Surcharges
Now that you understand how your freight costs are determined, it's important to plan for any common fees or surcharges that may pop up unexpectedly. Practice makes (nearly) perfect, so familiarizing yourself with these common fees will help you plan for (or even avoid) them in the future! Some fees and surcharges that may get added to your invoice may include:
- Fuel surcharges — These rates fluctuate based on market conditions, so do your research or partner with a 3PL to keep up-to-date.
- Rural/remote and residential delivery — Rural and residential locations may be more difficult to get to than suburban or urban warehouses and storefronts. Freight shipped to these locations may require special delivery tactics at extra expense.
- Incorrect address and redelivery — If a shipment's delivery address is missing or incorrect, the carrier may have to store or return the freight until the address can be corrected. These charges help to compensate the carriers involved for any unnecessary time and resources spent on multiple delivery attempts.
- Loading and unloading — If you run a smaller business or are delivering to one without dockworkers, the carrier may charge you to load and unload your freight. Larger companies can avoid this charge by hiring dockworkers to load and unload freight shipments.
- Cargo insurance — Many shippers choose to also add on cargo insurance for peace of mind, protecting fragile, perishable and high-value goods against loss, damage and theft.
3. Keep Track of Outside Factors That Affect LTL and FTL Freight Costs
Experienced shippers will have already had many of the previously mentioned cost-raising factors in mind, but there are also many additional factors outside of shippers' control that they may not know about. External factors that may affect the cost of your freight costs include:
- The political and economic landscape — Trade wars between countries, agreements and embargoes can all affect global supply chains and cause freight shipping costs to rise. And at the same time shippers work to reduce freight costs, political and economic conditions and the current demand for more cargo space may affect carrier rates.
- Government regulations — Did you know that the Department of Transportation mandates that truck drivers must rest after a certain number of hours behind the wheel? That means that carriers aren't making money during certain hours of the day, and that they may, in turn, increase shipping rates to make up for it.
- Inclement weather — When road conditions become dangerous and drivers' fields of vision are blocked by heavy fog, rain or snow, transit times may slow or even come to a halt. Plus, if a driver needs to reroute to avoid dangerous conditions, the shipper may get hit with the bill.
- Infrastructure and road conditions — As roads are continuously built and used, road conditions and possible routes are constantly changing. New roadways can provide more direct shipping routes and cut costs, while potholes and cracked roads may lead to slower shipping times and an increased risk of damage to your freight.
4. Learn How to Reduce Freight Costs From a 3PL Partner
Once you understand what factors are in play, it's important to put that knowledge to use and create a plan to reduce your freight shipping costs. We know this can quickly become complicated with so many important factors to keep in mind - make this process simpler by partnering with a 3PL!
3PLs like 十大菠菜台子 take on the difficult tasks of maintaining a strong carrier network, providing protection for all your freight shipments, analyzing the state of the shipping market and more so that you can focus on growing your business. 3PLs help keep shipping costs manageable by negotiating carrier rates and advising shippers on how to minimize fees and surcharges. Plus, with managed transportation solutions, you can focus on more pressing areas of your business.
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While 3PLs can't control external factors, they have the expertise to interpret trends and create workarounds to maintain a healthy supply chain. If you're looking for a long-term shipping partner that can help reduce and manage your freight shipping costs, connect with an expert today to see how 十大菠菜台子 can help maximize your shipping success.