Signs You Are Spending Too Much on Freight Costs

As a leader in manufacturing, distribution, retail or e-commerce, you understand the importance of moving products to their final destination efficiently. However, managing freight isn’t always as simple as it seems. Businesses often face several challenges throughout this process, leading to overspending.

Here, you can discover common signs you’re paying too much and strategies for reducing and managing your expenses.

Identifying Freight Cost Red Flags

Businesses often succumb to several red flags regarding freight costs. Single carrier reliance, excessive bills and ignoring market trends can lead to overspending or missed opportunities to cut costs.

Take a deeper look at these common red flags:

• Over-budget freight bills: Frequent overruns in the transportation budget often indicate red flags. A lack of visibility into shipment expenses can result in excessive or accidental spending. Additionally, a lack of visibility makes it harder to identify areas for improvement and opportunities to reduce spending.
• Over-dependence on one carrier: Limited carrier options often lead to inflated rates. When you rely on a single carrier, you lose negotiation leverage, allowing your carrier to charge higher prices. Relying on a single carrier could present other challenges, like increased operational risk and inadequate capacity during peak seasons. If you encounter these problems, you may have to spend more on expedited shipping to account for delays or face supply chain disruptions that impact business opportunities. Optimizing your carrier contracts with carrier rate negotiations is an excellent way to ensure competitive pricing.
• Ignoring market trends: Freight rates are a reflection of many elements, such as capacity, fuel prices, seasonal demand and economic conditions. Ignoring market trends can lead to poor budgeting, missed opportunities from rate fluctuations and delayed technology adoption for improving efficiencies.

Spotting Shipping Inefficiencies

The shipping process has a direct relationship to your freight spending, and inefficiencies can quickly raise your bills. Consider these common culprits:

• Inefficient shipping routes: Repeatedly using indirect or lengthy routes increases your fuel consumption, results in higher labor costs, boosts toll costs and can cause increased wear and tear on your fleet vehicles. Inefficient routes can also lead to missed delivery windows, lowering customer satisfaction and causing potential penalties. A shipping route analysis can help you identify opportunities for improvement.
• Suboptimal load optimization: Underutilized truck space or container capacity results in missed opportunities and increases the cost per shipped unit. Suboptimal loads require you to increase your total number of shipments, resulting in higher fuel consumption and increased handling expenses.
• Excessive expedited shipping: Poor planning can sometimes result in costly express services. Expedited shipping typically comes at a premium price because your carriers must prioritize your shipment, sometimes disrupting existing schedules and resource usage. Inaccurate forecasting, poor communication, inefficient inventory management and suboptimal load optimization can also result in the need for expedited shipping to meet customer demands.

Uncovering Hidden Freight Fees

Hidden fees are another significant contributor to freight overspending. These fees can quickly inflate shipping costs and make one contract less suitable than another.

Surcharges are supplemental to carrier charges and used to cover fluctuating expenses. For example, fuel surcharges are common in this industry due to frequent changes in fuel prices.

Accessorial charges refer to services beyond basic transportation. For example, some carriers may charge for delivery appointments, liftgate deliveries, failed delivery attempts and address corrections.

Overlooking contract fine print can have several financial implications. You may miss valuable information regarding limitations on liability, insurance coverage, claims processes, accessorial charges, payment terms and more. Unclear agreements can also lead to additional costs, making it crucial to understand every element before signing the dotted line.

The Benefits of a Freight Contract Audit

Freight auditing empowers you to lower freight costs and boost profitability by ensuring greater visibility and unified processes. Auditing allows you to:

• Identify billing errors: Auditing allows you to spot discrepancies in freight invoices and recover overpayments. You may identify duplicate payments, discount validations, and human input errors that impact your spending. Finding and addressing these blunders improves your overall cost management strategy.
• Ensure compliance with agreed terms: Meeting compliance is critical for supporting business relationship sustainability and efficiency. Contract auditing can verify carrier adherence to contract rates and specify elements that could make or break a contract, from labeling to delivering instructions.
• Find opportunities for cost recovery: Freight auditing offers insights regarding big-picture trends, history and opportunities. You may be able to recover losses from overcharges and penalties, optimize logistics and correct carrier fees to recover costs while driving long-term savings.

How to Control Freight Costs Effectively

Once you’ve identified the causes for overspending, you can craft strategies to address them. Gain control over freight costs by:

• Planning and forecasting: Proactive management allows you to promote accurate budgeting, better rate negotiations and optimized shipping schedules. You can use forecasting information to anticipate shipping volumes, cost fluctuations, seasonal demands and potential disruptions for optimal resource allocation.
• Leveraging technology tools: Technology like a Transportation Management System (TMS) empowers you to manage costs seamlessly. This software can streamline logistics optimizations, enhance communication and improve cost management to maximize business profitability.
• Partnering with freight experts: Engaging with professionals like Broussard Logistics for expert advice ensures you can leverage top trends and innovative technologies to stay ahead of the curve. The right team can help you eliminate inefficiencies, offer flexibility and provide the personal attention you need to form lasting solutions.

How to Reduce Freight Costs

Beyond regaining control over your spending, reducing freight costs where possible can benefit your business. Consider these strategies:

• Optimize shipping routes: Streamlining shipments delivers cost and time savings. Leveraging data analytics drives smarter decision-making and enhances efficiencies. Improving your shipping strategies can enhance your business reputation, ensure customer satisfaction and promote cost efficiency.
• Consolidate shipments: Reducing the number of small shipments you send out can promote better container utilization and optimize routing efforts. Consider solutions like less-than-truckload services to optimize spending and get the most out of every shipment.
• Develop continuous process improvement: Regularly evaluating shipping processes is the best way to identify inefficiencies and opportunities for improvement. Leveraging a TMS can support this initiative by ensuring you have access to real-time insights and analytic capabilities to streamline informed decision-making.
• Implement periodic contract reviews: Periodic contract reviews allow you to ensure the best rates and terms are in place to support your business needs. Choose a reputable audit provider to evaluate current rates, market trends and payment policies to optimize your contracts.

Choose Broussard Logistics for Optimizing Your Freight Costs

Controlling and reducing your freight costs is crucial for long-term business sustainability. Implementing the right technology and finding the right service provider can streamline these efforts and drive meaningful change. Broussard Logistics can help you identify billing errors in freight contracts, optimize shipping routes, optimize contracts and more to support your business.

As a leading transportation cost management firm, we have the reputation and experience to streamline processes, eliminate inefficiencies and improve your bottom line. Our signature services offer everything you need, from contract optimization to technology integration.

Request a consultation to discover how we can help your business.