How to Cut Inbound Transportation Costs

It is said that inbound freight management is multifaceted. Why is that? Millennium Logistics Management answers this question in this article and also provides us with some great information to help you cut inbound transportation costs!

Let’s first determine what we already know: An inbound freight management usually consists of a large manufacturer that could have hundreds of suppliers, and a national retailer that can expect business partners to deliver shipments to thousands of facilities.

Many shippers agree that controlling costs is the greatest challenge in the inbound freight management process. They feel this way because transportation rates are consistently rising (this includes higher premiums on expedited shipping, higher base rates that shippers are reporting and additional accessorial charges). This has resulted in businesses racing to control costs and finding logistics solutions which can effectively manage these expenses.

An effective inbound freight management process means warranting an efficient and cost-effective movement of raw material and goods coming into a facility. Currently, a large portion of the average organization’s annual freight budget is spent on this process. So, what can be done to cut inbound transportation costs?

The following are the best practices you can implement in order to cut costs and improve your current process:

• Negotiate: There is always room for negotiation. Most of inbound shipments are routed to facilities via Less-Than-Truckload (LTL) shipping and therefore, shippers can avoid paying high LTL transportation rates by highlighting attractive freight, utilizing guaranteed service levels and requesting a discounted fuel surcharge.

• Optimize the Process: We highly recommend the use of technology for monitoring safety, insurance and performance and tracking/tracing shipments to optimize your process. Take advantage of your TMS (Transportation Management System), which allows you to use custom reports to see if your inbound LTL freight can be consolidated into one truckload shipment. Doing this reduces congestion at the dock and minimizes hours of labor.

• Identify vendors and gain visibility into costs: Taking control of inbound freight moves allows you to gain visibility into true transportation costs and makes it possible for you to optimize freight moves. Otherwise, it is likely your suppliers are bundling shipping services into product prices and use the service as a profit center; if your suppliers are in control of inbound freight moves, you might be paying extra.

Everyone goes after costs and when you improve your inbound freight management, there is a significant opportunity to reduce costs. That is why an efficient inbound freight process benefits everyone. Reducing costs, possessing administrative competence and practicing a better inventory management are 3 key benefits to managing complex inbound freight processes. We urge you to contact Millennium Logistics Management for more information regarding this topic or any other logistics questions and information.