Rising logistics costs are a growing concern for businesses across the globe. Fortunately, there are some measures you can take to keep shipping expenses under control without sacrificing the quality of service you receive. Below is your step-by-step budgeting guide to lowering your logistics and transportation costs.
Step One: Make logistics cost control a top priority
The path to reduced freight costs begins with your commitment to taking a proactive approach to logistics. Unfortunately, some businesses wait until orders are ready to ship before thinking about shipping and transportation. This reactive approach to logistics is more likely to result in poor decisions and inflated charges. Here is what you can do to take a more proactive approach to logistics:
- Determine how much you are spending by reviewing all logistics-related expenses you incurred over the past two years
- Establish a savings goal you would like to achieve in the upcoming calendar year
- Review your past costs and savings goals with your business team to secure their commitment to your cost-saving vision
Step Two: Find an experienced logistics partner you can trust
Hiring the right logistics partner is the single best step you can take to keeping costs under control. With a trusted partner by your side to handle your freight and transportation needs, you can enjoy peace of mind knowing that an industry expert is guiding your decisions. Here are some of the many benefits of partnering with an established logistics company:
- Access to an extensive network of global carriers helps to ensure you receive the best rates
- The ability to schedule regular pickups is a good way to streamline your shipping procedures
- You can use the time you save to improve your operations and customer service, thereby boosting revenue
Step Three: Step outside your comfort zone
One of the biggest oversights business owners make is to keep using the same one or two shipping companies year after year simply because there is an established level of comfort. The companies are already set up as vendors or providers, and there are rarely any big surprises. Simply put, it seems to be much easier to just stick with an existing provider as opposed to launching a search for a new one. While there is not necessarily anything wrong with a long-term relationship, you might be missing out on some major cost savings by putting all your eggs in one basket.
If your current carrier is more like an old pair of slippers than an efficient cost-savings machine, it's time to step outside your comfort zone. This will take a little time and effort, but the payoff will make it worth your while. If you aren't quite sure where to start, here are some simple tips to help you expand your short list of current carriers and freight forwarders:
- Monitor your incoming shipments to see if there are any carriers who go beyond the call of duty when delivering orders.
- Agree to a brief meeting with some of the persistent but professional transportation providers who are actively seeking your business.
- Don't be afraid to question discrepancies in rates or shipping procedures. Those inaccuracies could cost you money.
Step Four: Always request a quote before committing to a carrier
Few things are more stressful than running behind on an important order for a top client. When your relationship with a five-star client is in jeopardy because an order is late, it can be tempting to schedule a pickup with the first transportation company you call. While this approach may help ensure the order is picked up quickly, you run the risk of being overcharged if the carrier can sense your desperation.
The key to avoiding this pitfall is to always ask for a written quote before scheduling a pickup. If you aren't working with a dedicated partner who can evaluate rates and secure the booking, then it's wise to request a written quote from three separate carriers. This will allow you to compare the quotes side by side and make sure you are comparing apples to apples before you finalize your choice.
Step Five: Evaluate your packing procedures and materials
Efficient packing is essential to controlling the cost of materials, shipping, and transportation. The Operational Excellence Society notes that packaging costs can equate to as much as 15% of the cost of your product you plan to ship. This figure can increase sharply if the packaging process is not properly managed. To avoid poor packaging and increased costs, you can try some of these measures:
- Introduce expert crating solutions to make sure you aren't too liberal or overly conservative with your fill, cartons, and crates
- Consider standardized box sizes if most of your products can fit into one of a few select box sizes
- Choose a logistics partner who offers professional crating services to help you save time and prevent costly errors
Step Six: Schedule annual meetings with your logistics partner
It's important to remain in regular contact with your logistics partner(s). At a bare minimum, you should plan to meet once per year with your regular providers to ensure you are receiving the best possible rates and service. Scheduling an annual meeting also provides a good opportunity to share concerns, strengths, and opportunities for improvement in the service you receive.
As you prepare for your meeting, take some time to review recent industry-wide rate changes to ensure your rates are lower or close to competitor rates. Most importantly, arrive prepared with a "wish list" of items you would like to see unfold in the upcoming year. Be sure to inquire about a rate reduction or any new incentives for which you might be eligible.
The Single Best Way to Start Saving on Logistics Today
Clearly, there are many ways to reduce your logistics and transportation costs without impacting the customer experience. In fact, many business owners find that their operations improve after they decide to partner with a seasoned logistics provider. So, as you map out your plan to save on transportation costs, consider the many benefits of partnering with an industry expert.
The single best way to kick off your logistics savings plan is to reach out to contact us at Aries Worldwide Logistics to request a complimentary consultation or quote. For over three decades, Aries has helped area businesses save time and money by handling their logistics needs. We look forward to helping you maximize savings on your freight and transportation costs!