Do You Know How to Reduce Freight Costs Successfully?
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Compared to previous years, this year is shaping up to be one in which more and more manufacturers are seeking ways to reduce across the board freight costs. According to a study done by American Shipper, in 2012, price is the number one factor when it comes to budgeting shipping container freight costs, including train freight costs and ocean freight costs. A whopping 58% of respondents indicated that Price was more important than Service and Risk. More companies are looking for deals from shippers and there appears to be an ongoing trend of holding the line on paying higher rates.
For example, thirty-four percent of those surveyed have had an increase of 5% or less in shipping costs. Eleven percent experienced no increase, while thirty-eight percent saw an increase of more than 5% in costs. Clearly, there’s an advantage in understanding how to reduce freight costs by improving negotiations with shippers.
The winners of this survey are companies that learned how to become increasingly savvy during the contract process. They were able to win attractive rates on service level guarantees, delivery times and other customer service items. Survey respondents were also separated into centralized and decentralized while being analyzed for savings. The results revealed that forty-two percent of the centralized group had no rate increases, while thirty-one percent of the decentralized group saw no increase.
When taking these numbers into account, it is obvious that those companies that seek out a qualified freight cost consultant are seeing real benefits in freight cost savings. Companies that experienced rate increases unabated are not taking advantage of strategic negotiations in this area. Maybe the reason is because management is not aware that such cost savings can be achieved. In this day and age, every manufacturer should be informed on how to uncover the hidden costs of shipping, and what to do about reducing freight costs. Monies saved in shipping can boost a company’s bottom line while maintaining above average service from shippers.
