Reducing freight costs isn’t just about the freight “rate.” Often, people focus on the wrong factors.
To truly grasp freight rates, you must examine rate structures and consignment profiles, which your freight carrier already takes into account for efficiency and cost savings.
Watch the video below to learn more.
Common Freight Rate Pitfalls
Rob: This week, we’re diving into freight rates and some common pitfalls people fall into. Today, Urszula Kelly joins us to shed light on these issues. Welcome back, Urszula! It’s great to have you here again. From what I understand, there’s more to freight rates than just the dollar amount. What are some frequent mistakes people make?
Ignoring Freight Profile and Volume
Urszula: Unfortunately, Rob, it’s not just about the dollar amount, even though we might wish it were simpler. The key issue is when rates don’t account for the freight profile and volume. For instance, if you’re regularly shipping 8-10 pallets between Sydney and Melbourne each week but paying full trailer rates, you’re not making the most of your spending. Many clients end up paying for a full trailer load or per pallet space when these rates don’t fit their actual needs. It’s important that the cost reflects the actual usage to ensure value for money.
Rob: That’s a crucial point. We often hear clients boast about their great freight rates, but when we check the rate cards, we see different rates for various volume or weight breaks. They might think they’re getting a good deal for pallets from A to B, but if they’re sending full truckloads, they’re missing out on better rates.
Incomplete Rate Information
Urszula: Another common issue is incomplete rate cards. Clients frequently get invoices with unexpected charges like marriage fees or extra costs for loading/unloading. It’s vital to ensure that all potential charges are included in the rate card to avoid unpleasant surprises at the end of the month.
Rob: That’s an important insight. Knowing your operational details can prevent issues. I recall a situation where a client was paying excessively for slow-loading freight. The driver was idle while the staff loaded, which wasn’t ideal for cost efficiency.
Urszula: Exactly! It’s worth considering how your freight is presented. Simplifying the loading process or repackaging can save both time and money.
Regular Rate Card Review
Urszula: The third mistake is letting rate cards gather dust. It’s essential to review them regularly, as market conditions and available rates change. I recommend reassessing every 6-12 months.
Rob: Indeed, keeping up with market trends is crucial. Also, internal changes like new products or markets can affect your freight needs. Regular reviews ensure you’re not overpaying.
Watch the video above for detailed insight.
Related articles on this topic have appeared throughout our website, check them out:
- 10 Freight Management Mistakes and How to Avoid Them
- Freight Benchmarking: What Is It? Why Do It?
- Why Containerised Freight Shipping is Daunting for SMEs
- The Challenge of Freight Container Utilisation and Why it Matters
- Container Freight Costs and Forecasting: Intrinsically Linked & Frustratingly Challenging
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated September 20, 2023, under the title “Freight Rates & Reducing Your Logistics Costs“.
