Redwood Blog

4 Reasons to Outsource Freight Management for a Better Bottom Line

Many companies underestimate the benefits of outsourcing non-core processes and go it alone when it comes to freight management. Most don’t realize that they can outsource repetitive tasks or believe they can do a better job in-house.

Transportation management traditionally has low visibility within companies because they are focused on so many other responsibilities, such as customer service, product development, and order fulfillment. Getting the product to the customer is the last step – and one of the hardest to execute well.

Here are four reasons relying upon a specialized 3PL partner can provide a better value for the time and money spent.

1. Volume Discounts

The most significant reason to outsource freight management is to leverage a 3PL’s network of shippers and overall volume of shipments to lower your own freight spend. 3PLs have significant buying power in the marketplace and can get much better pricing than a single company can get on its own.

2. Data Insights

Data analysis from your supply chain is one of the best ways to contain costs. From knowing what lanes are the most cost-effective to analyzing scenarios based on mode selection, having insight into your data is crucial for your supply chain optimization strategy.

A 3PL partner with a sophisticated optimization technology within their transportation management system (TMS) can help you not only organize and gather data, but can also help provide insights into what your data means. Since top tier 3PLs gather data from shippers and carriers all over the country, they have a unique big picture perspective and can analyze your data in the context of the entire industry.

A 3PL can help you analyze your data

3. Insulation from Changing Market Conditions

Capacity shortages, an increasing regulatory environment, and an aging truck driver workforce are all contributing to market conditions that are hard to predict and navigate. In addition, unpredictable swings in fuel surcharges are making the transportation planning process even more difficult.

Partnering with a 3PL can help insulate your business from changes in the market. With thousands of carriers in their network, 3PLs have access to more capacity and can handle any additional shipments you may have. In addition, top tier 3PLs partner with private fleets and can unlock this “hidden” capacity to drive your costs even lower.

4. Industry Expertise Means Better Results

An experienced 3PL can help augment your transportation strategy. Some of the benefits include shipment consolidation, improved freight terms, and a reduced transportation spend. Leveraging your data to make demand planning and forecasting decisions in the future is another benefit.

With access to tools for better visibility, better carrier management, and more efficient processes your business will be able to drive costs lower and see better results.

The Bottom Line

Outsourcing your freight management will not only lower your transportation costs, but can also help improve efficiencies throughout your supply chain. Learn more about how partnering with a 3PL for freight management can help optimize your supply chain by contacting the Redwood Logistics team today.