4 Ways to Lower LTL Freight Spend
It is important for businesses to stay competitive in today's market. Shippers still reeling from the recent recession are looking for better prices on their shipments. But, in the logistics world of small business, this can be difficult. Small LTL shipments can become costly, but you might not be flexible enough to pool your shipments into a full truckload to save money. So, how can small businesses level the playing field and lower their LTL freight spend? Here are four tips.
1. Utilize a 3PL company's high volume of shipments.
Here's the bottom line: the sheer volume of logistics problems a 3PL solves every day makes them experts in the field. This volume combined with industry know-how makes them crucial partners in lowering your LTL freight spend.
One historical example of a small business industry that benefits from this kind of volume is farming. For decades, rural farmers and small food distributors have worked together to combine their freight spend and save money. These are called farming co-ops.
You can think of a 3PL company as your personal shipping co-op, ready to utilize its volume and consistency to save your small business money. You are never forced to deal with rising LTL freight costs. You have control, and a team of experts to help you.
2. Make sure your freight class is correct.
Every year the National Motor Freight Classification (NMFC) Guide gets an update that re-classifies freight. And every year, small businesses leave money on the table by misclassifying their freight – or worse, they also have to pay an extra fee for misclassifying freight.
Now, we're not saying you have to know every freight classification by heart and then re-memorize everything again every year. Only look into potentially re-classifying your freight once a year, or whenever your load volume rises or drops significantly. Need help classifying your freight? Ask a 3PL LTL expert – after all, that’s what we’re here for.
3. Pool your shipments to become full truckloads.
The biggest reason small businesses use LTL shipments is that they need to get small amounts of product to their distributors quickly. They can't fill a truckload, but the distributor has already run out of product, and they need to have SOMETHING there to sell soon.
By carefully analyzing your market and sales, you can prevent this "hurry up and wait" mentality behind LTL shipments.
For example, some distributors of your product may be selling slower than expected. You can pool all of these "slow sellers" together into one full truckload for when they finally need more product. This pooling of shipments saves you a lot of money that would have otherwise been spent rushing the product at the last minute.
4. Do your best to eliminate data entry errors.
Typos are the silent budget killers of the logistics world. Almost every shipper can recall a time they lost money because somehow the wrong address, freight quote, or rate was typed incorrectly. And it's not just overpaying for shipping and accessorials that cause this - it's also all of the man-hours spent fixing the problem on the back end.
In the end, these issues boil down to human error. The only real way to eliminate them is to use the newest freight technology integrated with your enterprise resource planning software or contact management system. Often, 3PLs will do this automatically for you. For example, Redwood's LoadRunner® transportation management system (TMS) was built in-house and eliminates virtually all manual data entry errors by incorporating EDI and other automatic information gathering systems.
The Bottom Line
These four cost saving tips may seem like common sense but can still save you more than enough money to remain competitive as a small business in your market. Here at Redwood we can help you beyond just lowering your freight spend. We provide a cutting edge TMS and expert help with services such as claims and carrier relationship management.