While current freight rates may be favorable to shippers, good weather doesn’t last forever. Freight costs can quickly spiral when high demand squeezes shipping capacity, as evidenced during the post-pandemic boom. That’s why shippers must start building best practices when the conditions are favorable. If shippers already have robust systems and a strategy for reducing total freight costs, they can function and even thrive during times of pricing volatility.
However, many shippers need help in this area. This blog addresses the challenges shippers face in trying to control freight costs, and how a modern freight broker like Continental Logistics has the technology, resources, and expertise to help them reduce total freight shipping costs by significantly improving operational efficiency.
Excessive Shipping Costs: Where Companies Go Wrong
Shippers often struggle to reduce total freight shipping costs because multiple facets of a shipment’s journey can get unexpectedly expensive due to several factors.
A Lack of Load Consolidation
If shippers need to move multiple smaller loads, drayage and delivery costs for each of those smaller loads can add up quickly. Multiple shipments increase the number of trips, total fuel consumption, and overall transportation expenses.
Limited Carrier Options
A small, restricted pool of carriers can increase costs by decreasing cost competitiveness. One of a shipper’s biggest strengths is competition between carriers for business. Without that competition, there’s less incentive to bring the most cost-efficient routes and services to market. A broader selection of carriers allows shippers to choose the most cost-effective and efficient options for their specific needs.
Poor Communication
Integrated, smooth communication is crucial in drayage. Inaccurate information, unclear instructions, or delays in communication can result in missed opportunities for cost savings or increased costs associated with delays. Efficient communication ensures that drayage operations run seamlessly, minimizing unexpected expenses.
A Freight Broker’s Role in Reducing Total Freight Shipping Costs
Modern freight brokers use a host of innovative technologies and methods to help shippers reduce total freight shipping costs. Here are the main ways they implement cost savings for shippers:
Freight Consolidation
A shipper needs to move four pallets of fresh oranges from Los Angeles to New York. Using less-than-truckload shipping is expensive because the carrier must compensate for the extra handling and inefficiency of transporting smaller loads. An experienced freight broker can find a solution to consolidate those shipments into a full truckload with other shippers’ cargo headed to New York.
This option reduces total freight shipping costs because the cost of the full truckload is shared among the respective shippers, significantly reducing the cost per pallet for each. Furthermore, fewer pickups and deliveries reduce handling and administrative costs while minimizing the risk of damaged goods.
Intermodal Transportation
Right now, shipping by rail is 25–30% less expensive than road transport. Freight brokers utilize technologies that make it easier to plan intermodal routes that leverage the cheapest transportation mode for each stage of the journey.
For example, say a shipment of electronics needs to travel 1,000 miles to a big-box retailer in Boston. Using intermodal transportation, the freight is moved by truck for the first 100 miles to reach a rail terminal. Then, it is shipped by rail for the remaining 900 miles before being transferred back to a truck for final delivery. This combination minimizes the more expensive trucking segment, capitalizes on the efficiency of rail transport, and reduces total freight shipping costs compared to trucking for the entire 1,000 miles.
Networks and Relationships
As mentioned above, the strong relationships between great freight brokers and carriers, as well as their larger annual shipping capacity, means that your freight broker can get you better rates and faster service than you could get on your own.
Direct Store Delivery
Usually, shipments have to go to a warehouse before embarking on the final-mile trip to the receiving store. Freight brokers can streamline that process by delivering directly to a store or distribution center, reducing storage and handling costs.
Expertise in Logistics
A great freight broker will help you reduce total freight shipping costs in less measurable ways by simply understanding the industry and your specific needs really well. This knowledge enables them to provide insights and solutions designed to optimize transportation spend.
Save Time and Money: Work with Continental Logistics
Freight brokers can use their expertise, connections, and technology to secure less expensive shipping. Continental Logistics is an excellent option thanks to its 50 years of experience. They offer direct store delivery, consolidation, and intermodal transport, all of which can help save more money and time. Ready to get started on reducing total freight shipping costs? Contact Continental Logistics today.
