Transportation businesses are acutely aware of freight costs, often a burden during periods of potential growth and profitability. At the same time, freight costs are often a bit of a mystery. They exist – but businesses may not know how to take control, evaluate avenues of expense, and refocus to reduce spending. In the content below, we explore 9 strategic practices to reduce international freight costs.
1. Evaluate Your Budget
As with any business, understanding where the bulk of your budget is allotted to every month is hugely important. Every time a truck is sent out, how much money are you making? Have you created a profit-loss statement recently? Tracking expenses is the beginning of taking control of your freight business finance and reducing costs. For example, are you spending an extraordinary amount on a full-time accountant? Perhaps consider outsourcing accounting services or utilizing software and tackling the task in-house.
2. Inspect Intangible Costs
Intangible costs are extraneous charges that are not apparent in a profit-loss statement. A lack of communication, workplace dissatisfaction, or poor attitudes can severely cripple efficiency and productivity – ultimately wasting resources. Spend time motivating employees, expressing a desire to communicate well, and building a high-quality team. These intangibles will impact freight costs in the long run.
3. Evaluate Trailer Loading Efficiency
When was the last time you paused to evaluate your packing freight efficiency? Packing efficiency is one of the simplest, quickest ways to reduce freight costs. Reducing the amount of dead space between freight will immediately lower rates – packaging plays a significant role in loading efficiency. Is your packaging optimal for efficiency? Cory Levins, Director of Business Development for a packaging agency, writes:
Packaging should be designed earlier in the process to adjust for transportation and warehousing needs. While dunnage, blocking, and bracing are necessary to ensure the products arrive safely, especially for a long journey, they can sometimes be used in excess. Work with your packaging supply to use the appropriate amount of dunnage for safe transportation.
4. Ship Less, in Bulk
Transporting a specific volume of goods in a single, bulk shipment is more cost-effective than sending the same volume in multiple, small deliveries. Consumers understand the significance of purchasing in bulk, demonstrated by the existence of Costco and similar suppliers. Shipping regularly, regardless of order size, often results in time wasted processing, loading, and unloading. For transportation businesses, shipping large orders in bulk – or multiple shipments combined into one – closer to the point of sale allows for greater shipment efficiency.
5. Ship Off-Peak, if Possible
Unless your transportation business deals with perishable goods, shipping off-peak is a simple way to reduce freight costs. Significant savings can be achieved by adjusting a day or even an hour or two later. Fridays and Mondays are two off-peak days.
Pursuing backhaul shipping is yet another cost-effective transportation option. Carriers should make an effort to fill empty trucks on their way back to base, always checking for extra backhaul capacity. Carriers are often most willing to backhaul during evening hours to avoid mid-day conflicts.
6. Utilize Modern Management Systems
Inventory management systems are an insightful tool for transportation business owners. Data received can be utilized to identify weaknesses within the shipping system. For example, do certain carriers average higher late delivery rates? Are specific routes prone to increased breakage? Evaluate the results and make adjustments as necessary.
7. Outsource Where Possible
Staying faithful to your niche is hugely important for a business aiming to remain profitable in the long run. If other needs arise, outsource. Ultimately, the more services and skills you attempt to tackle, the more difficult it can be to remain excellent in each. If you must get involved in other niches, or learn a new skill, it is often best to outsource to a professional.
8. Perform Regular Maintenance on Equipment
Every trucking company owner fully understands the costs associated with truck upkeep. However, surprise repairs incurred when something breaks down cost significantly more. Performing regular maintenance is cost-effective in the long-run, ultimately proving more effective than waiting for something to stop working. Furthermore, a severe repair may remove a truck from commission for an extended period of time, crippling your workflow and bottom line.
9. Freight Factoring
Freight factoring is an incredible resource available to trucking companies in need of capital – instead of waiting for payments. Factoring means immediate cash without waiting for money, ultimately allowing companies the resources necessary to grow and expand without being pressed for payments. Advanced Commercial Capital’s freight factoring program provides freight companies peace of mind – your rate will never change, and you won’t be responsible to buy back uncollected invoices. Furthermore, Advanced Commercial Capital doesn’t lock clients into long-term contracts. Freight businesses can utilize factoring services while profitable and choose to stop at any point without enormous fees.
Advanced Commercial Capital
At Advanced Commercial Capital, we are dedicated to making freight factoring as simple and easy as possible, providing every client the precise service they need. Because of our dedication to excellence and passion for the success of our clients, we have become one of the leading freight bill factoring companies in the U.S. Furthermore, your ability to qualify for factoring services is primarily based on the creditworthiness of you customers, not you – an excellent option for new companies without a robust credit history.
To learn more about our services, contact us today at 435.673.4655 or via our online contact form!