I spent 21 years of my LTL career as Director of U.S. Strategic pricing at FedEx, working most often on LTL pricing and capacity strategy. With the ebbs and flows in the marketplace, there always seemed to be a massive pendulum that shifts from shipper-based strength to carrier-based strength and back again and again. This was obviously frustrating for both entities and made it virtually impossible to execute any kind of effective strategy being a victim of the ever-changing market headwinds.
Margins requiring double digit increases for accounts served to exacerbate these swings. There isn’t a company out there that budgets for that kind of price variability. These conversations place stress on the relationship and create an adversarial relationship in every negotiation going forward.
It’s our objective at Green Mountain Technology to eliminate those kinds of conversations and create long term, sustainable, pricing consistency. There are many other ways to improve operating margin for the carrier while improving operating conditions for the shipper as well. This promotes a healthy partnership that lasts and delivers positive outcomes for both shipper and carrier. With that in mind here are 15 ways a shipper can reduce cost for the LTL carrier and therefore, mitigate future increases and variability in the supply chain.
- Audit freight bills (LTL carriers are notoriously poor when it comes to freight bill invoicing accuracy)
- Know your weights and dimensions (LTL carriers are wanting to move toward parcelization of LTL. All shippers should pay for is the space their shipments occupy…no more)
- Mitigate accessorials (ensure that you’re only requesting services that you specifically need…and that you’re not being charged for services that weren’t performed – another reason for a quality audit)
- Pay on time (carriers will make pricing concessions for quick and timely payment of invoices)
- Utilize a robust TMS (all kinds of advantages from eBOL’s, carrier notification, audit and better understanding of freight charges and right carriers to utilize in the right lanes)
- Package freight appropriately (reduce claims and space on trailer)
- Provide carriers with advance volume projections (carriers will make pricing concessions when they have shippers that help them plan their network)
- Ensure accuracy on shipment labeling (redeliveries are inefficient for all parties involved in the shipment)
- Select right carrier in right lanes (based on service, price and capacity)
- Consolidate shipments when feasible (less expensive to ship one 5,000lb shipment than five 1,000lb shipments)
- Hold shipments at pickup if possible; to increase pickup density for carriers (this can lead to pricing concessions from carrier)
- Educate yourself on the carrier’s rules tariffs (they are all different and carry different charges and qualifiers)
- Reduce carrier p/u time, cube utilization and unknown risk (all things that can help negotiate better rates)
- Make carrier decisions based on overall net cost, not just discount levels (factor in base rates, discount, AMC, FSC and accessorials)
- Collaborate with carriers like the supply chain partners they are (provide robust, accurate data and engage strategically on a regular basis)
Based on our collective shipper/carrier experience at Green Mountain Technology, we are uniquely qualified to help our clients work with their carriers to drive this type of change. Overall margins are not fixed with price increases alone. However, when changes are made to an operation that drives efficiencies, that’s when we can find and instill stability in the relationship.
At GMT, we help our clients ensure they are on top of all aspects that are important to carriers and ensure that we are minimizing surprises to the P&L. Give us a call and allow us to help you save money, build better relationships with your carriers, and ultimately make your customers and shareholders the most satisfied they’ve ever been.
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