It’s a mistake to think it’s all about the freight “rate.” Efforts to reduce freight costs often miss important considerations.
To get a full picture of freight rates, you need to examine rate structures and consignment profiles. Your freight carrier takes these into account to provide a complete logistics solution.
Understanding these aspects can lead to more effective cost management. Watch the video below to learn more.
When dealing with freight rates, several common mistakes can lead to inefficiencies and higher costs. Here’s a quick overview of the key issues to watch out for:
Misaligned Rates with Freight Needs
One significant mistake is when freight rates do not align with your actual shipping profile and volume. For example, if you regularly ship 8-10 pallets between Sydney and Melbourne but are charged full trailer rates, you’re not optimizing your spending. It’s important that your rates reflect your usage to ensure you’re getting the best value. Many clients end up paying for more than they need because their rate structures don’t match their actual shipping patterns.
Unexpected Charges Due to Incomplete Rate Cards
Another common issue is incomplete rate cards. Clients often encounter unexpected charges such as marriage fees or additional costs for loading and unloading. To avoid surprises on your invoices, make sure all potential charges are included in your rate card. This means scrutinizing the card to ensure it covers all possible fees, even those that might not be frequent.
Neglecting to Regularly Review Rate Cards
A third mistake is failing to review rate cards regularly. Rates and market conditions can change, so it’s crucial to reassess your rate card every 6-12 months. This ensures you’re not overpaying and helps you stay updated with current market rates. Regular reviews can prevent the trap of sticking with outdated rates that may no longer reflect your best options.
The Importance of Maintaining a Balanced Relationship with Your Freight Company
Finally, while building a strong relationship with your freight provider is important, it’s equally crucial to ensure that this relationship does not lead to overpaying for services. A good relationship should be balanced with fair and competitive pricing. It’s about maintaining open communication while also ensuring that you’re not paying more than necessary.
By addressing these areas, you can optimize your freight spending and avoid common pitfalls that lead to unnecessary costs.
Related articles on this topic have appeared throughout our website, check them out:
- 10 Freight Management Mistakes and How to Avoid Them
- Freight Benchmarking: What Is It? Why Do It?
- Why Containerised Freight Shipping is Daunting for SMEs
- The Challenge of Freight Container Utilisation and Why it Matters
- Container Freight Costs and Forecasting: Intrinsically Linked & Frustratingly Challenging
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated September 20, 2023, under the title “Freight Rates & Reducing Your Logistics Costs“.
