How to reduce your freight costs now

Long-term effective strategies against increasing freight costs.

4 Min. reading time  ·     29. July 2022  ·     Christoph Bertram

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The topic of reducing freight costs has never been more topical than it is at the moment: global supply chains are under great pressure and causing exploding costs in the logistics sector, which companies have to cushion somehow. Here you can find out how.

Freight costs explode - companies must act

Global trade and international supply chains have made our modern economy possible. However, supply chain problems have been occurring since the pandemic-related outages. And the implementation of the EU Mobility Package 2022, rising energy prices and the general persistence of inflation are further factors that have caused freight costs to rise extremely in recent years. An easing of the current situation is not yet in sight.
This poses a huge challenge for many companies: they cannot pass the inflation on to their customers without losing their attractiveness in the tough price war. Therefore, they have to find other ways to reduce the freight costs incurred and thus remain competitive.

Freight costs vs. transport costs - Here are the differences

Both freight costs and transport costs belong to logistics costs and account for a large share of expenditure in the areas of goods procurement, production and processing as well as distribution. Many use the two terms synonymously, but this is not entirely correct.
Transport costs are a more general term. They include all amounts incurred to move people and materials or finished products from A to B. Freight costs, on the other hand, are only mentioned when charges are made to external parties for the transport of goods. Freight costs, on the other hand, are only used to refer to charges to external parties for the transport of goods. Freight costs are basically the costs that a company pays to the service provider (freight forwarder or carrier) for the transport of its goods.
Accordingly, the following article will help you to reduce expenses for the procurement and transport of goods, but it is not applicable to passenger transport or internal logistics costs. However, by reducing your freight costs, your general transport costs will inevitably decrease.

Reducing freight costs: this is how it works without compromising quality

Every transport of goods, whether it is the purchase of raw materials, the onward transport of components and intermediate products or the delivery of your finished goods, causes costs. So it's no wonder that these quickly add up to one of the biggest cost factors in logistics. Fortunately, there are a number of measures you can take to reduce your freight costs without having to accept delays and thus losses for your customers.
Just like production or distribution, logistics has become more and more elaborate and complex in recent decades. Today it is almost impossible to remember all the important data and partner companies. It takes time to search for the relevant information every time. Therefore, intelligent logistics software is a must for companies that want to remain competitive in the future through effective methods. Reducing freight costs today is not least a question of data quality, transparency and digital process control. Most options offer you the following possibilities and functions, among others.

Always cost-efficient thanks to freight databases

The larger your company, the more freight decisions you have to make each day. At the same time, working with a few service providers has long ceased to be effective and offers few options for reducing or keeping your freight costs low. Not only the ever-increasing competition on the market, but also increasing bottlenecks in personnel and capacities cause prices to fluctuate strongly. The only way you can avoid this is with the help of a Freight database keep track of the best offers currently available from various freight service providers. Of course, this means an investment at first, but it pays off in no time through the potential to reduce freight costs.

Intelligent tender management

In addition to a freight database, a powerful software solution for operational and strategic logistics and Freight tender. In order to efficiently reduce freight costs, the tendering of orders via web auction is a good option. In this way, you receive a large number of offers for your freight volume within a very short time and can choose the best option from these - without great effort or nerve-racking renegotiation.

Plan and optimise with freight cost analyses and simulations

Reducing freight costs is not only a short-term strategy, but above all a long-term strategy to strengthen your competitiveness. Therefore, freight and transport costs should also play a role in planning for the expansion and improvement of your logistics. With the help of the right logistics software, for example, you do not make the choice for a new and optimal logistics location out of instinct, but on the basis of reliable data. Data and simulations. At the same time, the analysis of the actual situation provides you with reliable parameters where you can start optimising to reduce freight costs.

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Intensify freight auditing and auditing of accounts

Trust is good, control is better. This wisdom also applies to the freight cost statements of your logistics partners. On the one hand, mistakes can always happen. On the other hand, freight invoices sometimes deviate from the original agreements, which can drive up freight costs. In a professional Freight Revision such inconsistencies stand out.
However, many companies do not make sufficient use of the savings potential in this area and at most do spot checks. No wonder: most invoices for freight costs are confusing and checking them involves a lot of effort. This is where your company can benefit from external service providers and their know-how. The investment in an accurate invoice audit pays off in savings that can sometimes be in the five-digit range and is therefore an important part of your concept for lowering your freight costs.

Logistics consulting uncovers weaknesses and potentials

Do you know how your freight costs compare to those of your competitors and to the rates that are typical in your industry? If not, it is high time for professional logistics consulting: with benchmarking, you will gain important insights into the freight rates typical for your industry and will be able to better assess whether you are paying too much in the future. With a new self-confidence and a sense for reasonable prices, many logistics managers find it much easier to reduce their freight costs.
At the same time, logistics consultants have a fresh and unbiased view of your processes and can identify cost traps and thus reduce your freight costs. Because even if you have a good overview of your entire supply chain, over time a certain operational blindness sets in and the ideas for alternative procedures are missing or seem too costly to implement. Particularly if you are planning a massive reduction in freight costs in your company, a well-founded Logistics consulting meaningful.

Reduce freight costs, but with strategy

So there are many ways to reduce freight costs, but it is a very complex task overall. Discovering potential for cost reduction is hard enough. And then quality must not suffer. Your transports must remain reliable so that you can offer your customers on-time delivery. We therefore recommend a professional Logistics consulting with experts for cost optimisation strategies.

Further contents:
Case Study: Pistor AG - 3 temperature zones in 1 transport with scheduling system
Dr Stefan Anschütz becomes Co-Managing Director of Städtler Logistik GmbH