Facing high road freight costs or seeking to improve your trucking service? It’s essential to know what to look out for.
What are the common obstacles in road freight?
Watch the video below for some valuable insights!
We are diving into the topic of freight for 2024, focusing particularly on road freight. Here are some essential tips to consider for the coming year.
Number of Carriers
One significant challenge in road freight is managing the number of carriers. In Australia, it’s difficult to find a single carrier that can handle all your needs nationally. Companies often end up using multiple carriers, which can lead to inefficiencies and missed opportunities for cost savings. For example, having upwards of 100 carriers can result in decentralized management, inconsistent rates, and lost buying power. Evaluating and rationalizing the number of carriers can enhance efficiency and reduce costs in road freight.
Freight Carriers Relationship Duration
The duration of your relationships with freight carriers is another critical aspect. Long-term relationships can lead to complacency, with missed opportunities for innovation and cost savings. While stability is beneficial, it’s essential to periodically review these relationships to ensure they remain competitive and effective. Benchmarking your rates and conducting market testing can help maintain a beneficial relationship with your road freight carriers.
Ownership
Deciding between in-house transport and outsourcing is crucial. A hybrid model, where specialized or highly utilized vehicles are owned and managed internally while others are outsourced, can be effective. This approach allows for flexibility and efficiency, particularly in road freight where specific routes and loads may benefit from direct control over transport assets.
Rate Structures
Understanding and optimizing rate structures can significantly impact your transport costs. Simplifying the handling of your freight and ensuring that rate breaks align with your shipping patterns are key strategies. It’s not just about the rate per pallet but how those rates are structured. Ensuring that your road freight rate structures are advantageous can lead to substantial savings.
Asset Utilization
Evaluating the utilization of transport assets provided by your carriers is essential. Changes in your needs over time may mean that the current fleet is not optimized for your requirements. Regular reviews and adjustments to ensure that the equipment used matches your current needs can improve cost-effectiveness and efficiency in road freight.
Contract Terms
Finally, scrutinizing contract terms is vital. Many road freight relationships lack formal contracts, leading to potential inefficiencies. Ensure your contracts cover rates, payment terms, KPIs, fuel surcharges, labor rates, and other cost-related elements. A detailed and well-structured contract can help manage costs and expectations effectively.
Watch the complete above for detailed information of this topic.
If you have questions or need assistance with your freight contracts, visit Logistics Bureau website: https://www.logisticsbureau.com/freight-contract-negotiation-consultants/
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?
- 12 Smart Ways to Reduce Your Freight Costs
- Do You Know When it’s Time for a Freight Review?
- Is it Time for B2B Freight Providers to Learn From B2C?
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated January 10, 2024, under the title “Road Freight 2024: What to Check to Improve Transport Costs & Service“.
