Poor decisions add 20% to transportation bills

By on Apr 28, 2010

According to Transite Technology, the majority of companies spend 20% more than they need to on their transportation costs

For manufacturing companies, transportation is one area that's ripe for improvement Transite CEO Geoff Comrie points out that transportation is one of a manufacturer's biggest expenses, along with payroll and raw materials Yet poor decision-making is inflating their transportation costs by about 20%

And with the sophisticated technology that is available, there's no excuse for not doing real-time accurate comparisons between carrier rates

In order to trim inbound transportation costs, there's no reason why manufacturers shouldn't ask vendors to separate shipping costs on their invoices The manufacturer can then establish which carriers charge what rates, and then insist that vendors use a particular carrier The manufacturer could also negotiate rates with the carrier, and pay the carrier directly

There's also the potential to mark up transportation costs and pass them on to customers

"For a manufacturer, reducing the cost of inbound freight lowers the manufacturing costs of a product even before the actual manufacturing process begins," says Comrie

Comrie suggests a number of tips and tricks to help cut shipping costs

When shipping products to customers, discard paper ‘routing guides', which became popular because it was easy to correlate weights with certain transportation options But in today's transportation complexity, the routing guide is increasingly inaccurate, particularly when looking at shipments that are in the grey area between LTL and parcel

"Over the years, transportation become a deliberately tangled ball of string where fast, accurate comparisons were almost impossible to discourage rate-shopping Even the time consuming practice of getting information direct from the carriers' sites was not accurate But, today's sophisticated technology enables relevant, comparative rate-shopping and takes into account everything that influences the shipping price: destination, weight, accessorials and more"

Other tips include:

  • Electronic submission of bills of lading, which avoids any discrepancies on the weight of the consignment
  • Consider arranging the collection of consignments at the port yourself, which can result in substantial savings on the port-to-door leg of the transportation costs
  • Pass along transportation costs to customers provided you can maintain or improve on your previous service levels