Let's Talk Transportation Optimization: Finding the Most Cost-Effective Solutions For Your Freight

Charles Miller

14 March 2018

These 3 approaches to transportation optimization can help you determine your ideal (read: most budget-friendly) shipping strategy.

It’s a fact: Many shippers are overspending. If you’re reading this, you may be worried that you’re one of them.

You may have heard the term “transportation optimization” thrown around as a solution. Transportation optimization involves the careful analysis of modes, carriers, distribution strategies, and routes to ensure the most cost-effective shipment possible. It sounds complicated — and it can be — but with the right knowledge and tools, it doesn’t have to be.

Like so many things in life, there are many ways to solve a problem. Let’s break down three different approaches to transportation optimization, so you can see how they’d work for you.

Strategy #1: Go back to the basics

Devil, details… You know the saying. Here are some of the most basic steps you can take today to optimize your transportation strategy and reduce your freight spend.

Packaging & density

First, let’s look at how you package your freight. Are there less costly packaging materials you could use? Or, less bulky materials? Is there room for your freight to shift in transit? The denser your freight, the lower your rates, the less your chance of damages, and the better your ability to find capacity.

Pricing & accessorial charges

By reviewing your carrier invoices, you can identify any unnecessary accessorial charges or inaccuracies, then work to eliminate them.

While accessorials like liftgate and inside delivery are helpful, they will bulk up your bills. If you can find a way to get rid of the accessorials you don’t really need, that’s money back in your pocket.

Carriers process thousands of invoices a day. So sometimes, mistakes slip through the cracks. Audit each invoice to avoid overpaying.

On the same note, work to prevent fees associated with shipper errors like incorrect freight classification (NMFC) or missed appointment times. For example, if your vendors are consistently unprepared for pickup, it will detain your carriers, and you will have to pay for their wasted time. Managing your vendors’ transportation to align with your needs isn’t easy, so getting assistance with your inbound freight management could earn a big return on investment.

Data-based decisions

Finally, make data-based decisions. While a transportation management system (TMS) streamlines transportation data analysis, you don’t need one to look at the recent feedback from your carriers. Taking some time to review transportation data could reveal areas where you can cut costs.

For example, say one of your regular shipping lanes has been plagued with delays in recent months due to construction. You should follow up with your carriers to see how you can make alternative plans to avoid that construction and reduce those costs in the short term.

Strategy #2: Get creative

Aggregation, pooling, continuous moves — these are just a few ways to get creative with your shipping strategy to find capacity and save time and money.

  1. Aggregation – One shipper combines multiple orders headed to the same destination on the same day into the same trailer, therefore reducing transportation costs, minimizing risk of damage, and making capacity less of an issue.
  2. Pooling – Freight is consolidated or deconsolidated at a pool point, also known as a cross-dock, so that it spends the majority of its transit time being shipped via the most cost-efficient mode. Pooling can be leveraged at any shipping lane’s origin (called pool consolidation) or destination (called pool distribution) — or both! Pooling can keep your transportation costs low, expand your capacity options, and mitigate the risk of freight damages.
  3. Continuous move solutions – Multiple shipments are added to one carrier route to close the gap between pick-up and drop-off points, therefore maximizing carrier efficiency and decreasing empty miles (called deadhead). Making your freight attractive to carriers and reducing their expense is one of the best ways improve carrier relationships, find capacity, and cut transportation costs.

Learn more about creative strategies to optimize your transportation.

Transportation optimization software allows shippers to simulate different scenarios to test their outcomes before investing and executing.

Strategy #3: Leverage logistics technology

The right logistics technology can offer significant freight cost-savings. Abstract concepts like proactive decision-making and predictive analytics become very accessible with the right software.

Logistics technology has developed significantly in recent years.

Transportation optimization software allows shippers to simulate different scenarios to test their outcomes before investing and executing. By inputting different parameters like ship dates, times, modes, and lanes, this software will predict the best decisions for your freight, whether they’re based on cost efficiency, timeliness, or both. You decide what matters to you and get the outcomes you want.

A TMS organizes all of your transportation data in one place, allowing you to make the most informed decisions for your freight. When you leverage a TMS, you will access end-to-end visibility of your supply chain and gain efficiencies that will save you time and reduce your transportation spend.

While TMS solutions are pricey, they are worth it. Be sure to purchase one that offers training and support to maximize your return on investment.

We’ll talk more about technology in transportation optimization in upcoming blog posts.

The bottom line: Transportation optimization saves you money

Some of these strategies may jump out at you as a good fit for your shipping needs. But don’t be reluctant to explore new ideas in transportation optimization with experienced shipping partners.

For example, purchasing software to help manage and optimize transportation may seem like a quick fix. But the reality is that logistics technology isn’t just plug-and-play. Its implementation is complicated and costly.

After implementation, it will require ongoing training and management. Bringing on an experienced transportation partner will shorten the learning curve, reduce your costs, and help maximize what logistics technology has to offer your organization.

Transportation optimization solutions are constantly evolving. Stay tuned to our blog to be sure you aren’t missing an opportunity to make logistics work better for your business.

Charles Miller

Charles is the General Manager at Evans Transportation's headquarters.

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