As a shipper navigating a chaotic transportation and logistics environment, freight management has never been more vital. Considering the current state of international and local supply chains, effectively coordinating the movement of goods from suppliers to customers and sometimes back to the suppliers has become a necessity rather than an option. While the process seems straightforward, freight management is not as streamlined as stakeholders in the transportation and logistics process would like it to be.
Effective freight management can significantly reduce shipping costs, improve the order cycle and delivery time, and enhance customer service. More importantly, it can increase profitability and customer satisfaction. That said, shippers might have to contend with less-than-desirable issues when managing freight, such as rising fuel prices, inconsistent carrier performance, and inefficient processes. All of this creates complications — and potentially erodes profits.
The trick is to take a more strategic approach to freight management. This article will dive into that. But first, let’s look at the current freight market.
Rising operational costs, shrinking capacity, and higher customer expectations define the current freight market. For example, fluctuating fuel prices have made it incredibly challenging to predict transportation costs. Beyond that, shrinking freight capacity — as carriers continue to exit the market — also means higher rates and delays that could have ripple effects across the entire supply chain. Then there are the customers who demand faster, more transparent, and more efficient delivery processes — an expectation borne from witnessing e-commerce delivery efficiencies. There is also the sustainability challenge, which many shippers are still struggling with despite working with carriers running electric trucks and route optimization solutions.
Freight management is inherently unpredictable due to factors like weather disruptions, escalating trade conflicts, and fluctuating fuel prices. However, poor freight management can be even more detrimental, leading to excessive transportation costs, delivery delays, and damaged goods. Shippers face lost sales and unhappy customers when shipments arrive late or in poor condition.
Administrative inefficiencies, such as billing errors and poor carrier communication, further exacerbate the problem, wasting time and money.
Successful freight management must be strategic, but for that to happen, certain principles must be followed and adhered to. Ignoring them could set the entire shipping process back considerably, both financially and in terms of efficiency. These principles are:
Relevant data from tracking freight costs, delivery times, and carrier performance helps shippers spot inefficiencies. Analyzing this data allows shippers to make better decisions, translating to accurate forecasting and planning. This in turn leads to cost reductions and improved service levels.
Strong relationships with stakeholders such as carriers and third-party logistics providers (3PLs) improve the delivery process and service quality. However, for this to work, there must be adequate or open communication. This way, shippers can ensure more streamlined operations with complete transparency.
Automation has come to stay, and with it, shippers are better off. For example, automating tasks like load planning and invoicing reduces errors and speeds up operations. Digital tools also help shippers manage shipments more effectively, enhancing their ability to eliminate unnecessary manual work that slows down the entire process. A typical example of this is tracking.
Identifying risks such as supply chain disruptions or regulatory issues allows shippers and their stakeholders to prepare backup plans and take decisive actions in the face of potential issues that can negatively impact the supply chain. Compliance is also a key aspect of risk management. Global supply chains complying with international shipping regulations prevent costly fines and delays.
Freight management is great for running an efficient and effective shipping process. However, beyond that, shippers can use it for financial wins, such as enhancing profitability and reducing overheads. Shippers just need the right strategies, and this includes:
From warehousing to transportation, optimizing the logistics network allows shippers to improve the efficiency and effectiveness of the entire operation. For starters, streamlining the transportation process entails finding the fastest routes to get the goods from source to destination, which, in turn, reduces fuel costs and wear and tear on the vehicles.
While optimizing the logistics network, shippers should consider load consolidation and efficient warehouse operations to ensure they can do more with less, leading to cost savings and increased profitability.
Two key factors to ensuring successful carrier management include making the right choice and diversifying the carrier or logistics provider base. Making the right choice can save the shipper a lot of money. However, to do that, these shippers must select their carriers based on cost, performance, and service levels.
This way, they are in a better position to ensure the efficiency of the entire shipping operation while also improving financial efficiency. The other key factor is the diversification of carrier options, primarily because it enhances resilience by preventing disruptions when one logistics provider falls short, whether they are or not.
Technology has increasingly become a game changer in logistics and supply chain since the turn of the century. For shippers, they aid them in tracking shipments and managing carrier communication.
The effective use of technology reduces errors, especially expensive ones. Technology solutions like freight auditing tools are critical for identifying billing discrepancies. At the same time, solutions like real-time monitoring ensure transparency and visibility, enabling stakeholders to ensure the shipments stay on schedule.
Inventory management can be costly, especially since a single misstep can severely impact supply chain finances. To navigate that successfully, shippers must invest significantly in balancing their inventory levels. It will prevent overstocking and reduce storage costs. Demand forecasting is also essential and will help shippers plan and execute their shipment processes much more effectively. For shippers dealing in large volumes across several markets, cross-docking can be of help, as it speeds up distribution, which in turn cuts down on warehousing expenses.
Constantly auditing the freight process allows shippers to catch overcharges and incorrect invoices, helping mitigate financial losses. Automating payment processes saves administrative time. Negotiating payment terms with carriers can improve cash flow.
Route optimization lowers fuel consumption, reducing costs and emissions. Using alternative fuels or electric vehicles cuts down environmental impact. Partnering with eco-conscious carriers aligns freight operations with sustainability goals.
At this point, it is clear how strategic freight management can transform the end-to-end shipping process. The following step-by-step approach will help shippers to get it right.
Gather relevant data on current transportation costs, delivery times, and carrier performance to assess the state of freight operations. This will help identify problems and areas for improvement, giving the shippers an idea of what to do.
When the problem is identified, the next step is to set goals and define clear objectives, such as cost-reduction targets or improved delivery efficiency. This will guide the shippers in getting the most out of freight management.
Shippers must set a clear path to ensure they can meet their goals. Doing this may include any number of innovative solutions, including carrier selection, route optimization, and technology implementation.
Shippers can leverage tech solutions and digital tools to automate workflows and enhance visibility, enhancing their ability to improve the overall throughput of the entire process. Beyond that, shippers can also leverage them to track performance metrics and refine strategies as needed.
As supply chains worldwide remain in a state of uncertainty, robust freight management that ensures your business can save money and show financial strength can make all the difference. You just need to partner with the right party: Zengistics.
Our focus is delivering the highest level of customer service, providing data-driven solutions, practicing proactive communication, and maximizing efficiency for scalable growth and personalized solutions to optimize your supply chain nationwide.
With Zengistics, you have:
Zengistics is the smarter option for getting logistics done more efficiently. Connect with us today.
Operating on the world’s first collaborative logistics platform, Zengistics is a technology company that executes freight.