Why outsourcing your Freight Review is the right choice
In this article we explore the many reasons around why outsourcing your Rreight Review (or Freight Tender, RFP). A request for a freight proposal (RFP) these days can be quite complex and involved. The trend toward higher number of consignments being shipped to a wider range of receivers as a result of the B2C growth, makes profiling your freight more difficult, but also more important than ever.
Shippers need to capture their freight data in databases that can be used for comprehensive analysis that capture parameters such as:
- number of consignments, per region, per carrier & service
- avererage dead / cubic weight ratios
- average consignment price
- average number of items, and descriptors
- services used
- laneways used
- DIFOT data
- cheapest carrier reports
These data sets are needed in order to get a comprehensive understanding of your current freight profile and establish how to optimise your carrier network.
The focus of a freight review is typically a reduction in costs and maintaining or improving upon service. However, there is also a growing demand to capture independent freight data for visibility on freight KPIs, tracking consignments, and a goal to reduce shipping costs during the daily dispatching process. As a result, many shippers are looking to technology-based improvements as well.
Let’s look at the key areas of concern, starting with rates. Should Logistics Managers be focussed on rates, in their Freight Tenders / Reviews?
The answer seems obvious, “Of course, knowing the rates are competitive is step one in a freight review!”
Our response to this is: “Yes, and no. It’s not just about rates”.
Reducing rates can only get you so far, and most sophisticated shippers, (like you, no doubt), have gone through this process on previous occasions and know their rates to be competitive for their freight volume, and type. What is more important is the delicate interaction of numerous data sets incorporating:
- rates / rate typres
- weight breaks
- laneways, shipping locations
- item descriptions
- carriers capabilities, etc., etc.,
and how you can compare against all these parameters to get further freight cost reductions, beyond a simple lower cents per kilo rate, minimum and basic charge.
Time and time again, we’ve had customers tell us we can’t reduce their rates any further, they’ve had dozens of carrier account managers try and fail. But when we come back with the results of our freight review, they are pleasantly surprised at the savings or productivity benefits uncovered. Rates are important, but it’s how you use them that is more important.
Of course, lowered freight costs mean nothing if you end up upsetting your customers through lost or damaged freight and therefore rates can never be considered in isolation. But what is the cause of the bad service? We can consult with you to find areas for improvement within your warehouse operations, technology systems, and via a wider range of carriers that best suit your freight profile requirements.
Your freight profile might be fairly static, but often a range of factors are influencing your profile so that it may be quite dynamic. You need to capture those dynamics in order to ensure you are making the absolute best choice on carrier selection for every single consignment.
No one can guarantee you will never get any lost or delayed freight again, but having the right system smarts will reduce those issues. If service is improved, freight costs are further reduced, and you have happier customers and market growth.
In-house Freight Review
Perhaps the carrier promises a detailed report on pricing data, not just rates. Let’s look at what that looks like:
- Have a meeting with a Carrier Account Manager; you explain your business, they tell you about their strengths
- Have this meeting 2-6 more times with each carrier you bring in for the freight review
- Maybe you have created an RFI / RFP document(s)
- Await response from Carriers on RFI – try to map disparate capabilities to your requirements
- Select Carriers for the Freight Tender; more details conversations / consultative meetings
- x 2-6 meetings / conversations
- First round of shortlisted carriers provide you with a Proposal
- Potentially with analysis on freight data you provided
- Try to map results – is it 12% cheaper than incumbents, for which service, which laneways?
- x 2-4 each Carrier
- Get follow up phone calls from 2-4 Carriers – have you made a decision yet?
- More Calls, queries on implementation; trials, contract negotiationes
- Phone calls – have you made a choice yet – x 2-4
This is a fairly basic outline of what’s involved, excluding things such as site visits, your facilities and sometimes theirs, going through service capability documentations, etc., etc.
All this while still doing your day job!
Outsourcing your Freight Review to Freight Controller
- We may provide a complimentary, preliminary Freight Tender / Review for qualified shippers with no fees, no lock in contracts or obligations to move forward
- Sign our Authority Letter for us to engage with various carriers on your behalf
- Provide histroric freight data for analysis through our bespoke, back-office systems
- Have a meeting on the results of the Freight Tender / Review including:
- In-depth analysiis on FC sourced Carriers vs. Incubments, including line-by-line & bottomline pricing
- Analysis includes best matched carriers for your freight profile and other parameters of your freight review e.g., technology capabilities, often including Carriers you may not know about
- Accurate, granular freight cost analysis data that demonstrates dollar and percentage cost improvements
- Outline of TMS cpabilities and relates services such as our Carrier Check: Invoice Reconciliation & BI Reports for a turnkey solution
- Plan for implementation & account management
That’s it! 4 steps. All you have to do, is sign a letter, give us some data, and we do the rest.
- No pouring over data with no ability to reconcile the difference between the carriers and find the most tailored solution for your requirements.
- No interrupting phone calls from carriers with (the same) questions on your requirements for answering the RFP.
- And no phone calls, or emails clogging up your Inbox, asking for your deicions while you are just trying to get through your regular, busy working day.
Typically, after completing a formal freight review, and you decide to move forward with our recommendations, we can guarantee that our fees are substantially lower than the savings uncovered over time. Furthermore, you save your internal resources for core work tasks. Plus you are getting the best software systems, analytic reports, and expertise available in the market from a company that has saved shippers across a range of industries, across all 4 modes of shipping hundreds of thousands of dollars. Why would you try to do this in-house?
A recent prospect came to us after completing a review with the typical carriers they always go to, once every couple of years, for reducing their freight costs. The carriers readily complied with this $2.5m per annum distributor in the mining engineering industry. But, when it came time to confirm that the new carrier was 10% cheaper than the incumbent, they did not have the systems in place to measure this. Few do.
That’s when we got involved and showed them that in one particular service, they would indeed save 10%, but in other areas, it was more expensive than the incumbents.
Had they taken the carrier’s word for it, their costs would have risen, not dropped!
After our in-depth analysis on this, they agreed to run the freight review again, with our assistance. And we saved them 10% across all of the National freight, exposed them to new carrier options, implemented a centralised TMS system for their 4 national sites, and put in a Carrier Invoice Reconciliation & BI Reporting service for further freight cost reductions and to ensure a continuous improvement methodology.
The Consultancy Difference
When outsourcing your freight review project with us, this is what we offer:
- A carrier agnostic philosophy; to ensure the widest selection of carriers, for the best matched solution
- A team of experts across all industries and all freight modes; with a wide network of carriers across Australia
- System smarts that simplify complex data sets for accurate, granular analysis; providing confidence in outcomes; our system goes well beyond the vlookup, ‘cut & paste’ of Excel
- A transparent, honest process with no hidden margins or fees
- Our expert resources do all the leg work, with no upfront costs; a free, no obligation process with guaranteed savings
- Often includes a TMS; Invoice Reconciliation; and BI Reporting as standard in a turnkey solution
You focus on what you do best, and we’ll design and deliver an optimised solution to drive your success.
When you combine the above strengths, you get more than the sum results as we exponentially propel your business forward. Freight costs are a big part of a company’s expenses. Knowing you have the right solution for your business through your outsourced freight management team of experts is a paradigm shift, taking your logistics department from a cost centre to a profit centre.
If you’re thinking about outsourcing your freight review, and we hope this article has convinced you of the benefits in time, software, resources, expertise, money, and optimised outcomes then please contact us for a chat and we will be happy to show you why outsourcing your freight review with us is the best choice for you and your business.