6 Truckload freight spend optimization best practices

Jason VanoverFreight Market Blog

Truck light trail time lapse

Optimizing truckload freight spend is essential in today’s freight market. There’s a broad range of options to reduce freight rates and increase carrier revenue. As the world of transportation continues to evolve, shippers and logistics service providers (LSPs) are effectively utilizing certain methods along with modern data platforms to meet the demands of today’s supply chains. Knowing the following key tactics and using the proper tools will help sustain long-term savings.

1. Track truckload freight accessorial costs

As reported by Inbound Logistics, “Carriers price accessorials, such as liftgate or non-commercial delivery, at a premium. Remove the charges by passing them on to the consignee or consider the use of a courier or cartage company for final delivery.” In the freight market, liftgates are commonly used at business locations without a dock, residential areas, and job sites, and where these differences exist, the risk of increased accessorials rises. More importantly, the type of carrier, whether asset-based or a lite carrier, may impact the risk of accessorials and overall pricing as well. It’s a complex process that adds to the need for more insight and accountability. Performing freight audits regularly will track accessorial costs such as these and show which types of extra activities may incur added charges.

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2. Choose the right carrier based on landed freight spend

There’s a lot at stake when it comes to choosing the right carrier based on landed truckload freight spend. Typically pricing is prioritized, but it should also be complemented with quality and delivery time. Sacrificing a low price for the latter could mean short-term savings but end up costing more in the long run. Along with this fundamental tip, knowing the most up to date carrier pricing in the freight market and using effective tracking technology will maximize savings. Plus, it helps carriers know which shipper-clients are the most lucrative, leading to potential shipper-of-choice status as well.

3. Review transportation pricing and contracts regularly

Awareness of price changes in the supply chain is pivotal when it comes to negotiating contracts. Using FreightWaves SONAR’s DHL Pricing Power Index (DHLPPI.USA) allows for the weekly analysis of pricing power between shippers and carriers based on the conditions of the current freight market. In a sense, the DHLPPI.USA is comparable to a marketwide lane score that considers the full picture. Since freight brokers, carriers and shippers are continuously working to maximize profitability, the value of this particular index is astonishing. If the score rises above 50, it indicates a power shift toward carriers. Meanwhile, a score of less than 50 emphasizes a shipper’s advantage in negotiations. Simultaneously, brokers may apply the index due to their unique blend of both shipper and carrier characteristics, depending on business model and demands. Regardless, its inclusion in an advanced freight forecasting platform shows who holds the power in negotiating spot market rates and contract rate rebids, also known as mini-bids. That’s a crucial advantage in optimizing spend for all involved parties.

4. Know when to initiate renewed RFP processes

When a carrier doesn’t hold to the agreed terms in the freight market, such as constant delays, frequent inaccurate invoicing, damages over time, then it’s a good time to consider initiating a new RFP process. This ultimately saves unnecessary truckload freight

5. Hold suppliers accountable for compliance

To reduce the unexpected stresses of the freight market, suppliers must be held accountable. Tracking and reviewing a carrier’s performance proves vital. This makes sure the carrier complies with regulations and mutually agreed upon terms. In addition, it saves both time and money, reducing avoidable truckload freight spend.

6. Leverage freight data analytics to simplify logistics management

Modern, more effective strategies in today’s freight market have overtaken the old ways of manual shipping data analysis. Leveraging by using analytic tools not only simplifies logistics management, but it also streamlines the full process. Understanding supply chain key performance indicators (KPIs) by interpreting truckload freight market data, such as performance and costs, allows companies to make more data-driven choices that bring in a stronger return on investment (ROI).

Optimize truckload logistics with the right freight data platform

The preceding advice will surely slim down any excess truckload freight costs and bring added savings to help shippers secure more capacity, empower carriers to avoid overstretched asset allocation, and more. Modern data-driven tools have exponentially simplified antiquated processes of the past in today’s freight market. Request a FreightWaves SONAR demo by clicking the button below.