Carrier Cost Is One of the Quickest Ways to Reduce Transportation Cost

Transportation costs continue to rise making it difficult for shippers to effectively manage their transportation budgets. Did you know that the top 3 transportation metrics are related to carrier cost? They are: freight cost per unit shipped, outbound freight cost as a percentage of net sales, and inbound freight cost as a percentage of purchases. These carrier costs play a crucial role in total transportation spend. One of the quickest ways to reduce transportation spend is to select the most cost-efficient carriers.

Traditionally, shippers have relied heavily on contracted rates to move freight. But in today’s market, contracted rates are no longer a guarantee that the goods will move. In fact, contracted acceptance rates have fallen to all-time lows, forcing many shippers into the costly spot market. And you know what happens once a load hits the spot market, it becomes a feeding frenzy for the brokers. So how can shippers reduce transportation spend, even during extreme market conditions? First, they need to change their mentality from working with a select few carriers to working with a large network of carriers. Second, they need to leverage technology to become agile and cut out waste.

Working with Multiple Carriers

Working with multiple carriers mitigates risk, especially when capacity is tight and acceptance rates from your primary/ preferred networks decline. Plus, working with multiple carriers can drive down costs by fostering a healthy, competitive bidding atmosphere. Imagine the savings impact if there were 5 or 6 world-class carriers bidding on each of your loads in real-time. Not only would the cost drop, reducing transportation spend, but the shipper would gain inside knowledge on true market cost based on current supply and demand.

Disruptive Technology Drives out Waste Eliminating the Broker

Disruptive software, Optimal Transportation Spend (OTS), generates immediate capacity and reduces transportation spend by allowing a large network of carriers to bid directly on the shipper’s freight. “With OTS there is no need to work through a middleman. The broker has been eliminated from the process driving out unnecessary waste”, said Mike Edwards, Sleek Technologies VP of Sales. In most cases, the same great carriers that have hauled through a broker are now hauling for the same shipper direct– but without the hidden broker margin reducing transportation spend for the shipper, and generating more revenue for the carrier at the same time. Plus, the shipper obtains 100% pricing transparency and can decide to build a direct relationship with the carrier. OTS yields a win, win for both the shipper and the carrier.

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