1. Negotiate reduced service and/or loss/damage liability with carriers in return for lower rates.
2. Leverage volume over time (e.g., annual shipment volume) and negotiate a reduced rate based on all traffic and inventory volume in a specific traffic lane over a specific period of time, rather than paying "spot market" rates on individual shipments.
3. Develop long-term relationships with carriers. Make yourself a better customer so carriers will have more incentive to offer attractive rate/service packages to get & keep your traffic.
4. Verify the carrier has applied the correct classification to your traffic and is using the appropriate rating class to determine the rate applied to your shipments.
5. Verify that your shipping department is providing accurate shipment weights on the bills of lading that cover your shipments.
6. Check to see if "unitizing" the shipment (e.g., via palletization, shrink wrapping, or strapping/banding) would reduce the rating class and lower the applicable rate.
7. Check to see how close your standard shipment weight is to the minimum weight required to qualify for the lower rate applicable to the next larger weight group. In other words, familiarize yourself with the "weight breaks" in your carrier's rate structure and take advantage of them. If necessary, you could increase your shipment size slightly to reach the weight break and declare a larger weight than you're actually shipping to qualify for the next higher weight group with its correspondingly lower rate and reduce the rate applicable to your shipment.
8. Try to take advantage of the "tapering rate principle." Check to see whether your traffic flow patterns qualify for the use any "special services," such as stop-offs or transit privileges which would allow you to apply a lower through rate to the entire shipment rather than applying a combination of rates for shorter shipment distances. Realistically, transit privilege would probably not, that often, be applicable to LTL movements, but stop-off service may be a possibility. The pragmatic applicability of this last suggestion is marginal.
Are you currently using any of these tips? What else you can you do to reduce LTL freight costs?
About the Contributor:
Professor Bruce Ferrin is a professor at Western Michigan University. He has extensive knowledge and experience in the logistics & LTL (less-than-truckload) industry.
Books We Recommend
- 7 Best Supply Chain Books of All Time
- 7 Best Purchasing Books Ever Written
- 7 Best Operations Management Books CEOs Read
- 7 Best Inventory Control Books Ever Written
- 7 Best Lean Books Ever Written
About the Contributor:
Professor Bruce Ferrin is a professor at Western Michigan University. He has extensive knowledge and experience in the logistics & LTL (less-than-truckload) industry.
Books We Recommend
- 7 Best Supply Chain Books of All Time
- 7 Best Purchasing Books Ever Written
- 7 Best Operations Management Books CEOs Read
- 7 Best Inventory Control Books Ever Written
- 7 Best Lean Books Ever Written
Last review and update: July 5, 2022