Part 16 of 22 Ways To Reduce LTL Costs That Don’t Involve A Price Reduction – Select Carriers Based Upon Total Net Costs

  • Part 16 of 22 Ways To Reduce LTL Costs That Don’t Involve A Price Reduction – Select Carriers Based Upon Total Net Costs

    16.  Select Carriers Based Upon Total Net Costs

    It is too easy for LTL shippers to think of the carrier invoice as the total cost of transportation. If the LTL carrier charged me $300 for shipping that pallet from Point A to Point B, that is the total cost, right? Wrong.

    Many other factors go into your total net transportation costs than simply what the carrier charged you. As the say, this is just one piece of the puzzle.  And as they say, you get what you pay for. Oftentimes you will find that a more expensive carrier provides the lowest total net cost, the best overall value.

    TMS systems have perpetuated this issue.  Most rank carriers by price, with the lowest carrier at the top. But not all carriers are the same. The better TMS systems out there allow users to rank carriers based upon other important factors so that you can make a more-educated routing decision.

    Loss and damage is a huge consideration here. How often are your LTL shipments lost or damaged? What is your replacement cost? How do damages impact your customers and drain your internal resources? The impact on customer perception, retention, and referrals is huge here.

    Invoice discrepancies are another. Quotes that do not match the invoice are a huge profit drain for shippers, particularly when they don’t even know these exist. Take a look at the carriers you are using, and how often they are sending you secondary invoices, or invoices that do not match the quote. Are they working with you to address these issues? Are you passing on all of these invoiced charges to your customers?

    Pickup and delivery failures happen in LTL, but the best carriers mitigate these exceptions. When you select the cheapest carrier in your TMS, are you more likely to have a pickup failure? Or do you notice transit time compliance is sketchy and deliveries may be delayed?  This is another TMS weakness, as carriers may be compelled to show the fastest possible yet inconsistent transit time. Consistency in hitting advertised transits is often much more important than being able to make a faster time on an inconsistent basis.

    How well do your carriers respond to customer service inquiries? Do you get routed to an overseas call center, or get stuck in phone tree hell waiting to speak to a human? Or can you actually reach someone at the local terminal when an issue arises. This can be an incredibly important differentiator.

    If you ship to retailers, particularly big-box retailers, you probably have seen fines for things like ODIF and MABD. These fines can be incredibly costly, and can be mitigated by paying a little more up front for more-reliable service.

    These are just a few of the considerations to make. It all comes down to looking at your carriers as a partner, and not a commodity. Finding the best value via lowest total net cost. After all, you do get what you pay for.

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