Keeping Expedited Costs Down
While expedited shipping can be expensive, it doesn't have to break the bank. With a little thought and planning, shippers can control the factors driving expedited shipping costs by following these tips from Dave Quinn, president of Belleville, Mich.-based Active On-Demand.
1. Choose the right mode. Utilizing the wrong mode costs shippers the most when they make premium transportation decisions. Choosing air charter over exclusive-use trucks, or same-day air rather than next-day air, quickly increases unnecessary costs.
2. Eliminate padding.Everyone along the logistics chain—from the person placing the order to the production team to the traffic manager—sometimes adds "safety" time to ensure an on-time delivery. Pretty soon, a shipment that is required by 9 a.m. becomes required by 5 a.m. and needs a more expensive transportation mode. Stick to the original delivery time.
3. Ask the right questions and provide accurate information. Inaccurate information relating to shipment weight, dimensions, and timing can cost thousands of dollars. For example, a shipper might request a pickup of a six-piece shipment weighing 2,000 pounds, but when the van arrives the pieces are too long or too heavy to fit on a van and a truck needs to be dispatched. Logistics specialists encounter these scenarios every day.
4. Utilize a broad carrier base. Shippers who lock themselves into dealing with one or two service providers ultimately pay more. When it comes to achieving hard-cost savings, increasing visibility, reducing labor, and maximizing service, Web-based bid and quote portals can be more effective than "partnerships." Transportation costs change daily and a single-source provider always charges a tariff-based rate.
5. Search for transportation capacity and options before you need them. Working in advance allows shippers to review competitive carrier solutions and make decisions that ultimately reduce transportation costs. Making hasty decisions when up against the clock can be expensive. Avoid dialing for diesel at the 11th hour.
6. Create a competitive bidding environment. Whether you send RFQs or use a Web-based bid-and-quote model, creating competition among carriers is a good policy. This practice drives down costs by ensuring the best possible rate on every shipment.
7. Buy quality expedited services. Failure to deliver on time is costly and can cause production stoppages, failed customer commitments, and lost business. Using a sub-standard or inconsistent carrier costs more in the long run.
8. Streamline the audit process, quote/invoice integrity, and financial controls. Pay only for the service you received and the amount you were quoted. Audit your bills to verify that the proper party pays for shipping.
9. Max out dedicated equipment. Dedicated truck costs are based on per-mile charges for each truck type. If you need to ship only one skid, but have enough available space to fill the truck, fill it. The cost per unit will be substantially lower.
10. Consider flexible and creative sourcing solutions. Waiting a few hours for delivery can often save a considerable amount of money. Be flexible regarding delivery times.