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REDUCE YOUR SHIPPING COSTS WITH A 3PL

August 17, 201703PL

REDUCE-YOUR-SHIPPING-COSTS-WITH-A-3PL.jpg

REDUCE YOUR SHIPPING COSTS WITH A 3PL

August 17, 2017 03PL

Achieving the next level of success in your business almost certainly means wider distribution. By now you know that your shipping practices, like your marketing savvy, have very tangible effects on your overall success.

As your business grows, you’ll be on the lookout for more robust services and carriers. But the most readily available shipping options are probably not the most cost-effective. We’ll give you an edge as you expand your reach, by helping you to Condense, Organize, and Negotiate in every phase of your shipping.

Read on for the details.

Condense

Just like every other business, shipping carriers have operational costs – costs which are offset by efficiency. You wouldn’t use a semi truck to deliver a postcard, after all. But a full trailer loaded by a Tetris master? That’s worth the trip. They make the most money when they are pushing the weight limit of their trailers.

More than anything else, density is the key to high-volume shipping.

The same is true for you, the shipper. Before you look outward for good shipping rates, look inward at your own processes. We’ll examine your existing operations.

  • Are your shipments as efficient as they can be? Are they the ideal weight, ideal dimensions, pallet-optimized, and stackable? Is there needless negative space in the box, on the pallet, or on the trailer? It’s worth your time to find the maximum product you can safely fit onto a pallet, which includes a) the product in its packaging, b) the units in cases, c) the cases on the pallet. An optimized arrangement can often permit as much as 15% more volume to be transported on one pallet.

For smaller operations, high-volume shipping might not be feasible on your own. But partnering with a 3PL can open up some more advanced possibilities:

  • Consolidate orders. We’ll teach you to build economical freight schedules. For example, we’ll determine how you might condense your shipments so they go out at optimal intervals, as opposed to your current frequency. Larger but fewer shipments are generally more cost effective than many small ones. Our cross docking facilities can open up a lot of opportunity you might not have on your own premises:
  • Utilize cross docks. Shipping full truckloads to a cross dock and then de-consolidating is often more cost effective. This is sometimes referred to as “zone shipping,” and enables you to outsource your warehousing, pick and pack, and last-mile shipping.
Organize

The second step flows naturally from the first; condense, then organize your shipments. To put it another way, the first step is about your physical product, and the second is about proper procedures.

The “1-10-100 Rule” is borrowed from another discipline, but it is widely applicable. In short, the rule states that it costs $1 to prevent a problem, $10 to correct a problem, and $100 if the problem is never corrected. Here’s how to spend that dollar.

Once your shipment is optimized and on the pallet, you’re ready to hand it off to the next responsible party. Right?

Almost. Your carrier and/or your recipient may have stipulations as to how they want the shipment to be secured for transport. But before you make yourself dizzy cocooning your pallets in shrink wrap, there’s an order of operations titled Loss Prevention:

  • Double-check your quantities against the Purchase Order for accuracy. Any deviation will necessitate a separate order or adjustment, which means needless additional expenses.
  • Ensure that the product will not damage itself (stacked too heavy, crushing lower tiers.) Refer back to Step 1: Condensing.
  • Ensure that the product will be safe from transit damage (not hanging over the pallet, or unbalanced arrangement.)
  • Note any special shipping instructions from the recipient or the carrier.

Doing any of these poorly can have an immediate impact on your expenses, or at worst, a long-term impact on your reputation. These are steps that we methodically execute as an integral part of our cross docking process.

Negotiate

Another widely applicable rule applies here: Negotiate from a position of strength. Once we’ve ironed out your process for the two steps above, we’re ready to approach your carriers for some price negotiation.

When negotiating initial terms, we consider both sides of the table. By this phase, we’ve optimized your processes. But what do your carriers want? What would make them happy to give you a discount?

Carriers want two things; efficiency and scalability.

Since we have many customers, we can consolidate shipments from a much larger pool of shipment volumes. This results in highly optimized shipments, creating optimal density for every truckload (and as we discussed, density is the key to shipping efficiency). With this reputation, we have strong negotiating power.

We have also secured pre-negotiated rates with many international carriers, which are not commonly available to the general public.

Whether you are able to do high-volume shipping or not, you have a lot to gain from partnering with a 3PL like Total Quality Systems.

Behind the scenes at TQS

Though we do have a dedicated fleet, most of us at TQS aren’t driving trucks or handling forklifts. We’re doing logistical legwork which makes those functions worth doing:

Comparing prices

  • We have long-standing relationships with all the big name carriers you’re familiar with, and with hundreds of carriers you might not know existed. Our systems are able to keep tabs on each one in real time, and make sure your shipments are received and processed by the best possible carrier, every time.

Backhauling

  • Carriers want to get their trucks back to their HQ/hub as quickly as possible, to ensure they’re available for their next regular customer. But those trucks don’t want to return home empty; they have an opportunity to take another load on the return trip (backhaul). But since the booking is less flexible (with a pre-determined destination), they’ll offer discounts to make sure they make the most of the return trip. These discounts can be substantial, often between 10-30% of their normal shipping rates. We are able to connect you with backhaul routes, which can save you even more than your normal shipping costs.

Shipping marketplaces

  • We also partner with Load Brokerage boards across the country. Similar to online auctions, these are where carriers can bid on specific freight. When carriers compete for each load, it can drive down costs for the shipper. Each trailer has a different route, and different amount of room left to fill. In Load Brokerage boards, carriers can find loads of the size they need, en route to their destination, to fill up the nooks of their trailer. If you have LTL volume, we can get your shipments up for auction.
Follow-up reading

Continuing with the theme of ironing out the kinks, check out this article on the most common shipping mistakes (which your 3PL won’t make).


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