One of the primary goals of a company is to reduce overhead and optimize profit margins. The question is always this: how do we deliver on our promise in the most cost efficient way possible? If you work with a company that ships goods or products, then you’re quite aware of how drastically shipping can subtract from your profits.
Enter logistics companies whose entire goal is to optimize shipping and save you money. Yet, you still may be wary about the procedures and checks and balances that have been implemented. You’ve hired a freight broker that claims to have a thorough and extensive knowledge of the industry, but because you don’t speak the language, it’s difficult to put your entire faith in them, especially when you see dollars jumping ship every time a shipment departs.
In which case, if you work or own a small-mid sized business, you may be considering what you can do internally to ensure you’re being cost-efficient, diligent, and intelligent with your shipping choices. At the end of the day, you, like every other company, wants to maximize profits. If you fall under this category, then worry not, these small business shipping tips will point you in the right direction.
Find a Great Freight Broker
When it comes to choosing a freight broker, it’s the decision between an optimal shipping system and not. It’s paramount that you do the proper research, reach out to people in their network, and vet them with extreme meticulousness. Freight brokers act as a liaison between you and a freight carrier(s). They handle everything on the backend, from paperwork, contracts, and negotiations, to the wide array of legal work involved.
This is the reality: the freighting industry is a multilayered, interwoven network that relies on multiple entities to function efficiently. Generally speaking, the days of shipper to freight carrier relationships—without any middlemen or intermediaries involved—are over. It’s too difficult of an industry to navigate without a freight broker or a company akin to one, as a Sherpa needs to guide you through the logistical nightmare which can be shipping.
All the tips we’re going to give you below should be on a great freight broker’s radar, and they should also be able to implement them flawlessly. Hence how important it is that, if choosing a freight broker, the process is handled with care and diligence.
We’re going to assume that you’re not packing bracelets in your living room and shipping them via the post office. If you’re in the small to medium sized business category, then it’s important you choose the right type of freight option for your shipments. The aforementioned tip plays into this, as a great freight broker will be able to leverage different shipping options and choose the one that complements your company best.
Often, with small businesses that require a hefty amount of shipping, LTL is the optimal choice. LTL (less than truckload) is a type of shipping that utilizes equipment to store the contents of multiple different shippers, optimizing the route and base rate. It’s often cheaper than TL (full truckload) which is one of its selling points, but can have extensive transit times and a lot more unloading and stops (which means your cargo is passed through multiple sets of hands).
Proof Your Bill of Lading (BOL)
If you’re handling the BOL, then you know that carriers can fall victim to an overloaded bandwidth, in which they don’t audit every bill of lading. The bill of lading is both a receipt and a contract between the shipper and carrier. The legally binding contract provides all the details of a given shipment, which means it also plays an integral role in the rate of said items being shipped.
In which case, a great tip is to put someone responsible in charge of proofing each BOL issued. A mistake on the contract could mean a higher cost to you or a botched shipment. Research the proper BOL form and ensure that it’s completely accurate.
Pay attention to Packaging
The manner in which you package your shipments can directly influence the cost of their transit. This is particularly important when it comes to smaller to medium sized businesses. We’ll explain:
Being that LTL shipping often provides the most cost-efficient rates, it’s commonly utilized. But one of LTL’s negatives is the amount of hands a package must pass through before reaching its intended destination. This means that your shipment may be unloaded and loaded into multiple different trucks, dependent on how a carrier utilizes their equipment and designs their routes. If your packaging is weak or prone to damage, then LTL shipping will only increase the likelihood of it occurring.
If a carrier notices that your package is indeed improperly packaged, then fees can accrue if they’re forced to repackage it in transit.
Weight and NMFC Number
Be sure to provide detailed and accurate measurements when it comes to the density (weight) of your shipments. Using estimates to cut corners can result in fees piling up once a carrier realizes your shipment is heavier than you declared. Often, there are fine lines within contracts that allow carriers to spike their rates if this event is to occur.
Then, know your NMFC (national motor freight classification) number and what type of commodity you’re declaring. This classification can reduce or increase price and you wouldn’t want to, by mistake, give your shipment an incorrect classification that is actually more expensive. This classification should be noted on the bill of lading.
Make Use of Your Pallet Space
One of the ways in which pricing is determined for LTL shipping is minimums. By this, we mean to say minimum cubic capacity, which is a standard set by freighting companies in response to ‘light but big-bodied’ shipments that eat more than what’s fair within the truck. Usually, if a shipment is larger than 750 cubic feet and has a freight density of less than 6 pounds (this calculated per cubic foot) then within LTL shipping it’ll accrue a higher fee.
As mentioned, one of the facets that make LTL budget-friendly is the ability to use shared space. If there’s a low weight but voluminous shipment eating up the capacity, it defeats the purpose. Thus it’s an imperative that you maximize your pallet space. Work to simplify your shipping system and, like LTL, optimize the space you use in your pallets. If you can fit more of your products or goods into one without damaging them, then doing so could save you a lot of money.
If you’re shipping LTL into a series of many small shipments, then at times consolidating them into one larger shipment can cut shipping costs. This works especially well when the litter of orders are all in transit to the same location. This is where a great freight broker or 3PL (third-party logistics) company can step in to provide you with valuable analytics that will discern between many small shipments and consolidating.
Often considered net cost, it’s important to calculate this total and leverage it against your estimated profit margin. Typically, LTL shipping rates are determined via 7 factors; freight class, minimums, transit length, density, dimensional weight (sometimes clumped into the minimums category), and base rate. If you’re choosing a specific service or company, make sure you address every fee or accessory charge that might accrue. Companies can be caught off guard by a variety of different fees that can pile on top of the base rate, and they’ll become particularly frustrated when they realize that it could’ve been avoided internally
Consolidate the package itself
To protect your goods or product, think about consolidating your pallets into a single unit. It’s much easier for a freighter to handle one 10-pallet unit than to handle 10 individual pallets. The less handling, the further you decrease the chance of damage. Furthermore, some companies will offer reduced rates if the shipment comes consolidated into a single unit. It’s less work on their part and increased protection for your cargo.
Be Aware of Additional Equipment
At times, a company will accrue charges for equipment needed that doesn’t come up on the BOL. If your shipment requires additional or even niche equipment, then it’s important to identify if and what that is before sending out a shipment. An example here is this: the place your goods or products are being unloaded doesn’t have a forklift or even a loading dock. In which case, the freighters are going to have to use a liftgate. If unknown beforehand, when the charges of the liftgate airse on the invoice, then it’s going to be an additional charge (on top of the base rate or agreed-upon price).
Don’t Ship in Outside of Standard Hours
If you can help it, never schedule your deliveries during off-hours. Typically, LTL shipping companies work from 8am to 5pm—as is standard in most industries. These carriers, despite the mobility, follow the same structure. Meaning, if you decide to coordinate a shipment that doesn’t work within that time frame, additional fees will likely accrue. It’s paramount that you’re conscious of an LTL’s (or any carrier, for that matter) standard hours of operation. Companies fall victim to the incorrect belief that—since they’re a freighter—their hours are long and flexible. That’s not the case.
We know, you’re probably rolling your eyes at this tip. But, when it comes to shipping for a medium sized business, it’s important to consider the wide array of options and most importantly make the right choice from the get-go. While you may be eager to ship your commodity and set the train in motion, by waiting instead of jumping into a contract, there may be an option that saves you tons of money in the long run. Or an option that is simply more efficient.
By all means, freighting is an extremely competitive industry. When you have this many parts all contributing to one larger machine, competition is actually part of its lifeblood. Everyone is going to state opinions as fact, claim they have the best prices, and boost their brand. While we’re not saying that people within the industry aren’t good natured, we’re saying that you should always gather multiple quotes, listen to everyone’s opinion and leverage them against each other, and ultimately come to a decision you think makes the most sense for your company.
When it comes to the shipper and freight carrier relationship, once it’s established, it’s important pieces don’t fall through the cracks. A huge one here is tracking. A shipper, once they’ve come to trust their carrier, can sometimes neglect tracking their shipments internally. Unfortunately, it’s also vice versa. That’s why when shipping, someone needs to be responsible for tracking.
The freighting industry is not impervious to mistakes and—as we all know—shipments can get lost or damaged. You’re going to want to track what’s being shipped in order to hold someone accountable when such events occur. The idea of a company not keeping their own book may sound ridiculous, but it happens more often than people are willing to admit.
As a small-mid sized business, you’re constantly fighting to scale, increase those profit margins, and eventually expand. Being that shipping is such a massive cost in your operation, the company in which you assign the task needs to be chosen with careful deliberation. If you’ve already chosen a carrier—and have most likely settled on LTL shipments—then do everything you can internally to reduce your costs, optimize efficiency, and increase accountability.
Shipping shouldn’t be a burden, nor should it burn through your capital. It doesn’t need to be an excruciating facet of your company’s operation. It doesn’t need to be anything save for an affordable, efficient, and easily manageable cart on your railroad to success. That starts with research, which you’re doing right now. That starts with strengthening your MO internally.