5 Cost Saving Ideas for Small Businesses who Ship Freight

5 Cost Saving Ideas for Small Businesses who Ship Freight

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Home Page > Business > Small Business > 5 Cost Saving Ideas for Small Businesses who Ship Freight

5 Cost Saving Ideas for Small Businesses who Ship Freight

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Posted: Sep 29, 2009 |Comments: 0
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As a small business owner, every single dollar spent on freight cuts right into the profit margin. Here are some tips to help the understand freight shipping costs, which will help improve your bottom line.

1) Understand different trucking services and how they are priced

• Less-Than-Truckload (LTL) Service is when trucking companies combine smaller shipments from multiple companies on

the same truck and make multiple deliveries. These goods move through a network of terminals on route to their final destination. At each terminal, the shipment may be taken off one truck and transferred to another that is loaded with goods destined for the same region. LTL is used by companies without the volume to move a full truckload. A typical LTL shipment ranges from 100 lbs. to 20,000 lbs. Pricing can be two methods: By weight and class (type of freight) or by pallet.

• Full-Truckload (FTL) Service FTL – TL (Full Truck Load or Truck Load) is trucking service that is used for large shipments (usually over 10,000 pounds) that an entire trailer or container is filled to capacity with cargo belonging to one customer. Unlike less-than-truckload (LTL) freight, the advantage of FTL shipping is that freight travels directly to its destination and is not transferred from truck to truck nor is the freight is handled in route whereas an LTL shipment will typically be transported on several different trailers. Freight cost is generally based on per mile, instead of per-pound pricing.

2) Be aware of Reweighs and Reclassifications

One of the biggest and most costly mistakes small businesses and infrequent shippers make involves reweighs and reclassification. Many small business shippers do not have scales, so they just estimate the weight and naturally it ends up being inaccurate. What happens when the carrier arrives and discovers a discrepancy is they will charge the company a reweigh fee – which is basically a “fine”. Then not only does the carrier charge this reweigh fee, but also for the extra freight due to the shipment weighing more than what was quoted on the original bill of lading.

Another problem small businesses face is freight reclassifications. Class is based on a scale from 50 to 500, and is based primarily on the item’s value and density, with higher numerical ratings indicating a higher per-pound transportation cost. Even more complicated when you deal with freight of mixed classes – called FAK – Freight of All Kinds. If the small business shipper estimates the density and forgets to take into account the pallet or other packaging materials, it can result in a reclassification. Again, more costly fees will be incurred.

The weighing and inspection process has increased substantially as the number of freight shipments have declined in recent economic times, and carriers are making up for lost profits this way. Be sure to give the most accurate information possible at the time of obtaining a freight quote, otherwise it can end up costing hundreds or even thousands of dollars extra– all of which go right to your bottom line.

3) Use a freight broker for 20-30% savings

Aside from gaining advice on the least-cost shipping method, going through a freight broker can provide significant discounts. Due to their large volume of shipping, freight brokers pass on a 20-30% cost savings to the customer who is not a regular freight shipper. Carriers charge more to an individual or small business if they do not ship a large enough volume to offer incentive pricing. However by going through the freight broker, the carrier gives them the large volume discount and it is passed on to the customer. This is why the infrequent shipper receives better pricing from a freight broker than if they went directly to the carrier.

Also consider hiring a freight broker if you are confused about what type of freight services you need and where to find carriers. A freight broker is essentially a “One Stop Shop”. They advise on the different options for shipping freight and offer numerous ways to save money. Another time-consuming, but money-saving service a freight broker provides is matching up your freight shipment with a carrier, from their extensive network, who is closest to the freight source. Think about it – do you have time to call 100 carriers to find out who, during the day you need the freight shipped, will be the closest carrier?

Freight brokers are the

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