7 Ways to Lower Your Logistics Costs

1. Eliminate supply-chain bottlenecks. “Inbound congestion at warehouses, distribution and fulfillment centers and manufacturing facilities will wreak havoc” on logistics. “Analyze your complete supply chain with a focus on inbound carrier scheduling, correct and complete documentation and full regulatory compliance.”

“Many companies routinely pay extra to insure their shipments with the carrier’s insurance programs even though their own corporate insurance policies cover loss and damage claims.”

2. Price out your logistics choices. “Are you shipping by air when you could ship by ocean? Moving goods by truck when they could get there by rail intermodal? Look into your transportation modes and request at least three quotes from competing carriers representing different modes when obtaining spot quotes.”

3. Create shipping alliances. “If you typically ship LCL,” that is Less than Container Load, “out of or to a particular country, you might be able to identify an importer or exporter who also ships LCL from and to those same ports. A partnership between you and them can secure more cost-effective terms” by combining your individual shipments into FCL, or Full Container Load, shipments. Similarly, you can partner with other companies to create trucking alliances that qualify for full truckload shipment discounts.

4. Consolidate service providers. Analyze your in- and outbound shipping patterns and identify where you’re paying multiple transportation and logistics providers to perform the same services in the same geographic areas. “Consolidate as many of these providers as you can to gain significant economies for both enhanced service as well as reduced costs.”

5. Cut back on redundant insurance coverage. “Many companies routinely pay extra to insure their shipments with the carrier’s insurance programs even though their own corporate insurance policies cover loss and damage claims.”

6. Audit your freight bills regularly and carefully. “Freight bills routinely contain errors in up to 5% or 6% of invoices issued, which almost always favor the carrier. A thorough audit can uncover substantial hidden costs, as well as potentially lost profits.”

7. Continually upgrade your software systems. “If you’re using software that is over 5 years old, you may be missing out on improvements and expanded functionalities.” Install the upgrades. “Take the tutorials and make the most of the new bells and whistles.”

Pass these suggestions along to your transportation manager and look to lower logistics costs significantly before end of year.

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Warren Strugatch
Warren Strugatch is a writer, speaker and consultant based in Stony Brook, NY. He covers economic development, global business, management and marketing.

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