How to Reduce Freight Cost in 12 Steps


As a company, you obviously want to be profitable with your current operations. In many cases, managing your freight costs has a significant impact on whether the business makes a profit or a loss.

Just because you have always shipped your products the same way, and with the same carrier, doesn’t mean you have to keep going this way forever. After working with a freight audit company, you may discover new ways to reduce your freight costs, cut unnecessary expenses, and make profits more streamlined for your business.

If you are wondering if you could save some money by making different, better choices, these tips will show you how to reduce freight cost for your business:

1. Make sure you know what is going on in your supply chain

Do you think your supply chain is efficient as it is, or do you feel like it could use some improvements? Supply chain visibility will help you figure out how you could solve some problems, save some money, and be more efficient.

2. Work with a freight audit company

There are professionals who can help you on how to reduce freight cost. If you want to improve your operations as well as your bottom line, you should consider working with a freight audit company.

This freight audit company will inspect your procedures closely, and help you optimize your supply chain so you can make the most of it.

3. Design your packaging while thinking about freight

If you need to design new products and new packaging, do it while thinking about how you can optimize your freight efficiency. The smaller your packaging is, the more products you will be able to move in a single shipment. Your packaging also needs to protect your products from damage during transportation.

4. Consider the location of your distribution centres

Location plays a big role in how to reduce freight costs. If you chose your current distribution centre locations because they were the cheapest options available, maybe you should reconsider your decision. A distribution centre that costs you more, but will save you many kilometers in transportation, could be a worthy investment.

5. Determine the real cost of outsourcing goods or services

Many companies outsource some goods or services overseas because they think it costs less. However, outsourcing anything from overseas can end up costing you a fortune in transportation costs, duties, and brokerage.

6. Check if you could automate some tasks

Errors can cost you a lot of time and money, so you could reduce your freight cost by automating some of your processes. Automation can help increase your efficiency, and reduce the risk of potentially costly mistakes in your invoices and other paperwork.

7. Consider a different mode of transportation

When was the last time you asked yourself if your chosen mode of transportation was the best option for you? Maybe international air freight was cost-efficient a few years ago, but you could find that ocean freight could help you save some money. Combining different modes of transportation could also be a good option.

8. Develop a good relationship with your carrier

Some companies like to select a new carrier each year, thinking that this will allow them to reduce freight cost. However, developing a lasting relationship with a great carrier can actually allow you to enjoy better rates, as well as more customized service.

If you need to find a new carrier, look further than local carriers. Choosing a carrier based near a location where you often ship products could help you save some money. Each of your shipments will become a backhaul for your carrier, and they will certainly offer you better rates.

9. See if you could make bigger shipments

If you can convince some of your customers to place larger orders, you could reduce your freight cost. Instead of sending out small shipments more often, you could send out bigger ones less frequently.

If your customers don’t want to place larger orders, you could still save money by consolidating your shipments whenever it makes sense. Hold shipments that are not urgent, and combine them with others to make the most of your carrier’s truck or container space.

10. Consolidate your freight with the freight of other companies

If you can’t hold and consolidate your shipments, maybe you could reduce your freight cost by consolidating them with the freight of other companies that are located near your distribution centres. This is especially convenient if you share some customers.

11. Choose the best days to ship your products

Learn which days of the week are busy days for your carrier, and try to arrange for your products to be shipped during low-volume days. If your carrier is looking for freight, you might be able to get better rates than if you wanted their services during a peak day.

Similarly, you can help your carrier make the most of their time by offering late pick-up times. If your carrier can come pick up your shipment at the end of the day, it might become a backhaul for them, and you might benefit from better rates.

12. Acquire the proper insurance for your shipments

Finally, purchasing the right type of insurance will help ensure that you won’t lose money in case a shipment is lost or damaged while in transit.