5 Ideas to Cut Freight Costs and Boost Your Bottom Line

Jason Konkel

Manager, Supply Chain Operations

GENCO Marketplace

It’s hard to be an expert at everything. But as a small business owner, it could sure help. Take shipping. Every extra dollar you pay for freight eats into your profit margin. Here are some tips to help you reign in freight costs and boost your bottom line.

1) Understand different trucking services and how they are priced

There are lots of ways to move freight, but liquidation loads are shipped primarily by two types of ground freight.

• Less-Than-Truckload (LTL) Carriers are trucking companies that 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 full truckloads.
• Truckload (TL) Carriers are trucking companies that dedicate trailers to a single shipper’s cargo and move goods directly from origin to destination. It’s a less expensive mode of transportation for large-volume shipments.

2) Be flexible on delivery dates to consolidate multiple shipments

If you purchase multiple pallets over time from a single location, you can save if you are willing to delay receipt of product. By shipping multiple orders at one time, you can move freight using a less expensive multi-pallet LTL shipment or a truckload shipment.

Compare these costs for different shipping methods to ship multiple orders from Canton, OH to Nashville, TN.

With some advanced planning, you can save hundreds of dollars – all of which drop straight to your bottom line.

3) Use the transportation services of a liquidator for volume discounts

Some merchandise liquidators offer transportation management as part of their service. Aside from gaining advice on the least-cost shipping method, using such a service can help you gain volume discounts. For instance, GENCO Marketplace is part of a larger logistics organization that arranges an average of 6,500 shipments a week. GENCO receives volume discounts from carriers and passes these on to customers.

Another volume-related pricing advantage is pallet pricing. Buyers like you typically receive standard carrier pricing, which is based on the weight of the shipment and the type of goods being shipped. But liquidators that move large volumes can negotiate with carriers to receive pallet pricing, which establishes a set price per pallet — regardless of weight. Check out the example below to see how pallet-based pricing can cut shipping costs significantly. This example is for a shipment of three pallets going from Columbus, OH to Houston, TX.

4) Avoid extra charges by arranging delivery to a business address

Carriers charge extra for delivering to residential locations. If the receiving location does not have a loading dock (one that allows forklifts to drive into the trailer), carriers will require more expensive trucks with “lift gates” to bring pallets down from trailer to ground level. Residential deliveries also add to carrier costs because, compared to deliveries into an industrial area, it takes longer to unload a truck and get it back on the road. Carriers pass on these costs to you in the form of “accessorial charges” that could be $150 for a single pallet shipment.

Chances are you don’t work at a commercial address. But can you strike a deal with a friend or local business to receive goods at their location? Or, perhaps it makes sense to have purchased loads delivered directly to your customer, bypassing your location. Get creative. It can pay big dividends.

5) Source product from a nearby location.

More important than the price of a purchased load is your total landed cost for the purchase, including transportation. One liquidator may offer a similarly valued pallet at $150 less than a competitor. But if that source is in North Carolina and you are in California, your landed cost will skyrocket! The best “deals” aren’t always the smartest buys.

Another advantage of a nearby source is that it gives buyers with access to a pick-up truck the ability to pick up the load – possibly the cheapest shipping method of all. Take the time to identify a good local source. This includes buying from large, multi-warehouse liquidators that are more likely to have loads close to you and your customers.

The success of your business depends largely on sourcing quality products at a great price. But paying attention to small details, like shipping efficiency, can have a huge positive impact on your profitability.

About the author. Jason Konkel is manager of supply chain operations at GENCO, parent company of GENCO Marketplace — www.gencomarketplace.com.  He and his team help GENCO Marketplace customers get the most cost-effective freight solution for purchased loads.