Many businesses have diverse shipping needs and it’s easy to assume that to meet the varied needs of your company, you need to use multiple freight providers. While there may be some advantages to using multiple transport companies in certain circumstances, when it comes to cost savings, you’re usually better off consolidating and reducing the number of carriers you use.
Why use multiple freight providers?
Many companies prefer to use multiple freight providers because they have varied needs and sometimes don’t feel that their current provider can meet them all adequately. They may choose to use multiple providers who all have specific expertise at handling a particular type of delivery and the timeframe or location needed. Other reasons to use more than one transportation company include the belief that using multiple providers can spread the risk and provide a backup system if one transport company is experiencing difficulties or can’t meet the required standards.
While these are all solid arguments, there are also a number of reasons why consolidating into a single carrier can save on your shipping costs. It’s called a ‘Volume Discount Level’!
The main reason to consolidate is cost. Freight companies want your business and they want as much of it as possible. This means they offer incentives and volume discounts for customers who transport large amounts of freight with them. By sending a high volume of freight with a single provider you can access great volume discounts that can save you a considerable amount. You also have more negotiating power from the start if you want to get a competitive kilo rate.
As well as the cost benefits and volume discounts, using one or two providers means you have fewer invoices to keep track of at the end of the month. This in turn can help you keep costs from spiralling out of control and avoid being overcharged.
Reducing the number of carriers you use can have a significant impact on the amount you pay for freight each month and it gives you more negotiating and bargaining power with the providers you are using. If you do decide to consolidate and use one single freight company, make sure it’s a good one! Service standards vary considerably throughout the industry and when you are using a single freight company, reliability is more important than ever.
At Freight Cost Solutions™ we regularly help our clients get better freight rates and improved service. Contact us today to find out how we can help you.