The number of businesses on the market has grown considerably over the years. In our modern era, people are undertaking their business endeavours everywhere. Business is conducted from couches, cafes, towns, cities and countries across the globe. As a result of the growth, even more sales opportunities are opening up for businesses and in that process; these businesses are incurring increased expense delivering their products.
Is your business freight dependent?
If the operation of your business is heavily dependent on the movement of goods interstate or internationally, spending large sums of money on freight will become part of your daily business requirement. This cost can take up to 10% of the total budget in business. But, that doesn’t mean you need to sink money into unnecessary overheads just to deliver great service to your customers.
Freight in Australia
Here’s an insight into just some of the freight being moved in Australia.
In 2011–12, the domestic freight task totalled almost 600 billion tonne kilometres. * That is equivalent to around 26 000 tonne kilometres of freight moved for every person in Australia. Rail transport accounts for approximately 49 per cent of total domestic freight, with iron ore and coal exports accounting for over 80 per cent of this. Road freight makes up around 35 per cent of total freight and 17 per cent of coastal sea freight.
* Read the whole report here
Freight charges in Australia
These statistics show just how many opportunities are available for freight forwarders in Australia. The standard prices are often made to account for the varying economic factors, such in rises and falls in oil costs, and this can result in the prices being higher than what they need to be. Freight Cost Solutions™ helps solve this challenge by ‘taking out the middle man’ and achieving a win-win transparent business model for their customers.
Businesses can save thousands of dollars in freight costs just by following the simple tips in this article and hiring a Freight Rate Auditing company like Freight Cost Solutions™.
How charges are determined
The first factor to consider when a business wants to save money on freight charges is how freight forwarders determine those charges. Read on to discover some hot tips for determining freight charges correctly and how freight rate auditing companies can help significantly.
Mode of transport
The mode of transport your business is employing for their freight operations is important. The means of transportation has grown over the years and therefore, a more diversified freight industry has led to intense competition. Whether you intend to use truck, train, ship or air to transport your items, the company must be able to afford the charges for business to be viable. If businesses use Freight Rate Auditors, like Freight Cost Solutions™, they will receive customised assistance including complex research into what the best mode of transport is for their industry and specific requirements. Our highly-skilled team of forensic analysts figure out which mode of transport to employ, what solution is the most affordable and we will compare prices between the best freight forwarders allowing you to make a fully informed decision.
Another major factor that leads to higher freight costs is the distance covered when an item is shipped. This is known as zone-to-postcode conversion. The longer the distance the freight travels, the higher the charges are likely to be. A business may choose to transport only to destinations closer to them in order to save costs. This is because cargo that travels shorter distances generally attracts lower freight charges. However some freight companies charge a higher rate for closer postcard zones. Therefore, if companies aren’t watching out for these zone-to-postcard factors, these costs can soon add up over the course of a few months, quarterly and annually.
The weight of freight
The weight of cargo is equally important. Just like distance, freight forwarders charge more for transporting heavier consignments than lighter ones. This is due to obvious reasons, such as increased fuel consumption during the transportation of a heavier item.
Urgency and service levels
Many clients need their goods delivered urgently while others are OK to wait. Freight providers love to place a premium on urgent freight requests, the cost of which is usually transferred from company to consumers. If your client requires their goods to be delivered urgently or even right up to their door, you will have to pay more for that privilege. You will need to be aware of the rates for urgency and service level in order to offset these charges. Integrating a Freight Rate Audit Process into your system will help you avoid losing track of these extra costs if your volumes are high.
Prices also differ greatly between carriers, so you’ll want to compare services. In and of itself, this can be very time consuming. Defining the best service levels for your customers (e.g. offering them delivery at a terminal rather than to their door) can make a big different in freight costs for both your business and customers. Customers are often happy to pay much less and pick the item up, rather than pay more for the item.
Freight auditing – the future of freight
The best way for a company to reduce freight charges is by engaging a freight rate auditing company like Freight Cost Solutions™ to conduct a monthly audit of freight movements, invoices and more. This way, items can be grouped in terms of the factors noted above including transport mode, zone-to-postcard conversion, weights, urgency and service levels.
A business can save a considerable amount of money by bundling freight shipments, referred to as consolidating shipments. Freight companies give discounts as freight volumes increase.
How freight rate auditors can help
Auditors assist businesses to negotiate the best deals possible with one or more suppliers. They continue to save clients money by re-negotiating monthly with freight providers on the cost of shipping to certain locations as needs within that business move forward or change. Auditors are also different from brokers, because the business model is transparent and there are no hidden fees.
If you plan ahead by working with a freight rate auditing company you will considerably reduce what you are paying for freight. Freight Rate Cost solutions provide a complete end-to-end solution assisting businesses to save at every point of the freight process.
How are you determining your freight charges? Do you feel you are paying too much? Share your thoughts in comments below.
BIO: Darren Ash is the owner and managing director of Freight Cost Solutions™. With a Bachelor in Social Science, Darren has a thorough understanding of the industry and he strongly believes in adding honesty and integrity into the freight rate process. With vast experience and expertise in freight and service capabilities, Darren and is regarded as a leading figure in logistics.