WHAT ARE THEY?
HOW ARE THEY APPLIED TO THE DETRIMENT OF MOST OF THEIR CUSTOMERS?
The concept of introducing and applying ‘Industry Standard Rates’ to the freight industry occurred many years ago and remains misunderstood by most of their customers.
Industry Standard Rates enable freight companies to manipulate freight rates proposed to potential customers whilst retaining excessive margins for themselves and their services. This concept is most unreasonable as it inhibits potential customers from obtaining the best freight rates from the marketplace.
When challenged freight companies will deny such a concept exists however it has existed for many years and gives comfort to the freight industry as they endeavour to maintain or improve their margins at the expense of their customers.
The term “cartel” comes to mind, but the concept of freight industry standard rates remains unexposed to most of their customers.
The cost of freight for any business is significant and can be the difference between a business being profitable or striving to survive.
Freight rates proposed to most potential customers are based on discounts applied against Industry Standard Rates subject to freight volume and can vary across the numerous freight providers in the marketplace.
Freight Industry Rates are based and calculated on a cost and margin model well recognised throughout their industry and rewards them, in most cases, with margins difficult to justify for the services they offer.
Even now, understanding the concept of Industry Standard Rates is actually exceedingly difficult for potential freight customers to calculate the discount rate that the volume of their freight justifies.
Freight contracts are mostly negotiated between a potential customer and a Salesperson representing the freight company and their own interests as the Salesperson is invariably incentivised through the commissions they receive. As a result, most customers will not receive the discount level the volume of their business deserves.
The concept of Industry Standard Rates can be exposed by allowing your freight business to participate in a tendering process. A process that is not highly respected by the freight providers as it exposes the individual rates, they offer allowing comparisons to be made and negotiations engaged in resulting in the best economical fit for your business.
Freight Cost Solutions has a well proven process that, since 2003, has enabled their customers to enjoy substantial reductions in freight costs whilst maintaining or even improving service levels.
A confidential analysis of your business’ freight volumes will be undertaken and compared to those recognised within the industry. The appropriate discount applicable to your volume of freight will be calculated and can be used to challenge the rates offered by the freight companies for your business.
The FCS process is not “rocket science” but it requires a certain skill set, unique software programs and a tenacious approach to the freight industry.
Step One: Invoices detailing the freight activity of your business for at least the last three months are analysed in detail.
Step Two: The movement of freight across zones is determined.
Step Three: This data together with freight volume and the number of consignments is further analysed utilising software programs developed by FCS.
Step Four: The correct discount level justified by your freight spend against Industry Standard Rates and potential savings is calculated.
Contact FCS if you’d like to know more. They are here to help and assist your business to be treated fairly by the freight industry.