Getting low LTL freight rates and competitive freight rates for trucking is challenging. The problem is that most people don’t have time to learn the complexities of the transportation industry and supply chain management. And, most people don’t understand the pricing leverage they already have when it comes to negotiating shipping rates. For shippers of any size, there are three easy ways to get the lowest contract transportation rates and reduce shipping costs.
Get to it. Right Now! You’re Almost Too Late!
You need to start looking for a transportation partner right away. Freight rates are primed to surge in the near future, and you’ll want to lock in low contract rates now. Low truck capacity, a driver shortage, rising oil prices leading to increased fuel surcharges, aging equipment, rising complexity, and government regulations are some of the factors that will make carriers more willing to negotiate rates with you now. Understanding current market conditions is crucial for effective freight negotiation.
Learn to Negotiate Transportation Rates Like a Pro
You have to know what all carriers, including LTL carriers, want: high volumes of freight that are easy and cheap to carry. It’s simple. Highlight anything in your distribution network that aligns with those two goals and makes your freight carrier-friendly.
On a more practical note, here are some of the best tips you’ll find for how to negotiate freight rates:
- When negotiating, make sure you’re using all your transportation spend for leverage.
- Make sure your data is accurate and up to date, and have it with you during negotiations so the carrier can picture exactly how they would carry this freight. This includes information on tonnage and potential deadhead miles.
- Highlight good freight qualities: easy loading/unloading, fits on pallets, regular size and weight, warehouse/DC productivity (low dwell times), historically consistent on-time payments, and effective product packaging.
- Don’t try to hide bad freight qualities – it won’t work in your favor in the end.
- If you know which accessorial charges you will incur, negotiate a rate ahead of time instead of just waiting to be hit by them. This can help avoid hidden fees.
- Negotiate with a few carriers, tempting them with all your freight spend, and make sure they know who else is bidding on your freight. This can help you secure more competitive rates.
Remember, successful freight negotiation with shipping companies often involves understanding tools like the CzarLite tariff, which serves as a baseline for LTL pricing. Familiarize yourself with lane rates trucking companies use and how they compare to spot market rates.
Use Free Transportation Management System
You can score the major benefits of a Transportation Management System (TMS) by working with third-party logistics companies (3PLs) or freight forwarders. Typically, shippers save an immediate 10% on transportation management when they implement a TMS. A TMS has thousands of carriers in its network, all of whom bid on your freight when you post a load. All you have to do is choose the best one based on your service level expectations and cost reduction goals.
Using a TMS can help you manage various aspects of your transportation contracts, from tracking shipping schedules to monitoring operating costs and labor costs. It can also assist in identifying opportunities for guaranteed freight services that might offer better rates or improved cash flow for your business.
By following these strategies and leveraging the right tools, you can effectively negotiate rates with carriers and optimize your overall transportation spend. Remember, successful LTL negotiation and freight rate optimization is an ongoing process that requires staying informed about market trends, understanding your shipping patterns, and continuously seeking ways to make your freight more attractive to carriers.
