There are many times in life when going “above and beyond” is a recipe for success. Spending your transportation budget isn’t one of them.

I can’t tell you how to meet your budget. However, as a longtime logistics professional from both the 3PL and the shipper sides, I can warn you about several common-and easy to fall-into-traps.

Overlooking class distinctions

It’s no secret that rates for NMFC’s 18 different classes of freight vary dramatically. Yet, many shippers don’t question their classifications as closely-or as often-as they should.

To prevent this from happening to your company, keep abreast of exactly what you’re shipping and in what configuration. Conduct periodic reality checks of your cargo and classifications to see if they match up. And, if your carriers have a low claims ratio, consider agreeing to hold them accountable for lower claims charges (as a percentage of product price) in exchange for having your freight bumped down to a lower-price class. 

The potential savings varies by the carrier used. But considering that the rate difference between Class 50 and Class 100 cargo can be as much as 100 percent and even small class differences-like that between Class 55 and Class 65-can mean rate variations of 18 percent, it’s an economic opportunity that could really pay off.

Turning down the volume

As a rule of thumb, any time a company uses smaller-volume LTL shipments instead of larger-volume truckloads, it’s going to pay anywhere from 10 to 30 percent more.

To shave costs from your over-the-road transportation bills, think big-truckload big. Pool your shipments where you can. Use freight management optimization tools to identify opportunities for consolidation you might not otherwise notice.

For example, with some advance planning and management of customer expectations, can you change your delivery schedule from several times a day to once a day? Can you combine what would be a few LTL shipments to several different cities into a single truckload that makes a stop at each city?

Being redundant

Take an inbound shipment coming from Asia. Bring it into the United States via a West Coast port. Transport it to an inland distribution center several hundred miles away. Then ship a portion of that cargo back out to the West Coast a few weeks later to fulfill a customer order.

Many companies engage in this inefficient practice because they don’t have a distribution center near their ports of entry, and their supply chains are reliant on DC-to-customer transits.  

But that doesn’t mean your company has to follow suit-because you can employ a technique known as DC bypass. Freight using DC bypass travels from a port of entry to a nearby deconsolidation center, where it’s trans-loaded and shipped directly to sales outlets or large stores’ distribution centers.

Being too susceptible to incentives

Many U.S. communities are anxious to attract distribution center business, and they’re willing to offer substantial tax breaks or other deals to get it.

However, companies that allow these incentives to be the primary driver behind their DC site selection could be rewarded with considerably higher freight invoices. And that’s rarely a good trade-off, because for every dollar spent on warehousing, most shippers spend three to five dollars on transportation. 

It’s fine to consider tax incentives, especially if you’re trying to choose between two equally strategic venues. But make sure your logistics strategy comes first, and don’t choose an out-of-the-way location simply because the real estate costs are so attractive.

Engaging in a paper chase

It doesn’t take a superior mathematician to calculate the economic advantage of using electronic freight payment.

It costs decidedly more to process a paper invoice than it does to process an electronic one. More important, it deprives you of considerable money-saving potential, because there’s a lot of big-picture value to be derived from having your freight payment information flowing into and out of the same systems-driven source. 

Used in tandem with quality analytical tools, electronic payment is ripe with opportunity for evaluation, planning and improvement.

Choosing cheapest

Carrier rates run the gamut, and it’s always important to consider them during carrier selection. However, companies that choose the cheapest carriers every time simply because they’re the cheapest could wind up suffering some significant financial consequences in terms of damages, delayed product and disgruntled customers.

Before selecting your carriers, research their claims ratios. Carefully evaluate their experience in handling your particular kind of commodity. And get a handle on their on-time record. Their better performance in these areas may more than justify the slightly higher rates they command.

In-Visibility

It’s 11 p.m. Do you know where your inventory is? If you don’t, you’re probably not working with state-of-the-art visibility tools. And your transportation costs are probably higher because of it.

Visibility tools are they key to helping companies maximize transportation efficiency and minimize transportation contingency, but unfortunately many shippers still don’t have access to them.

If you’re one of these shippers, don’t be timid in your next bid for internal funding. Visibility tools increase certainty that product will arrive exactly where it needs to (which will help reduce the number of extra shipments that need to be sent just to be sure products arrive on time). They also allow companies to swiftly redeploy shipments if demands trends change.

As an alternative, remember that many 3PLs also have visibility tools and if you’re a client, you can take advantage of them without having to make a substantial capital investment yourself.

Confusing budgeting and goal-setting

No article on exceeding transportation budgets would be complete without at least a few words regarding how such budgets are born.

While it is always commendable to strive for greater transportation efficiency and performance every year, don’t make the mistake of confusing ambitious productivity goals with bankable budget figures when you’re requesting or setting your budget. wt