| As a small business owner, every single dollar spent | | | | different options for shipping freight and offer |
| on freight cuts right into the profit margin. Here are | | | | numerous ways to save money. Another |
| some tips to help the understand freight shipping costs, | | | | time-consuming, but money-saving service a freight |
| which will help improve your bottom line. | | | | broker provides is matching up your freight shipment |
| 1) Understand different trucking services and how they | | | | with a carrier, from their extensive network, who is |
| are priced | | | | closest to the freight source. Think about it – do you |
| • Less-Than-Truckload (LTL) Service is when | | | | have time to call 100 carriers to find out who, during the |
| trucking companies combine smaller shipments from | | | | day you need the freight shipped, will be the closest |
| multiple companies onthe same truck and make | | | | carrier? |
| multiple deliveries. These goods move through a | | | | Freight brokers are the way to go for small companies |
| network of terminals on route to their final destination. | | | | and individuals who do not have a logistics department, |
| At each terminal, the shipment may be taken off one | | | | shipping knowledge, or simply the time to negotiate the |
| truck and transferred to another that is loaded with | | | | best rates and services from hundreds of different |
| goods destined for the same region. LTL is used by | | | | carriers. Further, today’s economic recession has |
| companies without the volume to move a full truckload. | | | | forced many companies to cut their logistics |
| A typical LTL shipment ranges from 100 lbs. to 20,000 | | | | departments or do away with them altogether, and |
| lbs. Pricing can be two methods: By weight and class | | | | instead are electing to outsource their logistic needs. |
| (type of freight) or by pallet. | | | | Choosing to go through a freight broker has actually |
| • Full-Truckload (FTL) Service FTL – TL (Full | | | | saved companies more money due to not only |
| Truck Load or Truck Load) is trucking service that is | | | | lowered freight costs, but also in the form payroll |
| used for large shipments (usually over 10,000 pounds) | | | | reductions. Still, if a company continues to maintain its |
| that an entire trailer or container is filled to capacity | | | | logistics department, a freight broker works with their |
| with cargo belonging to one customer. Unlike | | | | staff as a third party support group, and the small |
| less-than-truckload (LTL) freight, the advantage of FTL | | | | business company still saves money due to the greatly |
| shipping is that freight travels directly to its destination | | | | discounted freight costs. Using a freight broker can |
| and is not transferred from truck to truck nor is the | | | | often be the key to competitive advantage; a |
| freight is handled in route whereas an LTL shipment | | | | company can gain more time to focus on its core |
| will typically be transported on several different trailers. | | | | business, decrease capital expenses, and improve |
| Freight cost is generally based on per mile, instead of | | | | productivity and efficiency. |
| per-pound pricing. | | | | 4) Avoid the extra “Accessorial” charges |
| 2) Be aware of Reweighs and Reclassifications | | | | Carriers charge extra for delivering to residential |
| One of the biggest and most costly mistakes small | | | | locations. Residential deliveries add to carrier costs |
| businesses and infrequent shippers make involves | | | | because it takes longer to unload a truck and get it |
| reweighs and reclassification. Many small business | | | | back on the road compared to deliveries in an industrial |
| shippers do not have scales, so they just estimate the | | | | area. The carrier is who determines if a destination is |
| weight and naturally it ends up being inaccurate. What | | | | considered a residential or commercial address. |
| happens when the carrier arrives and discovers a | | | | Typically, they define a commercial address is one that |
| discrepancy is they will charge the company a | | | | opens and closes to the general public at set times |
| reweigh fee – which is basically a “fine". Then | | | | each day. But be aware that schools, colleges, and |
| not only does the carrier charge this reweigh fee, but | | | | churches located in residential zones may also incur |
| also for the extra freight due to the shipment weighing | | | | residential fees. If you are at a residential address, try |
| more than what was quoted on the original bill of lading. | | | | instead to arrange with a local business to receive |
| Another problem small businesses face is freight | | | | goods at their location. Or, perhaps it makes sense to |
| reclassifications. Class is based on a scale from 50 to | | | | have purchased loads drop shipped directly to your |
| 500, and is based primarily on the item’s value and | | | | customer, bypassing your location. It can make a big |
| density, with higher numerical ratings indicating a higher | | | | difference to your bottom line. |
| per-pound transportation cost. Even more complicated | | | | Another caveat is if the receiving location does not |
| when you deal with freight of mixed classes – | | | | have a loading dock (one that allows forklifts to drive |
| called FAK – Freight of All Kinds. If the small | | | | into the trailer). When the shipping or receiving address |
| business shipper estimates the density and forgets to | | | | does not have a loading dock, the options are either |
| take into account the pallet or other packaging | | | | manual unloading or use of a more expensive truck |
| materials, it can result in a reclassification. Again, more | | | | with a lift gate (a platform at the back of the truck that |
| costly fees will be incurred. | | | | can raise and lower a shipment from the ground to the |
| The weighing and inspection process has increased | | | | truck) to bring pallets of freight down off the trailer. |
| substantially as the number of freight shipments have | | | | Carriers will then bill an “accessorial charge” that |
| declined in recent economic times, and carriers are | | | | could be as much as $150 for a single pallet shipment. |
| making up for lost profits this way. Be sure to give the | | | | Wait, there is one more. If the driver is required to go |
| most accurate information possible at the time of | | | | inside (beyond the front door or loading dock) to pickup |
| obtaining a freight quote, otherwise it can end up | | | | or deliver a load instead of remaining on the dock or in |
| costing hundreds or even thousands of dollars | | | | his truck, additional fees will be charged for this |
| extra– all of which go right to your bottom line. | | | | ”Inside Service" It’s imperative that the shipper |
| 3) Use a freight broker for 20-30% savings | | | | be aware of all of these additional charges involving |
| Aside from gaining advice on the least-cost shipping | | | | freight shipments – as they can add up to be more |
| method, going through a freight broker can provide | | | | than the initial cost of the freight shipment. |
| significant discounts. Due to their large volume of | | | | 5) Insurance |
| shipping, freight brokers pass on a 20-30% cost | | | | Be aware that even though freight carriers have a |
| savings to the customer who is not a regular freight | | | | legal obligation to provide a minimum amount of liability |
| shipper. Carriers charge more to an individual or small | | | | insurance, the norm is typically only10 cents per pound. |
| business if they do not ship a large enough volume to | | | | If your cargo is stolen or damaged in transit, the carrier |
| offer incentive pricing. However by going through the | | | | provided insurance may not be enough to recover the |
| freight broker, the carrier gives them the large volume | | | | cost of replacement. |
| discount and it is passed on to the customer. This is | | | | Freight insurance can be purchased from a variety of |
| why the infrequent shipper receives better pricing from | | | | 3rd-party companies and offers coverage that far |
| a freight broker than if they went directly to the carrier. | | | | exceeds carrier liability. If time is of the essence, this is |
| Also consider hiring a freight broker if you are | | | | yet another service that a freight broker can do for |
| confused about what type of freight services you | | | | you. By planning what your coverage should be rather |
| need and where to find carriers. A freight broker is | | | | than living with the carrier's insurance you can design |
| essentially a “One Stop Shop". They advise on the | | | | the outcomes and limit your risks. |