How Freight Companies Can Manage Their Costs Better

The freight and shipping industry is one of the most competitive industries right now. There are a lot of opportunities to seize, but there are more freight companies competing for the same market segment than ever before. It is necessary for a shipping company to remain flexible and agile in order to be as competitive as it can be. A good way to maintain flexibility is by gaining complete control over operational costs.

There is no shortage of ways to cut costs in a shipping business. There are a lot of cost elements to work with, including mileage, lane, market capacity, and lead time. Knowing how to optimize each cost element will bring more chances to reduce costs and increase flexibility.
The following tips and tricks will help you explore this and improve your freight business’s competitiveness.

Tweak Truck Utilization

Truck utilization is an obvious way of optimizing shipping. As the name suggests, truck utilization is how the available space in FTL and LTL shipments is utilized. Doing simple optimizations to the truck utilization can help lower freight costs by a substantial margin.
Some freight companies now use racks installed inside their trucks to improve space utilization. With the help of racks and rails, items can be arranged in a way that minimizes waste space. More goods can be transported at the same time and the cost of individual shipments is reduced immediately.
Another way to maximize truck utilization is through better shipment management. Instead of relying on LTL to speed things up, adding a slight delay and managing shipments better can actually lead to up to 80% increase in truck utilization, all without significantly increasing shipping time.

Minimize Damages

Damages are another cost factor that can be minimized and managed in a straightforward way. Instead of paying for damages and dealing with the loss of goods, as well as the liabilities that come with it, you can reduce shipping costs through the use of better pallets.
Another advantage of using in-truck racks mentioned earlier is the reduction of damages. With items staying in their places, there is no need to worry about bumps and road conditions causing goods to move around and get damaged in transit.
That’s actually the key: limiting (or eliminating) movement. As long as the transported goods can be kept still during shipping, damage to them can be avoided completely. This applies to the delivery of different types of goods, including fragile items that require special handling.

Optimize Your Lanes

A lane is a route from one point (the starting point) to another (the destination point). Freight companies often manage multiple lanes according to the needs of their customers. Some take further steps in optimizing those lanes, combining multiple lanes for a more streamlined operation. You can too.
Better lane management isn’t a difficult thing to achieve, but it is a great way to reduce shipping freight rates. Since trucks can visit multiple destinations on the same lane, several LTL shipments can be combined into one full load. The approach doesn’t just reduce costs; it also reduces the time needed to complete the shipments as well.
You don’t even have to combine lanes manually. There are systems designed to help freight businesses automate the process of sorting through shipping requests, calculating their loads, and combining lanes to achieve maximum efficiency. Investing in such system is certainly a must in a market as competitive as it is today.


Speaking of combining multiple shipments, consolidating smaller shipments is also a cost-cutting measure worth exploring. Consolidation means working together with other shipping companies to limit costs together. It is a practice that more companies use to boost competitiveness and gain a mutual competitive advantage.
Through consolidation, you can combine your LTL shipments with other companies managing the same route. Since many clients actually ship to the same destination (i.e. the same warehouse or retailer) finding different shipments to consolidate isn’t as difficult as you think.
Technology offers ways to further simplify the process. Multiple freight management systems can now talk to each other and automatically suggest shipments that can be consolidated. This eliminates the need to manually communicate with other shipping companies. With the process fully automated, an immense level of efficiency can be achieved without a problem.

Watch Those Lead Times

We mentioned how increasing lead times by a small amount often enables additional cost-cutting measures. Managing lead times is a great way to keep those options open. All you have to do is focus on staying within a certain range of acceptable shipping times. This way, you don’t end up disappointing the clients, but you keep your options open too.
It is a simple approach to take – just like the other tips we covered in this article – but the impact it has is big enough to matter. The more you explore ways to limit your costs, the more flexible and competitive your freight business will be.

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