So how do you choose a freight provider? Let me start with the do it yourself option. Should you run a dedicated fleet? i.e. vehicles that deliver only for you. The answer is yes if you have sufficient volume of orders and a limited customer base so that you can ensure a high fleet utilisation. The most likely candidates are B2B companies serving a particular market niche. The next question is whether to outsource the management to someone else. This is probably also a yes unless you are very big and can afford to invest in the vehicles and management staff and systems required run your own fleet efficiently. The halfway option is to manage a fleet of subcontractors, where you provide the management and any vehicle fleet management technology but the subcontractors buy the vehicles.
Even if you have a dedicated fleet you will most likely still need to use general carriers to service the areas of your market you cannot deliver to directly. The best advice I can give here is to shop around. You can do this yourself or engage a freight broker or a consultant to give you advice. The brokers advice will not be independent as it will be limited to the carrier relationships they have in place. A broker will help you manage your freight and will take a margin for doing so. This can still be a very good option as they will likely get better rates for you than you could get yourself (with their carriers) even though they take a margin.
A freight consultant can perform a carrier review for you. The only way to accurately compare rates among different carriers is to apply the rates from each carrier to a standard set of historical data that represents your typical freight requirements. To do this a consultant (or broker) will collect all your historical freight data and run a Request For Proposal (RFP) process to independently test the market to find the best price. In this case you will pay a fee to the consultant but the advice will be truly independent and not hidden in ongoing fees.
As independent consultants Logistics Help can run a cost effective (and anonymous) freight review for you and repeat it on an annual or bi-annual basis to make sure you stay current. The fees are not high and will be recovered in lower freight costs. As your business grows and changes you will be able to negotiate better rates as rates generally reduce with higher freight volumes.
Sometimes a change in freight service or niche carrier can give you lower costs on part of your freight requirement. For example you can send freight to the metropolitan area of your capital city with an overnight express service (such as Star Track) or you can send it with a twice daily parcel service such as Couriers Please or Fastway. The parcel service is usually cheaper and gives you more time to process your orders because they pick up in the morning instead of the night before. They also provide you the ability to do very cheap same day freight for early morning orders, or simply the advantage of clearing your outbound freight twice each day.
A niche carrier may specialise in delivery to particular state or regional area that you have a lot of business in. In this case you may well get a better rate and a better service that your customers love because the carrier is a local.
Knowing what is available and which carrier is worth pursuing is what you are paying the broker or consultant for, but there is no reason why you cannot do it yourself if you have the time to do the research and are a good negotiator. If you have any doubts or want to find out the costs to have a carrier review done for you then contact us to find out more.
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