5 Ideas to Cut Freight Costs and Improve

Your Bottom Line

Nicole Goldstein
Marketing Manager, Freight101.com
Small Business Transportation, Inc.

As a small business owner, every single dollar spent on freight cuts right into the profit margin. Here are some tips to help the understand freight shipping costs, which will help improve your bottom line.

1) Understand different trucking services and how they are priced Less-Than-Truckload (LTL) Service is when trucking companies combine smaller shipments from multiple companies on the same truck and make multiple deliveries. These goods move through a network of terminals on route to their final destination. At each terminal, the shipment may be taken off one truck and transferred to another that is loaded with goods destined for the same region. LTL is used by companies without the volume to move a full truckload. A typical LTL shipment ranges from 100 lbs. to 20,000 lbs. Pricing can be two methods: By weight and class (type of freight) or by pallet.

Full-Truckload (FTL) Service – TL (Full Truck Load or Truck Load) is trucking service that is used for large shipments (usually over 10,000 pounds) that an entire trailer or container is filled to capacity with cargo belonging to one customer. Unlike less-than-truckload (LTL) freight, the advantage of FTL shipping is that freight travels directly to its destination and is not transferred from truck to truck nor is the freight is handled in route whereas an LTL shipment will typically be transported on several different trailers. Freight cost is generally based on per mile, instead of per-pound pricing.

2) Be aware of Reweighs and Reclassifications

One of the biggest and most costly mistakes small businesses and infrequent shippers make involves reweighs and reclassification. Many small business shippers do not have scales, so they just estimate the weight and naturally it ends up being inaccurate. What happens when the carrier arrives and discovers a discrepancy is they will charge the company a reweigh fee – which is basically a “fine". Then not only does the carrier charge this reweigh fee, but also for the extra freight due to the shipment weighing more than what was quoted on the original bill of lading.

Another problem small businesses face is freight reclassifications. Class is based on a scale from 50 to 500, and is based primarily on the item's value and density, with higher numerical ratings indicating a higher per-pound transportation cost. Even more complicated when you deal with freight of mixed classes – called FAK – Freight of All Kinds. If the small business shipper estimates the density and forgets to take into account the pallet or other packaging materials, it can result in a reclassification. Again, more costly fees will be incurred.

The weighing and inspection process has increased substantially as the number of freight shipments have declined in recent economic times, and carriers are making up for lost profits this way. Be sure to give the most accurate information possible at the time of obtaining a freight quote, otherwise it can end up costing hundreds or even thousands of dollars extra– all of which go right to your bottom line.

3) Use a freight broker for 20-30% savings

Aside from gaining advice on the least-cost shipping method, going through a freight broker can provide significant discounts. Due to their large volume of shipping, freight brokers pass on a 20-30% cost savings to the customer who is not a regular freight shipper. Carriers charge more to an individual or small business if they do not ship a large enough volume to offer incentive pricing. However by going through the freight broker, the carrier gives them the large volume discount and it is passed on to the customer. This is why the infrequent shipper receives better pricing from a freight broker than if they went directly to the carrier.

Also consider hiring a freight broker if you are confused about what type of freight services you need and where to find carriers. A freight broker is essentially a “One Stop Shop". They advise on the different options for shipping freight and offer numerous ways to save money. Another time-consuming, but money-saving service a freight broker provides is matching up your freight shipment with a carrier, from their extensive network, who is closest to the freight source. Think about it – do you have time to call 100 carriers to find out who, during the day you need the freight shipped, will be the closest carrier?

Freight brokers are the way to go for small companies and individuals who do not have a logistics department, shipping knowledge, or simply the time to negotiate the best rates and services from hundreds of different carriers. Further, today's economic recession has forced many companies to cut their logistics departments or do away with them altogether, and instead are electing to outsource their logistic needs. Choosing to go through a freight broker has actually saved companies more money due to not only lowered freight costs, but also in the form payroll reductions. Still, if a company continues to maintain its logistics department, a freight broker works with their staff as a third party support group, and the small business company still saves money due to the greatly discounted freight costs. Using a freight broker can often be the key to competitive advantage; a company can gain more time to focus on its core business, decrease capital expenses, and improve productivity and efficiency.

4) Avoid the extra “Accessorial” charges

Carriers charge extra for delivering to residential locations. Residential deliveries add to carrier costs because it takes longer to unload a truck and get it back on the road compared to deliveries in an industrial area. The carrier is who determines if a destination is considered a residential or commercial address. Typically, they define a commercial address is one that opens and closes to the general public at set times each day. But be aware that schools, colleges, and churches located in residential zones may also incur residential fees. If you are at a residential address, try instead to arrange with a local business to receive goods at their location. Or, perhaps it makes sense to have purchased loads drop shipped directly to your customer, bypassing your location. It can make a big difference to your bottom line.

Another caveat is if the receiving location does not have a loading dock (one that allows forklifts to drive into the trailer). When the shipping or receiving address does not have a loading dock, the options are either manual unloading or use of a more expensive truck with a lift gate (a platform at the back of the truck that can raise and lower a shipment from the ground to the truck) to bring pallets of freight down off the trailer. Carriers will then bill an “accessorial charge” that could be as much as $150 for a single pallet shipment.

Wait, there is one more. If the driver is required to go inside (beyond the front door or loading dock) to pickup or deliver a load instead of remaining on the dock or in his truck, additional fees will be charged for this ”Inside Service" It's imperative that the shipper be aware of all of these additional charges involving freight shipments – as they can add up to be more than the initial cost of the freight shipment.

5) Insurance

Be aware that even though freight carriers have a legal obligation to provide a minimum amount of liability insurance, the norm is typically only10 cents per pound. If your cargo is stolen or damaged in transit, the carrier provided insurance may not be enough to recover the cost of replacement.

Freight insurance can be purchased from a variety of 3rd-party companies and offers coverage that far exceeds carrier liability. If time is of the essence, this is yet another service that a freight broker can do for you. By planning what your coverage should be rather than living with the carrier's insurance you can design the outcomes and limit your risks.

About the author. Nicole Goldstein is the online marketing manager of Freight101.com, owned by Small Business Transportation, Inc. where they help customers get the most cost-effective freight solutions. Got a question about shipping? Email marketing@freight101.com

Small businesses struggling with shipping and logistics will soon have an opportunity to go back to school" with Small Business Transportations revamped Freight101 website (http://www.Freight101.com). The site, built from the ground up with first time shippers in mind, launches June 1st with new features to make it easy for companies of any size to develop a shipping solution customized for their business. The new site will provide both expanded service options and a new collection of resources aimed at smaller quantity shippers, particularly first-time shippers.

Small Business Transportation, a pioneer in LTL (Less Than Load) shipping for small business, is introducing “The ABC's of Shipping" to assist the exploding market of Ebay PowerSellers and other online auction dealers in navigating the sometimes confusing world of freight shipping. This new feature gives new customers a simple view of the process of choosing and scheduling shipping, and provides quick access for frequent shippers.

The new Freight Resource Center makes it easy for customers to learn the steps to freight shipping success. The Freight Resource Center taps the collective wisdom of SBT's staff of experienced account managers. Most of the common questions about shipping and logistics are answered, and there is a large collection of internet resources to help new customers. Additionally, the Freight Resource Center sells necessary shipping supplies, such as packaging.

For frequent customers, access to user accounts means the ability to save and retrieve their own customers details for easy repeat shipping. Customers can also print bills of lading, shipping labels and reports.

There is also Freight Auction, where truckers looking for a load to haul on their return trip, also known as a backhaul," can post their equipment and destination details. They are matched with a customer for low-cost shipping that benefits both parties. This combination of features positions SBT as an innovator for LTL shipping and logistics, according to Felix Diaz, vice president of operations for SBT.

The new features of Freight101 are based on the great feedback of our customers over the years. We have collected the necessary knowledge for a small business to receive the cost savings of LTL shipping, but we've also reduced the time commitment necessary for our customers to make this a success," remarked Diaz.

Small Business Transportation, a pioneer in shipping for small business, is also extending their service to offer full truckload shipping to their customers. This additional service highlights the fact that the competitive advantage of SBT's logistics solutions has helped their customers grow to the point that they need shipping options for larger loads.

We've always had the capability to offer truckload shipping, but it wasn't a primary need of customers. As our customers have grown and their shipping needs have expanded, offering truckload shipping became desirable for all of us," commented Diaz.

SBT is also adding an additional 20 carriers. With over 70 available carriers, customers have a much broader range of scheduling and price options. More shipping choices means quicker deliveries overall, making it easier for SBT's staff to customize effective solutions for every shipper.

These anticipated upgrades move Freight101.com into the top ranks of small business shipping and logistics providers. The growing need for truckload and LTL shipping among small business owners should make SBT a popular destination for small business owners in the years to come.

Contract carriers are trucking companies that work by contract and agreement with shippers to deliver goods throughout the country. Truckload carriers sometimes work in conjunction with other modes of transportation to move goods around the country. Truck transport moves 69% of all goods throughout the US.

Trucking contracts

They are used with companies that have need of regular transportation of goods. Dedicated freight carriers carry food, building supplies, household goods and every other kind of cargo. Contract carrier services are typically used by larger businesses to transport goods on a regular schedule. Businesses that need contract carriers to move their cargo make long-term agreements with carriers as to pricing, type of trucks needed (refrigerated trucks, for example), as well as insurance conditions.

Get info on contract carriers basics

Contract carrier service falls under the broad umbrella of the trucking industry as a whole. If you're thinking of entering into a trucking contract, learn more about contract carriers basics. Look at trucking industry commentary for more info on contract trucking, as it can provide basic insight on contract trucking and dedicated carriers.

Freight101.com for a good list of frequently asked questions on contract trucking.

During this time of economic recession, Small Business Transportation, Inc. (Freight101.com) growth has reached unprecedented numbers by focusing on the smaller business client. They realized the secret to their success is by focusing on customers with minimal transportation budgets.

Freight101.com is located in the Chicagoland area of Merrillville, IN at 3201 83rd Pl., Merrillville, IN 46410. For more information about Small Business Transportation, Inc. or to request a free instant quote, please call 888-368-6022 or visit www.Freight101.com

Small Business Transport, a leader in shipping for over twenty years, is pleased to announce they have made getting accurate shipping quotes and information to online customers even easier than before. Using SBT's Freight 101.com web interface, businesses with shopping cart websites can offer their customers real time shipping quotes.

Taking care of retailer and wholesaler transportation needs has long been a specialty of Small Business Transport. With uniquely personal service they can create the perfect shipping program for any sort of business. At their website, www.freight101.com, SBT's staff can design a customized logistics program to meet the needs of any company, their customers, and their budget. On average SBT and Freight 101's shipping charges are 20 to 30% less than other transport companies.

However, you need not trade quality for price. Small Business Transport could not have stayed in business as long as they have without delivering quality. The benchmark of quality among shippers is their claim ratio, meaning the percentage of freight that has claims of damage or loss. The average claim ratio in the freight industry is 1.5%; SBT shatters this number with a claims rate of .25%. This means, on average, a business is six times more likely to have problems getting their freight delivered by other shippers than Freight 101. They are understandably very proud of this figure

A business looking for a full service shipper should search no further than Freight 101.com. Wherever they need freight shipped and whatever they are shipping, Freight 101.com has the answer. They offer full and less than truck load shipping. They carry parcels and letters and can even handle hazardous materials safely and inexpensively.

Freight 101.com customers have the ability to integrate their shipping quotes with their web site to provide real-time shipping rates for merchandise sold on their own websites. Having instant access to so many trucking firms, Freight 101.com provides flexibility unheard of with other trucking and shipping companies.

A Freight Resource Center helps people new to the world of 'Less Than Truckload' shipping learn the terminology and the processes of truckload shipping. No matter what businesses a merchant is getting into, the Resource Center is the place to go to begin understanding the complexities of shipping, a vital part of any retail operation.

Freight 101.com provides a glossary of shipping terms, a freight density calculator, multiple carrier claim forms, and other useful tools. By taking a look at the Suppliers section of the Resource Center customers can find car transporters, home movers, and packing and crating companies.

Freight 101.com offers instant free shipping quotes for first time visitors and frequent customers can register and receive customized rating applications, higher discounts, save customers to online address books, create bill of ladings, and run useful shipping reports. By using Freight 101.com's Truckload Board users can find carriers looking to fill incomplete truckloads and an interactive map of the U.S. for determining distances to be shipped.

These are just a few of the many excellent services provided by a top-notch customer service team available either online or on the phone. Small Business Transport has always placed great importance on customer service and strives to provide a level of quality interaction with their customers that matches their dedication to getting shipments on the road and delivered on time.

“It is a history of listening to our customers that is at the heart of the constant improvements and expansions of the SBT and its website,” said vice-president Felix Diaz, “The business world changes everyday and SBT is committed to reaching the shipping goals of the future by bringing innovation and technology to trucking.”

Building trust by treating customers as partners, providing an excellent quality service by keeping abreast of the latest in technology, and an intimate knowledge of the industries they serve make SBT and Freight 101 the king of the road transport business.