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How To Optimize Your Freight Costs

How To Optimize Your Freight Transportation Costs

Every day, businesses worldwide ship and receive products from competitors. The company’s development, expansion, and regular operation all depend on this procedure. Companies today need to send and receive goods from all over the world, increasing the complexity of the freight transportation system. And as the global economy continues to expand, the demand to maximize freight transportation efficiency will only grow.

However, some shippers often work under the false premise that their freight shipping practices (and the expenses associated with them) are immutable. However, questioning how things are done because “that’s the way they’ve always been done” is good. The key to saving money on freight transportation is to examine the process as a whole. Many shippers make the mistake of concentrating solely on one facet of their operation, such as transportation, to the exclusion of all others.

The truth, however, is that every part of your supply chain is dependent on every other part, so adjusting one element can have repercussions everywhere. I-Way has found numerous approaches to cutting shipping expenses, many of which can be implemented immediately. For this reason, we’ll go over several strategies for reducing freight transportation expenses and the factors that contribute most to these bills.

What Ramps Up the Cost of Freight Transportation?

When we talk about the factors that influence costs, we first need to define those factors. Generally, the elements that contribute to the overall cost of a product or service are referred to as cost drivers. Several main cost drivers can substantially influence the bottom line when it comes to freight transportation.


The most obvious factor that drives up costs in freight transportation is fuel. The rates are subject to wild swings, and even minimal adjustments can significantly affect the final tally for the shipping expenses. 

The cost of transporting goods increases in tandem with the price of fuel in the marketplace. This is due to the fact that the trucks that move goods across the country require fuel to operate correctly. 

Trucking businesses have two options when gasoline prices go up: They can either pass the increased expenses on to their clients, or they may take the hit themselves. In either case, increased fuel costs negatively impact the bottom line of businesses that ship products.

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Maritime emergencies, piracy, limited air spaces, and political sanctions can all impact the freight cost and the expenses associated with delivery. It’s possible that businesses will need to ship their goods across greater distances, spend more time waiting at docks, and pay their employees a higher wage. The sum total of these factors contributes to the cost of transportation.

Vehicle Depreciation

Vehicle depreciation is a significant factor in hauling costs. Your trucks and containers lose value every year as they get older. You must comprehend the mechanics of depreciation because it can significantly affect your profits. A brand-new pickup has a specific monetary value.

The truck’s worth, however, gradually drops as time passes. Reasons for this decline include everyday use and age, as well as technological advancements and market fluctuations. Reach a point where they are no longer worth the price you paid for them. This is a significant cost factor in trucking because it is referred to as vehicle depreciation.

Storage & Warehousing

Storage and warehousing are one of the primary cost drivers in the freight transportation industry. After all, when goods need to be stored, the carrier must pay additional fees for things like warehouse rental, labor, as well as facilities, and equipment. In point of fact, the rotation rate of goods is strongly correlated to the storage costs incurred by a carrier. Therefore, the storage expenses will go up if the company has more things in stock than it actually moves.

Circumstances in The Market

The state of the economy is one of the critical elements that significantly impact the prices charged for freight transportation. Businesses are less inclined to ship items to their customers when challenged economically. Prices may go down, and shipments will slow down as a direct result of this downturn in demand. When the economy is performing well, businesses are more likely to ship items to their customers. This uptick in demand might increase the number of shipments and the prices charged.

By working with I-Way Transport, our customers work with a trusted and transparent partner. To further understand the key cost drivers, contact us at logistics@i-waytrans.com today!

Steps You Need To Implement To Optimize Freight Transportation Cost

After being familiar with the primary factors that can contribute to an increase in the cost of transporting freight, the next step is to investigate the strategies that can assist you in achieving cost reductions in this area. Being prepared provides you with more options and flexibility with your shipment. Here are some of those factors:

1. Steady Lane Volume

To remain competitive in today’s freight industry, it is more vital than ever to find ways to reduce transportation expenses. Working with shippers who routinely transport a high volume of cargo along the same route is one approach. The lower prices offered by these providers are the result of the successful marketing and building of their networks and backhauls. In addition, the shipments of regular and reliable shippers will be given more priority. Consequently, it can be financially beneficial to collaborate with a carrier that experiences consistent lane volume. B

2. Off-Peak Shipping

 You can cut costs on freight transportation by preparing ahead of time and being aware of the times of the year when shipping rates are at their lowest. For example, shipping prices are often lower during the week than on the weekend, and they are typically quieter during the middle of the day than later in the evening. Because there is less total shipping activity on Wednesdays, Thursdays, and Fridays, the days in question, shipping costs can be reduced significantly on those days.

If you schedule your shipments for periods of the week when there is less demand for freight transportation, you will be able to save money on the cost of this service. After being familiar with the primary factors that can contribute to an increase in the price of transporting freight, the next step is to investigate the strategies that can assist you in achieving cost reductions in this area.

3. Consolidate Shipments

The best way to cut costs on freight transportation is to combine multiple shipments into one larger one. It will cost you more money to send various parcels to the exact location. Therefore you should make an effort to consolidate them if at all possible. In many instances, doing so will result in a lower cost for shipping. 

Reducing multiple shipments of 100 boxes each to the same address into one load of 200 boxes can, in most cases, save you money on shipping costs. This is because you only need to pay for one set of shipping materials. By consolidating your freight shipments, you can save money on transportation charges.

4.  Increase Delivery Lead Times

When carriers have as much warning as possible about upcoming shipments, they can better allocate resources like trucks, drivers, and storage space, improving efficiency across the supply chain. Simply, a carrier can better organize their resources and equipment with a head about an upcoming shipment. This will all0w you the flexibility to choose economy over standard shipping which in turn will save you more money. Carriers incur significant losses while a trailer is idle at a customer’s location awaiting shipment. Companies can save money by better anticipating their needs and passing the savings on to their customers. All parts of the supply chain can benefit from better planning, including pickup, staging, and live loading. The more time you give carriers, the more they can streamline their operations and negotiate a better price for you.

5. Develop Relationships

Building relationships gives the potential for increasing shipment volume discounts, which can be taken advantage of. When shippers make a long-term commitment to working with one or a few carriers, they position themselves to become more desirable freight partners from a purely commercial perspective. As a direct consequence of this, carriers are more inclined to provide volume-based discounts, which can potentially cut overall shipping costs by a significant amount.

6. Provide Reliable Lead Times

If businesses are more aware of their lead times, they can dramatically cut the amount of money they spend on freight transportation. The amount of time required from the planning stage to the execution stage of a method is referred to as its lead time. The amount of time that passes between the placement of an order and the point at which it is carried out is referred to as the lead time. There is a possibility that lead times will fluctuate based on the kind of product being shipped, the nature of the company, the mode of delivery, and the geographical distance.

Over To You

Even though the above solutions are apparent, shippers often ignore them and pay more than they should for freight. But you can avoid it if you follow the tips given above. With these essential tips, you can get the best deal on shipping your freight. You can lower your overall transportation costs by understanding the main factors that affect freight shipping costs and taking steps to improve your shipping operation. But if you want logistics services that are more reliable or easier on your wallet, you can contact I-Way Transport. We have years of experience shipping, storing, and managing freight between developing markets worldwide. You can get a free quote from us if you contact us.

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