The vast web of the domestic freight shipping network can be intimidating to any business, whether established or new. If you’re not transporting the same item to the same destination over and over the same time, a variety of factors will affect your domestic shipping costs. Consideration of distance, weight and delivery times is only the top of the iceberg when deciding on the most suitable design to meet your shipping requirements, and a thoughtful and deliberate plan of action could make a huge difference in money and headache down the line. The process of calculating rates and formulating transportation routes is more of an art than you can call it a science, and a solid understanding of the shipping business and a well-thought-out method will allow you to achieve long-term achievement.
A third-party logistics business (3PL) can assist in reducing the process and improve your capability to navigate roads of transportation across the country. Often , they act as a mediator for price and delivery times, an 3PL can broker special rates and discounts , and assist in achieving the company’s objectives and values , for example, getting goods delivered to their destinations in time and at the lowest price.
When choosing a 3PL or managing your own shipping department, there are many factors to take into consideration and a clearly defined strategy is crucial in order for everything else to work. First, you need to know what the shipping industry sees at the product you offer. You can then decide on the most efficient method of delivering your product to your customer.
What determines freight cost
Commodity
The first thing to think about is your commodity. What are you selling? Is it perishable? Is it heavy? Fragile? It’s important to know and know the value of your product and the way that shipping companies view the logistics involved in delivering your product.
An assigned freight class will be given to your product(s) after they have been assembled and ready to ship. The cost of shipping will be affected by the freight class, which is broken down into 18 components based on weight, density, size and the value of goods and their liability, the transportability, and capacity for storage. If the item can be placed on pallets, boxes, crates, or barrels, the carrier is required to alter their load based on the freight class of your shipment. A lot of thought must be given to the method you intend to pack your item. A more manageable packaging for the shipper will mean a lower price.
If the weight and size of your products are identical, you may typically choose a per item and zone-based system, where the cost of shipping varies according to the delivery location, and not by size and weight.
Delivery time
Pitney Bowes, a global technology company, reported in 2014 that an impressive 93% of users agree they are an essential element in their online experience — up from 24% in 2014.
In addition, 88% of the people surveyed thought that free shipping was an attractive incentive to purchase even if it required 7 to 7 days, as opposed to the cost of a delivery service that is 1-2 days.
Guaranteed delivery time should be the norm for any company. Having options for the consumer like 1-2 days or 5-7 days, or free shipping is something to consider as you may risk customers looking elsewhere. Thus, you must have the capability of getting the product to them via various channels. A 3PL can help find the best routes and methods for delivery.
Location
The distance traveled determines the price, however the efficiency and transportation methods are the reason. Packages are loaded from pickup destinations, and then trucked or trained either direct to their final destination, or taken to central hubs, and Distribution Centers (DC). At DC’s, trucks are consolidated to maximize the capacity of a truck. Then they are routed using major channels. If the product is loaded and unloaded “dock-to-dock” with no need for lift-gate service and the price will be much lower than if it must deliver to a residence or an inside delivery. If your product has deliver to a restricted access location, such as a school, or a church, or a store, extra charges will be charged. Other Accessorial Charges like increases in fuel prices can boost the overall cost of shipping your product.
Shipping options
Does your product fit in a 1st class envelope? or on an 18-wheeler with a flat bed? Most likely, it’s in-between. Knowing the pros and cons of each type of transport can provide for you will determine how you want to transport your shipment. Now that you know your commodity, and can arrange it to increase its value for freight It is now time to think about how to transport it to the place it needs to be.
Documents and parcels
There are numerous options available when sending smaller packages. Everything from envelopes or a box of up to 150lbs fall in this category. Making sure you have a good relationship with a carrier can be a lengthy process, so it is advantageous to look into the cost and other options prior to.
Choosing an 3PL
If your business expands, and your network expands It is beneficial to have a professional staff handling your international shipping needs. The cost of transporting products through the supply chain has been steadily increasing, and the complexity of transport management might be best left to a third party. Statistics show that 3PL’s often get better shipping rates and have more resources to expedite your product. According to experts, a company could expect that freight costs to typically amount to around 10% of their total cost, a significant enough portion that you should be paying attention to and implement the most efficient methods to cut down on. But choosing a 3PL isn’t as easy as picking the cheapest or the largest. Choosing the best fit for your company is essential. Your success should be determined by a long-term, profitable relationship.
When deciding on a Third-Party logistic company (3PL), here are some tips to think about:
How will your product be delivered? Does the 3PL capable of handling every transport options available, air, rail FTL/LTL and waterways? Examining the way in which the 3PL handles similar products to yours may provide knowledge of how your product can be handled.
Value-added services. What will you require to move your product? Re-palletizing or custom packaging, warehousing, white-glove service? While all of these options will cost more but a 3PL is often able to negotiate conditions and offer the most favorable prices.
Know your company’s fundamental value system. If you choose to use a 3PL, you’ll be working in order to establish an unison approach to carry your delivery processes. The 3PL will, in turn, be an appendage of your company that must consistently reflect your goals and principles. Does the 3PL exhibit a proficiency for customer service? What is your company’s perception of urgency? Does the 3PL feel the same? Do you sense a feeling of team play — of people coming together to accomplish things? Does the size of the 3PL represent yours? Or is it so large that you are worried that your business will not receive the attention to detail that you would like? What international resources does the 3PL offer? The core values of your company must be established from the beginning. A long-term, positive relationship with a 3PL will be dependent on a shared vision of the immediate plan and the longer-term goals.
What are the best ways to measure ROI? In the event that you outsource shipping needs what will you use to decide if it you’re getting the best value?
If you are trying out a 3PL system, make use of key performance indicators such as:
– On-time performance
– – Product damage or loss
– Billing accuracy
Costs (and hidden cost)
Communication is easy
– Creative problem solving
– Competitive discounts
– Reduction or elimination of accessorial charges
Best use of transport and routing
– Consistent performance reports
In today’s competitive market shipping has assumed a role of such importance that most consumers view it as their top priority. The reputation of any business could be damaged or created by a few reviews based on the timeliness and cost of the delivery your company promises. It’s logical for any firm, regardless of size to implement an extremely reliable full truckload domestic freight shipping strategy to ensure your goods arrive in time and at the most affordable price possible.
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