Three Ways to Reduce Your Cost of Freight

Photo by Steve Wilson

One way for manufacturers to reduce the costs of operations but not sacrifice on service or product quality is by reducing cost of freight.

It’s likely your company’s cost of freight is a key component of your overall cost of inventory, and that lowering these costs is an essential part of increasing gross profit.

Most enterprises assume that the single biggest factor involved in lowering freight costs is to use their economies of scale to lower expenditures on shipments. However, there are other ways. Here we list three:

Better packaging helps to reduce costs by ensuring that freight is protected against damage. Damage incurred on shipments is an extremely important cost of inventory.

More accurate shipment tracking. The ability to track shipments in real-time helps to reduce costs pertaining to inaccurate information, while also empowering companies to make quicker, more informed decisions. Companies can then reroute shipments to other warehouse destinations earlier in the process, thereby avoiding the high costs of delays, lost time and multiple hub points.

A company’s freight costs on incoming raw materials and parts are a key ingredient of not only managing its supply chain, but in defining its costs of inventory. Lower these freight costs with higher volumes, multiple shipments and consolidated strategies, and your company has successfully lowered a key component of its inventory costs.

In fact, not only has your company lowered its costs, but it has made its product offering more competitive to its market and its customers.

Freight plays an extremely important role in making companies more competitive and can ultimately make the difference between business won, or business lost.


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