As more and smaller firms enter the logistics industry, more people will be making freight agreements for the first time. Here are a few controllable cost elements to consider when negotiating such an agreement, no matter which side of the table you are on.
Service level agreements, and service levels in general
It is in everybody’s interest to see that a shipment gets where it is going without damage and in good time. Both parties should consider how they can contribute to making this happen. The shipper should be considering palletisation, documentation and packing issues. You should both be looking at improving transparency for mutual efficiency.
Automatic tender and settlement
All considered, it costs a carrier almost £10 to generate and send an invoice. If a load is tendered early, the carrier can better predict equipment use as well. Also, modern shipment tracking data allows simplified single step settlement instead of the more complicated systems still in common use. This makes a business case for making tender and settlement automatic and electronic, and discounted rates therefore.
Dynamic pricing structure
Process automation can allow shipping and carrier partners to build strong, optimised networks if they are sufficiently transparent with each other, and if they cooperate in planning. Using a pricing structure that varies per lead time, season, or even day of the week can be appropriate and even lead to greater efficiencies on both sides. Shippers should be able to link their transportation management software to such a dynamic price list very easily.
Transparent shipment valuation for insurance purposes
In traditional arrangements, both shipper and carrier make more assumptions about each other’s insurance coverage, and exposure, than is really advisable. It is becoming best practice to include item valuation in the shipper’s disclosures, and for shippers to disclose their accident rates and actual insurance costs as well. Only then can a full and open discussion of risks and who pays for them be had. This can lead to minimised claims, faster resolution of disputes, and lowered coverage costs and exposure all around.
Driver retention incentives
High turnover among carrier employees, especially drivers, is one of the things really holding the industry back. Making retention incentives part of a long term contract can have benefits for both parties, reducing costs in the long term and improving quality of service as well.
If you are looking for a freight forwarding company you can discuss the options with, contact DMG Freight Services on 01279 452 468 for more details.