How to Keep Your Freight Costs From Breaking the Bank
It’s hard not to notice the daily fluctuations in gas prices. A recent news report estimated that the average American household spends about 4 percent of its annual income on gasoline. Plus, most freight shipments that get delivered to our doors arrive in vehicles running on diesel, which is even more expensive. For this reason and many more, we have to keep a close eye on our daily freight costs.
Have you looked at your total invoice cost, then looked at the total freight cost related to that invoice? Is the percentage 5, 10, 15, 20, 30 or 50? It’s important that you know the answer to this question on every purchase. That "great deal" that’s going to make you a lot of money might not look so great when you realize that freight costs are 20–25 percent. And as a buyer, knowing the total cost, including freight, will help you make a final decision between company A and company B.
Familiarize yourself with freight classifications and their differences in costs. Shipping LTL can save you a lot of money, and since freight costs are directly related to square footage and weight, palletizing has become increasingly important.
Taking advantage of NAMM's freight services and those of several other freight brokers can save you money. There are a number of online freight calculators that make it easy to estimate freight costs on your own. These calculators usually require a shipping-from zip code, shipping-to zip code, number of pallets, size of pallets, total shipment weight, total dollar value and freight classification, which can also be obtained online. Most vendors will provide this information, and after you get familiar with the process, it becomes very easy. Once you start comparing prices, you may be amazed at the savings you find by shopping around.
On a recent 50-piece shipment, the difference in freight cost was more than $2,000 between the quote I was given by the vendor and the price I was able to negotiate with the broker. That may be an exception, but most of the time, the price I negotiate for freight is less than what was originally quoted.
Freight costs are also critical if your company places special orders for customers and prides itself on fulfilling those orders quickly. Sometimes, you'll have to weigh whether to ask the customer to pay a portion of the shipping charges or cover the cost in the name of customer service. In some cases, covering the freight cost could be worth keeping your customer satisfied and coming back to you for all of his or her musical needs.