Improving your Freight Costs 2 – Required History

Phase-2: The method I am using here is to enable you to compare the potential costs of different Freight Providers if you deliver Nationally or at least over a two States. The savings or differences between Providers can be up to 53% (this is an actual figure from a project I am currently doing!).

Once you have the history file of all your consignments for the relevant period together and in a spreadsheet, you should also have all the data for each consignment on one line, with the different types of data in specific columns. You can now remove all the information (columns) that reference a customer or receiver’s name and address (referred to as “Consignee”, while you are the “Consignor”).

What should remain are the following columns:

Date, Consignment No, Destination Suburb, Destination Post Code, Actual Weight, Volume, Number of Pieces.

If you send consignments from more than one place, you will need to include the Sender’s Suburb and Post Code.

Your history file has now been de-sensitised, yet retains all the information required by your preferred/selected carriers (freight providers) to work out an appropriate quote. Now before you send this off, you need to decide what is important to you and your customers. Also be aware, you do not need to send this information to the carriers, you can always just ask for their rate-card, but this would mean you do all the work in the spreadsheet.

Phase-3 of the project is to make a list of the performance standards you will be asking your carriers to provide for comparison. You will also be asking for a copy of all their ancillary charges (these are the ones that can really hurt the pocket if you are not aware of them up front). Next time, I will give you a list of the standards I look for.

Improving Your Freight Costs 1 – Prepare for task/project

The first phase of any project is to gather and consolidate the data you have already, the same goes when reviewing your freight costs.

Having previous costs and your freight profile allows you to identify patterns which will form the foundation of your cost review.

To have the right type, quality and volume of information is critical. This information should be at a consignment level and include: date, destination suburb, post-code, actual weight (this is different to charged weight) and volume as well as the number of pieces in the consignment and the total cost per consignment. Extra data that will help is the type of customer/delivery e.g. residential, commercial or industrial locations.  If you do not have this data already, contact your current freight provider(s), they should be able to give you all this information in a spreadsheet – and at no charge.

You will also need to have the rate tables from your current providers. These ‘tables’ will show you the Cubic Conversion, Fuel Surcharge and kg charge (within each weight break if they have variable charges). I will explain these terms and how they affect you in a later blog.

As you can see there is nothing in this data that is commercially sensitive, confidential or will contravene any privacy requirements. But it will allow you to complete the task with confidence.

As for time period covered, it depends on the cycles. It is best to have enough data to cover 1.5 to 2 cycles. This will usually mean 18-24 months of history. If you do not have seasonal/annual cycles a lessor range would be suitable. Let’s say your cycle is 1 month, then 2 months history would suffice, although it would still be just as easy to consolidate 6 months’ worth.

Other information that you should acquire includes the current performance of your freight provider, how many consignments do they lose, damage or just misplace. How many other functions are impacted by the performance of your freight provider, for example accounts receivables/payables, customer service, sales, etc, what issues do they have? All this will help as you go through the project.

Gathering all this information will help you during the next phases. Phase-2&3 will be to build a history table for quoting against and formulating services that are important to your business, eg: a high DIFOT %- Delivered In Full On Time.