Improving Less Than Truckload (LTL) Decisions

Remember:

·         All freight is negotiable.

·         Carriers use high pricing and then discount heavily.

·         A low volume shipper generally receives a minimum 60-72% discount.

·         Larger shippers (1M+) should be in the 85-90% discount range.

Know your carriers and what motivates them to gain more of your business. N2TMS will aid you in providing data for your carrier to increase your discounting.

Develop a relationship with your carrier so you work to improve your discounts. Carriers are willing to improve their discounts if they can prove that the amount of business will warrant an increase in tariffs.

Carriers need to see shipments and usage by other carriers to increase their discounting for your company. Use the report from the N2TMS program to show carrier percentages.

Each year, carriers have a GRI (general rate increase) which is a percentage increase amongst all lanes which they service. In the last few years, this increase has been 6-8%. This is why negotiating discount increases throughout the year is imperative. 

Apply the effective date from your tariff to ensure you know when your tariff was last modified. Meetings should be set with carriers on a three month basis or sooner.

Understanding Tariffs

Tariffs are broken down into three parts:

By origination/destination

·         Outbound

·         Inbound

·         Third Party

In each part, discounts may also be applied using the two methods:

·         Weight Discounts – this is generally applied when you have a standard product which is easily handled.

·         State by State discounts: Choose the states that each discount applies. Many carriers are trending toward this method to secure regional areas and lessen the distance their drivers have to return within an area. It is broken into:

o   Interstate Discount

o   Intrastate Discount - Within home state (If applicable) discount

Classification Structures

Understand your class structures. If you are using several classes, it may be necessary build a classification sheet to have your classes and weights consolidated for the N2TMS system. This helps in ensuring that each person completing freight follows the same classification system for your company and ensures that all billing can easily and quickly verified using either NMFC (National Motor Freight Classification system) or reclassed items using FAKS (Freight of All Kinds).

Volume Quotes

Classes 150+ are generally volume quoted when the number of pallets is greater than 5.

Most carriers use 7,500 lbs as the break for which a volume quote should be applied. Some carriers can use lesser weights. Know what the minimum weight to call for volumes. This saves money.

Minimum Charges

Minimum Charges – AMC also known as Absolute Minimum Charge. The minimum amount a carrier will charge for a shipment. This may also apply to an accessorial charge called single shipment for shipments under 300 lbs.

Managing Accessorials

Accessorials are special needs applied to your freight to ensure shipping; these include but are not limited to notifications fees, marking and tagging, single shipments, sort and segregating, etc.

Waived Accessorials (Special Needs Rates) – shippers who have higher volume and recurring accessorials such as notification fees should have certain fess waived.

Negotiating Fuel Surcharges

With the rising price of Fuel, many carriers have applied FSC charts to compensate for changes in the price of diesel. Fuel surcharges can be used as a negotiable point when carriers are unable or unwilling to provide lower discounted rates.

Using N2TMS makes your decisions simpler by providing immediate pricing for all of your routes. Designed with shippers goals in mind of controlling their process and to maximize pricing strength while ensuring timeliness, quality of the carrier and keeping claims to a minimum.

Are brokers really necessary?

Many companies rely on brokers to run their freight decisions. But are they really necessary? If your software provides you more control than a broker, is there potential savings? What is the difference between using a software program and using a broker?

A broker works on the premise that they have a larger footprint with the to get better discounting and therefore provide these discount increases onto their clients. But the reality is are they truly transferring these savings forward. They negotiate on their behalf not the client and most clients after signing up, receive no further discounting.

Some brokers use the average older rate bases, but the problem with this is two fold, one being economies of a scale, in which if new hubs are built rates in that geographic area plummet, but the older base rates do not provide this. The second area is whether or not the discounts truly save you money and will the discount every increase.

In addition, brokers are required to "audit" yout freight bills, but does the auditing not require re-auditing by your firm. If you are not auditing your own freight bills, you are potentially leaving money on the table. But in addition you are doing the auditing all the same. So why pay for it twice.

N2TMS is not a broker, we are software program which allows you the control and run your tariffs using your established carriers and we save you money. You control the tariffs and always receive the lowest price with metrics to ensure the process is truly saving you money. You control the increases in discounting based on your volume, usually getting better discount rate than brokers provide. The program handles discounting, FAKs, accessorials, fuel discounts, and regional and national carriers.

If you posting your pricing for an annual period, N2TMS provides a quick clean method of getting you pricing. Getting the better system saves your company money and in today's economy all companies should be saving money.

Getting Better Freight Rates

Controlling Transportation Costs

If you are in the freight industry, you know that transportation has changed dramatically in the last twenty years. Shippers now realize that they must control their costs through analysis used to help them in the decision making process.

Companies now have the option to truly control transportation management. Most companies research and perform pricing on the basis of a percentage of sales associated with freight. But why not use true numbers? Using your own tariffs and using comparisons of all of your shippers as a basis for pricing. It is now possible for any sized company to truly manage their costs without a huge investment in Information Technology.

Most financial methods look at freight transportation as a fixed cost, and therefore apply constant financial measurements to apply to expenses. However, Freight has always been random, dynamically changing due to conditions, without regard to whether costs are too high or managing claims issues, brokers and 3 PL hidden costs. Many executives look at Freight as a service to sales, but not controllable.

Transportation Managers have always had to struggle with the different modes and control associated with the fundamental changes in freight, discounts, (regional, interregional, direct and indirect), negotiable and non negotiable accessorials, fuel surcharges, freight of all kinds and how to properly manage them. Some transportation departments call carriers all day trying to get the best pricing and spend enormous amounts of labor to achieve possible $100 in savings.

Brokers and 3 PLs use this confusion to “benchmark” pricing and receive large compensation for each of your shipments. They do this through the expense of auditing, but most billing has to be re-audited internally to insure true discounts is applied. Another expense which is not accounted for. But wait, didn’t you pay for this?

How about end of month control? Are you shipping heavier at the end of the month to ensure you are reaching budget? Is the control in place to get the pricing?

Finally there is a solution to truly control your transportation costs. N2TMS is a software company, designed with the shipper in mind. Control of the shipment begins at the shipper. The decision making process can be spread across the organization, ensuring consistency and low labor expense. Always choosing the lowest carrier based on a comparison of all of your carriers using your tariffs. The ranking is always provided based on least to highest for each shipment. Payables are lined up with spend to ensure freight expenses are in line with the cost side expectations.

Negotiations are enhanced with carriers to ensure shipping is easily tracked and decisions are made on analytics and not salesperson give-ways.

Isn’t it time to give your organization the control needed to know your freight and better handle your negotiations? Call N2TMS now, get a demo and find out how to truly control your freight costs.

Are you really getting the best freight price?

Many large shippers rely on a one time review of tariffs and rates to ensure they are getting the best freight price for their business and to fulfill budgets for the upcoming year. Many shippers perform their review of freight in October to decide what their freight budget will befor the upcoming year . They then lock in lanes to pricing using their ERP system and ship those shipments on designated carriers who provided the best pricing.

Carriers have now begun to modify their pricing increases to improve their edge knowing the process many large shippers have using their ERP systems. During the last two years most carriers have increased pricing up to twice during the calendar year and are scheduling a early year increase in 2012.

Although completing the budget for the a calendar year is necessary, shippers should continually utilize the best pricing method throughout the year. Getting actual values for each shipment can sometimes save on freight costs by allowing a continual review of carriers pricing and lanes.

N2TMS provides a solution to ensure best pricing for each lane. Whether you are using Czarlite, older rate bases or current rates, the N2TMS system always ensures that you receive the lowest priced shipment for every lane. Check us out at http://www.n2tms.com/

Freight Optimization

In today's competitive environment, many companies exclude freight expense as a controllable. Viewing their discount rate as good when it is a marginal to lower return on investment.

Optimal freight expense from your software includes:

• Having a rating engine which provides quick direct access to their rates.
• The ability to ensure carriers invoices are the correct contractual rate including accessorials (both waived and priced) and fuel.
• Improve corporate decision support by providing various stakeholders with specific information to manage their business.
• Allow organizations to easily filter transportation spend by various customized dimensions as well as proactively monitor transportation spend management programs throughout the enterprise.
• Provide visibility to service vs. cost and provide necessary information to ship at lowest cost.
• Improve negotiating power by considering total volume from all sources and all directions.

N2TMS is built to provide shippers the ability to receive the best pricing, the best service, strength in their negotiations and the the maximum savings for their freight spend.

http://www.n2tms.com/

Do your carriers compete for your freight?

In today's environment carriers have shrunk their supply. Most carriers had several price increases in the last year to raise profits. But competition in the freight industry remains. If you are not negotiation with your carriers regularly you are seeing price increases and thus higher cost on your freight to your company.


N2TMS is designed to maximize your options of service providers giving you the best pricing for each shipment and route. Simplifying the negotiation process and increasing your leverage for discounts.  The process is simple by ranking your carriers for each route. We use your discounting, so what you receive is your savings. A broker does not take a piece of your pie.

Negotiation are simplified by extensive analytics to help you keep your profits. Because if your aren't keeping your profits and getting better negotiations, then it is time to experience the N2TMS difference. http://www.n2tms.com/

Creating Simplicity in Shipping

N2TMS designed their program with the Shipper in mind. Simple control is the key to help shippers get the best value for their shipping dollar. Most transportation management systems only manage the shipping process. But N2TMS has taken the step to provide algorithms for improving competition amongst the carriers by making them compete for the shipper's business.

With simple controls and input of tariff discounts, reduced or waived accessorials, and negotiated fuel surcharges, N2TMS takes the step of providing the best pricing for each route and each route is individually calculated to ensure best pricing.

Calling around to obtain quotes is labor intensive and generally removes the savings of quick quotes. Single Request for Quotes (RFQs) elminate the ability of the shipper to have competition and getting the savings.

The goal of the most shippers is to ensure that their product arrives on time, in good condition and at the best price. Shouldn't your freight decisions program be made for this? If your current program isn't saving you money and time, then you should contact N2TMS today for a free demo.