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.

Do Brokers really give the best price?

Many companies decide to use brokers for a variety of reasons. Some of the reasons may include:

One stop shop
1000s of carriers to choose from

The Shipper gets their lower discount.

We are using 1995 pricing.
No negotiating of rates with the carriers
Auditing of freight bills
Lack of a knowledgeable trained staff

But some of the hidden aspects of the brokers can cost more than the service.

One Stop Shop

"I only have to deal with one person when I have an issue." This can be true, but when you only speak to a certain individual within the brokerage, what is the cost.

We use 1000's of carriers to choose from.

Many brokers use the advertising slogan that they have 1000's of carriers in their system. The problem many shippers incur is what is the quality of those carriers, so they remain with the carreirs they have chosen.

You get their lower discount.

Many times only a select number of the carriers are offered. These are generally the best discount for the broker, not the shipper. Some of the concerns for the shipper should be claims; could I get a better or same discount level on my own? One of the biggest issues is will you ever receive another discount increase. The broker will use the excuse that prices haven’t gone up. The brokers are then making more money on each load you ship through them.

We use 1995 pricing.

This is a common selling tactic used by many brokers and depending on the discount may or may not save you money versus current base rates. In addition, it over looks economies of a scale. If a large retailer opens a distribution warehouse in an area, the carriers may provide extremely low pricing to that area to get trucks into the distribution center. Therefore if the center was built after 1995, you will lose these savings.

No negotiating of rates with carriers.

Although you are not negotiating directly with the carriers, the broker is, and it is not so much on your behalf as that of the broker. Many times the carrier representative will provide competitive bidding for your business depending on your volume. If you volume is greater than $500,000, you should be doing your own bidding.

Auditing of Freight Bills

In a recent case study, N2TMS went into a client who was doing approximately $1.5MM in LTL. They were using a broker. They were paying $80,000 for their auditing fees although this information was actually a hiddenline item in their statement. Although the audit caught some items, the staff of the shipper was still performing an internal audit. Therefore auditing of their shipping was being paid for twice.

Lack of a Knowledgeable Staff

Staff employees do not need to be the traffic manager having an extensive knowledge of all aspects of freight.

So Is there a solution?

Check out N2TMS and see why our solution could save you money and provide you with a better solution than brokers. We use the latest technology to let you run your own freight for a modest subscription fee, not per load. You choose 6-8 carriers, you control your negotiations making the carriers compete for your business.

Auditing is not a problem, N2TMS allows you online auditing of your freight bills.

Some shippers have saved as much as 30% from their use of brokers using current base rates.

Training of your staff takes less than a day to implement and techincal expertise is alaways available.

Do you use a single RFQ?

Singular Request for Quote (RFQ) sounds like it is a good idea. A request for quotation (RFQ) is a standard business process whose purpose is to invite carriers into a bidding process to bid on specific for your business. RFQ generally means the same thing as IFB (Invitation For Bid).

When a company receives a single RFQ, the base rates associated with an individual carrier can vary as much as 8-10% from client to client, so even receiving the highest discount may not ensure receiving the best price for each shipment. This does not take into consideration fuel surcharges (FSC) and accessorials.

For example: a preferred carrier provides a client with an 80% discount, which makes it appear as the lowest RFQ compared to a competitor that only offers a 78% discount. However, the carrier offering the 80% discount’s actual base rate price is $1,100 versus the 78% discount quote which has a base rate price of $1,000; therefore the discounted pricing is as follows:

$1000 x 80% = $220.00 before fuel

$1000 x 78% = $220.00 before fuel

Note that the price is the same although a better discount is provided. Therefore, if one company has a better fuel discount or accessorial, it can provide a lower cost despite the higher discount. This is why competitive analysis provides lowest pricing every time. Despite discounts, lower fuel surcharges, waived or repriced accessorials, N2TMS ensures that your lowest cost is always ranked #1 inclusive of FSC and accessorials.

Getting the Best Pricing for your Freight Dollars

Getting the best freight price for your shipment can be a daunting task in today's market place. The questions you should be asking yourself:

If you are using a broker, when was your last discount increase? Most shippers using brokers or 3PLs will not receive another discount increase. The excuse will be you haven't had a price increase.

How much are you really paying for auditing? Some shipper of $1MM dollar have found they are paying $80,000 for auditing only to have to reaudit their billing to insure they are being charged right.

If you have a single RFP, what is the difference between your base rates and your discount? In some cases the percentage savings in the base rates can cost more money than the discount difference.

Do I manage my tariffs regularly? If you are not holding regular meetings with your service providers, you are leaving money on the table.

Are my carriers competing for my business? Using one carrier provides no competition for your business. Each route is priced differently, therefore on one carrier there can be a difference of 10% for the same lane.

Who is controlling your shipping expense? Is it a clerk within your business? Sometimes a employee can receive "perks" for business. But is those perks influencing their decision process? If there is a possibility you need the reporting of N2TMS.

N2TMS places the control of your freight back into your hands, controlling discounting, accessorials, Fuel surcharges, and using reporting to provide best pricing and competition. If you believe in having service providers compete for your business, then using N2TMS gives you the edge to ensure you are getting the best price for your business.

Join the new way to get your best pricing without brokers and 3PLs. http://www.n2tms.com/