Large consulting firms and purchasing groups offer freight rate negotiation services, but they have the same process for negotiating pens as freight. It’s not the same. Successful rate negotiation requires detailed modeling, extensive benchmarking, and an in-depth knowledge of the transportation mode in order to reduce freight costs.
At Trans-solutions, we take the time required to do a fact-based, numbers-driven analysis of your freight profile in order to deliver precise recommendations you can trust. It starts with an accurate baseline built from a representative sample of your shipments. Once the baseline is established, we re-rate the freight with the carrier’s proposed pricing and ancillary charges so we can see exactly where, when, and why prices improve and don’t improve.
From this analysis you will know, quantifiably, how much you are gaining or losing and where to address our attention during negotiation. It’s an exacting approach that takes more time. But having a detailed understanding of all the pricing elements that make up your freight rates significantly strengthens your negotiating position and your ability to reduce freight costs.
Common misperceptions in freight rate negotiation
- Freight rate reductions are not linear.
An additional 10% discount doesn’t necessarily mean your freight bill is reduced by 10%. Accessorial charges, minimum charge thresholds and other factors may offset the discount. - A better rate isn’t necessarily a good rate.
You can’t know if you’re getting competitive freight rates unless you know what other shippers are paying. Because Trans-solutions does carrier rate negotiation for many companies, we maintain an extensive record of these rates. If your rates do not compare favorably, we use this knowledge as leverage on your behalf. - To carriers, all freight is not the same.
TL carriers don’t want freight to backhaul lanes and NVOCCs don’t want freight to lanes in which they haven’t purchased capacity. Knowing what freight the carriers want can help you reduce freight costs an additional 10%-20%. Sales incentives change regularly and Trans-solutions makes it our business to understand the type of freight carriers seek. - Bundling all your freight with one carrier doesn’t ensure the best pricing.
This is a common misconception with large management consulting practices that negotiate freight. Because they think negotiating freight is like negotiating pencils, they miss the nuances of the commodity and leave money on the table.
