They may not wield a gun or send ransom notes, but many companies feel like they’re held hostage by their freight carriers. The bleak predictions for the near future of gas prices can’t make anyone any less nervous.

No red-blooded CFO would throw up his or her hands and admit defeat. There still is a way to cut how much you pay for freight.

The first place to look: The way your organization is being billed.

Many companies are billed according to freight industry standards — they set a baseline of service, and pass on any cost savings as they calculate them.
Odds are pretty good carriers are calculating those rates in a manner most beneficial to them.

Might be time to suggest a change.

Worked for this company

One controller we know decided she wanted to be in the drivers’ seat when it came to the rates they paid for freight. So she approached her company’s carriers with a request: The company would set its own baseline and measure any improvements over it on its own. Any savings found? They’d be happy to give a percentage of it to the carrier.

Be prepared – this company said its request was met with a “deafening silence.” The carrier had never been approached with a proposal like this before.

Doesn’t mean the carrier didn’t go for it. After some additional pencil-sharpening, the freight vendor accepted.

And the company knows it’s not paying a dime more than it’s supposed to.

Couldn’t hurt to ask!

Tags: cost control, freight, logistics, negotiation, supply chain