The buzz today is all about controlling ocean freight costs. Profit margins are under pressure, so it's important to know if your carrier is invoicing at the contracted rates, or if fuel surcharges are appearing mysteriously on their invoices to you. You may also want to make sure that LTL shipments are not combined in order to give you FCL rates. Checking the transit times is equally important; goods-in-transit are being financed; it's important to get them delivered and sold.
Manufacturing and selling a product is easy; but market-share and profits lie in seeing who can get that product to the customers cheapest and fastest.
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5. The buzz today is all about
controlling ocean freight costs.
Profit margins are under pressure,
so it's important to know if your
carrier is invoicing at the
contracted rates, or if fuel
surcharges are appearing
mysteriously on their invoices to
you.
6. Manufacturing and selling a
product is easy; but market-share
and profits lie in seeing who can get
that product to the customers
cheapest and fastest.
8. Management of profitable shippers is cognizant
of these issues, and sets a corporate tone that logistics, or
logistics management, is to be considered an important segment
of management planning.
About 5 years ago, the aberdeen group identified the following
common factors in companies they considered “best-in-class”
shippers. Though, you may say that the report is dated, it actually
still holds true today.
9. 8% of their carriers were compliant in their routing requirements.
45% were compliant in their contract costs
65% reduction in their freight costs annually
(Per unit carried)
These Companies Featured In The Study
Ensured That Their Carriers Were:
11. Too-small an audit is a statistical waste of time
nd effort.
Too large an audit adds extra costs that might
Not be worth the salaries expended in recovered-costs
If a company audits every invoice, it likely costs
as much in personnel or added technology as is
saved in finding any errors. Without some level
of automation, personnel costs makes an audit
cost-ineffective:
12. It's important to remember that the freight audit is an
after-the-fact issue.
Real saving in shipping and logistics comes not just from being
invoiced properly, but rather from using performance and
intelligence data for future sourcing and procurement of freight.
Outsourcing is an answer, but usually not a good one.
Outsourcing is an inexpensive answer to handling payables, but
unless carrier invoices are linked to the appropriate freight
contract, there is no way to ascertain if the invoices are correct.
14. Those who were categorized as “best-in-class” companies by the
Aberdeen Report used a freight invoice as the starting point to
measure their carriers.
These best-in-class companies possessed a management that
proactively worked to control and/or reduce logistics costs by the
utilization of dedicated in-house staff.
These best-in-class companies possessed a management that
proactively worked to control and/or reduce logistics costs by the
utilization of dedicated in-house staff.
15. These metrics offer evidence of the differences in resources
dedicated to logistics management between best-in-class and
laggard companies:
A single person or department manages global
Logistics
70%
Best
In-class Laggard
49%
24%
33%
30%
19
%
44%
58%
64%
69%Transportation procurement managed globally
Tracking of freight costs including fuel subcharges, demurrage,
detention, damage
Practice multi-round freight bidding
Over 90% of freight invoices are audited
16. The key to gaining control of your
freight costs is having access to
freight cost data and then utilizing
that data to see where costs can be
reduced. Focusing on root causes
enables the company to gain a fuller
understanding of where their freight
money is being spent – and if it is
being spent wisely.
17. Learn How Xeneta Can Help
You Get Insight And Intelligence Into
Your Global Ocean Freight Prices And
Change Your Logistics Business:
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Demo Now