This document discusses freight costs and outlines a freight savings program. It notes that freight costs make up 58% of transportation budgets on average. The document then discusses outdated pricing models, over 750 different freight charges, and lack of transparency in pricing. It introduces a gainshare model for freight procurement that provides cost transparency, partnership with shippers, and pays 3PLs based on performance and verified savings. Examples are given showing average client savings of 30% through this program, with specific customers reducing freight costs by 30-56% and improving other metrics like carrier compliance and damage claims.

1. Freight Savings Program

2. 2

3. Freight
58%
Admin
4%
Inventory
30%
Warehouse
8%
Why Challenge Freight Costs?

4. Freight
Because
Inventory
58%
30%
the Upside is Huge!
Admin
4%
Warehouse
8%
Why Challenge Freight Costs?

5. What Impacts Freight Costs?
Fuel
l
essoria
Acc
harges
C
Internal
Operations
Rate Base
Handlin
g
Betwee
n
Destina
tions
Freight
ns
Classificatio
Over 750 Different Charges!

6. Discount, What Discount?
Prices increase on average
every six months.

7. Current Pricing Methods
Established in 1936.

8. 2010 University of Tennessee Study
Closer Look
at Why Change
is Needed

9. 2010 University of Tennessee Study
Many shippers are unaware of
additional accessorial charges stated
in the carrier’s rules tariff, which are
“incorporated by reference” on the bill
of lading and/or in the pricing
agreement you have with your carrier.
A typical rules tariff can run between
30 pages to over 200 pages per carrier
and are subject-to-change with no
notice to the shipper.
Alternatively, a shipper may require the carrier
to utilize a common rules tariff, such as the
SMC3 190 Rules Tariff, or write their
own rules tariff in conjunction with
the carrier.

10. 2010 University of Tennessee Study
1. Pricing models are outdated.
2. Too many constantly changing
pricing variables for any busy
freight manager to stay
informed.
3. Pricing variables change
without you knowing about it.
4. With the strategies and the
right tools, shippers can
minimize impact on profit.

11. Freight Pricing Models
Savings
Traditional
Brokerage
3PL “Shared
Savings”
True
Gainsharing
Markup
Wholesale Cost
?
?
?
?
Savings
Shared
Costs
Disclosed

12. Freight Brokerage with Markup
Savings
Traditional
Brokerage
Markup
Wholesale Cost
?
?

13. Hidden Markup
Savings
Traditional
Brokerage
3PL “Shared
Savings”
?
?
Savings
Markup
Wholesale Cost
?
?
“Hey! We saved you
10%! Let’s split it!
You still don’t know
what the real costs are.

14. Gainshare Model
Savings
Traditional
Brokerage
3PL “Shared
Savings”
True
Gainsharing
Markup
Wholesale Cost
?
?
?
?
Savings
Shared
Costs
Disclosed

15. Gainshare Model
Transparency
Partnership
Pay
For
Performance

16. Gainsharing
maximizes
cost
savings
while
increasing
performance.
16

17. Priority Gainshare
1
Proprietary
Rate Base
2
Wholesale
Buying Power
3
Contracts
& Legal
4
Technology
Platform
5
Consulting &
Operations
Proprietary rate base and buying power
Millions in freight managed annually
Our contract, not the carriers
Online TMS for easy scheduling/tracking
Weekly auditing, reporting & support

18. Priority Gainshare
Proac;ve
partner
En;re
supply
chain
Minimal
opera;onal
changes
Empower
shipping
department
Simplify
freight
process
Create
a
profit
center

19. How it Works
Analysis
(en;re
supply
chain)
Rate
nego;a;on
(our
contract)
Publish
tariff
(online
TMS)
Freight
department
one
page
guide
Weekly
audi;ng
and
reports
Bill
a
percent
of
savings

20. Weekly Freight Report Example
You Won't Get This From a Shipping Co. or 3PL
20

21. Example:
One Weekly Report:
$4,440.08 In Savings
2121

22. Benefits
Long-­‐term
cost
reduc;on
Reduce/Eliminate
price
increases
Empower
shipping
department
All
Freight
Categories

23. The Freight Dept:
More time for
strategic,
profit-producing
work
23

24. Why The Carriers Like It
Because we match the carrier to
the freight, which is more efficient
for the carrier.
24

25. 30%
Average client savings since 1998.

26. Lighting Manufacturer
Freight costs down 43%.
Carrier compliance: from 50% to 100%.
Damage claims: Over 2% to less than 1%.
Delivery lead times: 3-5 days to 1-3 days.
26

27. Parts Distributor
Freight costs down 56%.
Total carriers from178 providers to 6
Damage claims down 400%
Freight is now a profit center
27

28. Tape Manufacturer
Freight costs down by 30%
Total carriers from 30 to eight
Middlemen (profit margin) between Mexico and
United States shipments cut from 10 to only three.
Delivery time reduced by 50%.
28

29. Thank You
29