Freight transport is the basis for a successful e-commerce company. Optimal transport of goods plays an important role, especially in the management of supply chain and logistics processes. But transporting goods can also be complex and expensive.
As supply chain logistics evolve, companies are looking for ways to reduce shipping costs in a variety of ways to mitigate freight expenses.
This is where freight cost analysis comes into play! It helps to get an overview of the budget, optimize delivery processes and reduce shipping costs.
What is a freight cost analysis?
A freight cost analysis – also called freight track analysis or freight rate analysis – is an audit of freight shipping services. It provides information about whether goods transport services are used optimally and fulfill their purpose.
If problem areas arise that unnecessarily exceed the budget, a freight cost analysis provides clarity and thus helps to save costs. Invoices, delivery reports, contracts and real-time data from route planning are analyzed to identify discrepancies and identify savings potential. A regular analysis of freight costs is therefore helpful in stabilizing the budget and minimizing excessive expenses.
How freight cost analysis reduces freight costs
Freight rate analyzes are used to identify additional expenses in unforeseen areas of logistics. They often reveal simple, quick solutions that can significantly reduce costs.
How to reduce freight costs depends on considering various factors, such as shipping frequency and volume, products shipped, and freight route. Any weak points in these areas can usually be easily remedied.
Freight spend analysis can help a company understand discrepancies or additional costs. Owners, logistics teams and other decision makers can use analytical tools to identify problems - but also to understand why they occur. A freight cost analysis can prevent problems in order to protect shippers from recurring or unnecessary costs.
Understanding freight routes
Freight routes are the designated freight routes between locations that are regularly used by freight forwarders. These are also known as carrier lanes or trucking lanes. There are three types of freight routes:
- Owner-Operator Freight Routes
- Long distance freight routes and
- Short-haul freight routes, each tailored to different transportation needs.
Better understanding freight tracks through analysis can be an important part of freight cost analysis. It helps companies improve their pricing strategy, optimize their network, and make better decisions about how to ship.
A freight lane analysis conveys a range of data including transit times, fuel costs, freight costs per lane per kilometer, truck-to-load ratio, reliability and more. Using these metrics, shippers can determine the most profitable freight routes to ensure good ROI.
Shippers should also compare different carriers to ensure they choose the most cost-effective provider and that their freight processes are fully tailored to their needs.
Practical tips to reduce shipping costs
1. Collect data
The first step in a freight rate analysis is to collect evaluable data. This data can come from various sources, such as accounting systems, a transport management system (TMS), route planning software, freight insurance and more. Ideally, the data should include information such as origin and destination, shipping zone, dimensions and weight, service and net cost.
2. Evaluate freight routes used
Conduct freight route analysis to ensure your routes are being used efficiently. Consider factors such as reliability, costs and run times. Freight routes are a central part of freight transport and suboptimal routes can cause high costs for shippers.
3. Identify metrics
Review the data collected and identify key metrics. Insights are critical to transforming raw data into actionable strategies to reduce your shipping costs in the long term. To stay competitive, it can be helpful to compare these insights to industry benchmarks and market trends.
4. Implement cost reduction strategies
Transform data into direct action. The insights gained from the analysis can be converted into concrete, practical strategies to stabilize costs and make the most of your budget. These strategies can be tailored to the company’s specific freight needs to maximize returns on freight investments.
5. Check the results
Continuously reviewing freight cost analysis results ensures you reduce your shipping costs in the long run. By continually monitoring results, you can ensure that your cost savings strategy is effective. This also reveals potential for further reductions in spending in other areas.
Results from a freight cost analysis
Depending on the results of a freight route analysis, companies decide, for example, to negotiate better carrier rates, invest in new technology, consolidate shipments or improve their load planning.
An often overlooked but important part of cost analysis is the continuous monitoring of freight costs. Shippers and freight managers need to track the performance of their freight cost savings over time to ensure they remain successful and sustainable.
Continuously monitoring performance is an effective way to identify new savings potential. It helps companies familiarize themselves with the development of their freight spending over time and translate the knowledge gained into effective strategies.
Get the most out of your shipping costs with Amazon Freight
Amazon Freight offers customized freight solutions for a variety of shipping needs. Our dedicated team will help you decide which freight options suit you best. When you transport freight with us, you gain access to our extensive network of freight forwarding partners for FTL and LTL transport across Europe.
We deliver your goods either to our Amazon fulfillment centers or as a full truckload to warehouses outside of Amazon.
Our customer service representatives will be happy to explain our rates to you so that you can create the right freight plan. Through a comprehensive freight cost analysis, we help you reduce your shipping costs and stabilize your budget. Create your free shipper account today or contact our team at: freight-eu-interest@amazon.com.
We would be happy to advise you!