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GTS Blog

3 Simple Steps to Gain Control of Inbound Freight Costs

Posted by Ascent Global Logistics on Mar 31, 2017 9:47:14 AM

controlling inbound freight costs

 

If you’ve been following our blog series on inbound shipping, you know that lack of visibility is one of the primary issues with inbound shipments. And to that we say this: there is no such thing as free freight!

All operating costs and profits for “free freight” shipments are covered under the cost-of-goods purchased.

This means that the consignee pays with an inflated invoice cost. The additional cost is justified at times, but it’s very common to see vendors over-inflate product prices or force consignees to buy more volume than actually needed to get “free freight.”

Here are 3 cut-and-dry ways to control your inbound freight cost:

1. Pre-paid & add - Review the “and add” dollar amount on the invoice of ‘prepaid and add’ shipments. Remember that vendors typically add both shipping and handling to the invoice. If the ‘add’ portion is higher than the inbound collect charges would be by using your own carrier, instruct the vendor in writing that all future shipments are to come via your approved carrier on a collect basis.
 
2. Free freight - Ask “free freight” vendors for a pick-up allowance. This could drastically lower your cost of goods purchased and your overall transportation spend.
 
3. Compliance - Be sure that all of your inbound collect freight has been routed via the appropriate carrier to maximize operational and cost controls. If non-approved carriers are delivering collect freight to your company, it’s time to re-issue routing instructions to your vendors. Include a penalty clause for non-compliance.

Once again, it’s usually not in your best interest when vendors dictate the shipping and freight payment terms. Gaining control = gaining bottom-line savings!

Visit www.onestopshipping.com to learn more about running a well-managed inbound shipping program.

Topics: Vendor Inbound Management