10 Tips to Help Manage Freight Costs During the Fuel Spike

The effects of the sudden and substantial increase in fuel is being felt by everyone. Freight Companies in Australia rely heavily on diesel, and they have no choice but to pass the increases on to their customers. Although there is no way to completely avoid the increase, there are strategies to minimise the impact: 1 – Make sure all carrier quotes include fuel To manage we need to measure – don’t let carriers get away with “plus plus”. If you’re not sure, ask – Does this quote include fuel and GST? It’s also important that the quote has an effective date. Many carriers are changing (increasing) fuel weekly and your quote might only be valid until Friday. 2 – Time your carrier choices Some freight companies in Australia run lagging fuel levies which mean their increases may not yet be as severe as others. Your freight manager and their chosen software should enable you to choose the pockets of excellence, and select the right carrier at the right time. 3 – Customers nominated carriers If your customers are nominating or demanding you choose a particular carrier, and you’re paying for the freight, you need to discuss options around sharing the costs. If you can offer a cheaper carrier, that’s preferable. Another option is to negotiate a surcharge if the receiver is not flexible on their carrier demand. 4 – Consolidate orders where possible

Usually, sending fewer orders of larger size reduces your overall freight cost as a percentage of sales. The basic and minimum charges are amortised across more orders by sending them as one consignment. If your customers are used to daily order and despatch, talk with them about 3 days a week instead. 5 – Increase minimum order quantity Alternatively, negotiate with your customers to increase the minimum order. The math still works in your favour, and if the customer orders 2 widgets instead of one, you also increase sales. It might be possible here to offer an incentive, depending on your previous minimums. 6 – Choose General Service where available Especially on the long haul south-north and east-west routes, adding a couple of days to transit times might save you hundreds of dollars per consignment. If the orders aren’t urgent, slowing them down is a good option. This usually works with palletised freight, and depending on your freight manager, might also work with smaller cons as well. 7 – Work with your regional specialists If you’re in a regional area, you may be restricted by prohibitive onforwarding costs for the bulk and general carriers. Sometimes getting the freight to your nearest capital is half the cost of the entire journey.One example is our Gippsland customers use Burra Couriers to bring the freight to our warehouse in Seaford, and then we despatch with the bulk interstate carriers. As an added bonus you will be helping your local carrier out – keeping the money in the community.

8 – Force Majeure or Extenuating Circumstances If you’re trapped in an FIS contract and your initial approaches to your customers have not been welcomed, tap into your legal team and see if you can activate any force majeure or extenuating circumstances clauses. I’m not a lawyer, but I’m pretty sure a conflict in the middle east isn’t your fault.Good customers will see value in a vested partnership, and ought to understand that if you can’t afford to supply them, that’s a sub optimal outcome. 9 – Regional 3PL The cost of freight may have increased to such a degree that it may be worth utilising a regional 3PL to hold stock interstate, and then despatch your orders from there. The increase in cost from the 3PL will be offset by sending bulk freight (consolidated orders) and then bypassing some of the big fuel surcharges by using local and regional carriers. Talk to us about the Global3PL Network if you’re interested. 10 – Pay your bills on time Carriers are under huge financial pressure right now. Cashflow is tight and the last thing they need is to be chasing debtors. Be the customer of choice by paying your invoices in full on time. It is not preferable to force carriers to make decisions that accounts are non-viable due to overextended terms .I hope this helps. If it does, or doesn’t, please reach out to the team at Freight Companies Australia on 03 9008 6999 or info@freightcompaniesaustralia.com.au

Marshall