Getting even a small discount on your freight rates can save your company thousands on your busiest lanes. But as you already know, clinching lower rates is easier said than done – especially in today’s market.
So, what can you get better prices for your freight in 2022? Here are some smart tactics to help you navigate 2022’s freight procurement market and land the best rates possible.
Utilise increasing capacity to clinch lower rates
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For the first time since the beginning of Covid-19, capacity shortages have begun to ease. Cost of living and inflation is driving down consumer spending and freeing up ocean, truck and air freight.
More capacity means cheaper spot rates – which gives you the opportunity to snag some great deals right now.
Contract freight rates aren’t following the spot market and dropping just yet, but keep your eyes peeled so you can tender at the perfect moment…
Tender at the perfect moment to secure the best rates
Timing is everything – especially in freight procurement. If you tender at the right time, you can secure rates that will keep you below the market average for months.
In the last decades, market analysts, like Xeneta, have made benchmarking much easier – giving you access to real-time data on the thousands of lanes at the click of a button.
New software collaborations are making benchmarking even easier. You can now integrate Xeneta data into your freight procurement platform, so your freight management software tells you when the optimal time to tender is. This means, your platform can manage your benchmarking for you – giving you more time to spend on building budget-saving strategies.
Expand your carrier network to find better rates
During the second half of 2021 and the start of 2022, cost-reduction strategies were focused on building strong relationships with your core suppliers. If you didn’t stick with them, snapping up the limited space available was tough – meaning you had to be faithful to get a good deal.
But with capacity freeing up, you don’t need to prove your loyalty to secure a transport anymore.
If you compare more carriers when you’re tendering, you’re able to boost your negotiation power and ultimately secure a better price. This tactic is especially effective if you’re a large multi-national corporation with big buying power. Carriers will be keen to make a long-term partnership with you and fight harder for your business – especially with the threat of excess capacity looming over them.
This tactic doesn’t mean you have to be ruthless to your reliable suppliers. Strong relationships will always go far in business – so communicate effectively and keep your top guys in the loop…
Communicate quickly and effectively with your carriers
We all prefer working with dependable people. So, give your suppliers a reason to love working with you by communicating effectively when you’re requesting quotes. Although your carriers can’t change the overall market, they’re likely to give you preferred rates if you're easy to work with. And being easy to work with plays in your favour in negotiations.
Digitally managing your RFQ processes can automate a lot of your carrier communications and messaging tools, meaning you can bulk send information and essential files to all your carriers at once.
Audit your quotes to offset the cost of human error
In freight procurement, human error can be costlier than you might think. Did you know a study found around 10% of carrier invoices were overcharging shippers? That’s a figure which can really add up.
What’s the point of securing the best freight rates possible, if the bill you get is more than you negotiated?
If you or your finance team struggle to manage the workload, you can digitise freight invoice auditing on today’s freight procurement platforms – making it fast and easy.
Right now, it’s also important to check your BAF charges. Oil rates are soaring and pushing up Bunker fuel prices, due to the war in Ukraine. Double-checking those charges could save you a good chunk of your budget by the end of the year.
Want a freight procurement strategy that implements all these cost-saving tactics? Adopting the agile tactics of the Silicon Valley giants, like Google and Facebook, will give you an edge in today's competitive freight market. Download the whitepaper to learn everything you need to execute an agile strategy.
