Instead of taking a traditional markup approach and simply squeezing the rate a bit to get your business, we start from scratch and negotiate on your behalf the best rates with the best carriers based on your cargo and shipping patterns.

We eliminate those high margins disguised as “discount rates,” and the literally hundreds of tiny charges that add up to big bucks at the end of the year. We don’t make money unless we can save you money. There is no cost or obligation to see if this approach can work for your company.

Here’s typically how the process works:

We can implement a full scale freight cost restructuring plan within 30-45 days with minimal intrusion. Here are the typical steps in the process:

1. Freight Review & Assessment: We evaluate your existing programs and determine “low hanging fruit” — opportunities for immediate savings and areas for initial concentration.
2. Benchmarking: We provide a cursory benchmarking proposition of savings opportunities for each mode of transportation. A minimum amount of information is required at this point but gives you an idea very quickly of potential savings, and establishes a foundation for working together.
3. Alignment: Once we assess existing programs and benchmark expenses and savings opportunities, we ensure alignment on restructuring objectives, our gainsharing relationship, and our engagement plan.
4. Representation: Once an engagement plan is approved, we represent your interests with your freight transportation vendors and provide our leveraging capabilities to realize savings for you.
5. Implementation: A custom “Shipping Sheet” is created for your team which provides specific direction how freight should be shipped. Typically there is minimal involvement from our team because your existing shipping department handles freight just as they are now, but under a framework that will produce long-term savings.

Upon overhauling your expenses, we remain an active adviser to ensure your programs run as efficiently as possible. Our entire team is an assemblage of experts with a diverse set of backgrounds within the freight transportation industry.  We all have a common mission to minimize costs for our clients.

We understand successful freight transportation programs require steadfast attention towards sound management to maintain optimization. Additional features or our advisory services include the following at no additional cost:

• Freight Management System Applications
• Bill Auditing & Claims Management Services
• Brokerage & Forwarding Services
• Consulting & Logistics Management Services
• Management & Performance Reporting Services

Most purchasing agents fail to consider that suppliers use their outbound transportation departments as profit centers, not as cost centers as many believe. What does that mean? It means shippers (your suppliers) are using their negotiated carrier rates and your package volume to fatten their bottom lines. In fact, you are probably doing the same thing to your customers! I can count on one hand the number of clients that I’ve had over the years that passed their discounted rates on to their customers.

Here’s How Inbound Transportation Markup Works

Supplier A meets with its carrier and negotiates a discount off of base shipping charges, let’s say 20%. Rather than pass those savings on to you and all its other customers, Supplier A decides to invoice full base shipping charges. The result is that Supplier A pockets 20% of all invoiced shipping charges while passing along only 80% of its collections to the carrier. That’s a nice profit center, wouldn’t you agree?

Inbound shipping costs are often bundled with product costs, hiding the actual shipping cost paid by the supplier to the carrier. The notion that these shipping costs are absorbed by the supplier is wrong. To paraphrase a popular expression, “There is no such thing as free shipping!”

Even when shipping costs are clearly listed on the supplier’s invoice, they are usually based on calculated standard pricing and do not accurately reflect the actual cost to ship your goods. The rates you pay may not even coincide with the carrier’s base shipping charge. It can get very confusing, to say the least. But it is certainly in your company’s best financial interest to unravel this mystery.

You Don’t  Have to Pay a Premium for Inbound Transportation

The good news is that you no longer have to pay a premium for inbound transportation. You can enjoy significant savings by managing the inbound process yourself. By now, you are asking yourself, “What do I need to do to get control of my inbound shipping?” An effective strategy must include the following items:

• Review supplier invoices to identify shipping costs, and in the cases where shipping costs are not available, ask your suppliers to unbundle costs and provide the information to you. This will give you an excellent understanding of the savings opportunities available to your company.
• Meet with your 3PL or logistics consultant to set up an inbound collect billing program. They will be happy to accommodate your request. Additionally, by controlling inbound volume, you suddenly become more profitable to your carrier because of the high number of inbound packages per day. The overall cost of servicing your account will drop considerably for your carrier once you implement an inbound collect program. Take advantage of this cost reduction when discussing new rates.
• Discuss your intentions with all your suppliers so they clearly understand you intend to manage your inbound shipments.
• Develop and implement the operational plans and business processes necessary to properly direct and manage your inbound shipments, for example, carrier routing letters.

Understanding the savings opportunities is the first step toward convincing yourself that managing inbound shipments is something you should be doing. Establishing the necessary changes in operational plans and business processes remains the challenge of implementation. However, once you calculate the dollars you can add to your company’s bottom line, I am sure you will be as enthusiastic as I am about managing inbound transportation.

We believe in establishing long-term relationships with mutual benefits for our clients and ourselves.  Establishing a transparent transactional model via gainsharing creates a foundation for common objectives:

• Always enable optimum pricing of services.
• Always share a common mission to minimize costs.
• Always ensure total visibility of our value.

We continuously assess material changes in freight volume, leveraging capabilities, and other factors to ensure you are achieving maximum savings from our pay-for-performance model.

How do we establish a gainsharing model?

By evaluating existing vendor arrangements and cost structures for each mode of freight transportation together, we can establish a set of benchmarks for financial gainsharing propositions.  Evaluations are performed most expeditiously via simple auditing of existing billing information and/or contracts.

Evaluation of various aspects of existing program information enables us to assess cost and/or other restructuring possibilities for benchmarking gainsharing opportunities.  In essence, we benchmark existing retail costs against  our wholesale costs.

Weekly and monthly performance reports detail specifically how much you are saving.

Both Priority Logistics and our clients prefer our transparent gainsharing model because we now have a common objective which is to maximize cost savings while improving performance.

One of the line items continually increasing in cost is freight.

Most companies see at least a 3% to 5% increase in freight charges annually. And many times freight increases are buried in the over 750 accessorial charges that can be levied on you. Did you know you give a carrier the right to charge these fees when you sign the bill of lading?

The hundreds of freight classifications change on a daily basis. Classification changes impact cost immediately and usually  without you knowing it. In even the largest of companies it is difficult if not impossible to keep up.
And even companies are losing billions of dollars each year in costs which can be avoided, even the largest Fortune 500 companies continue to operate the Old School way.

Ten years ago we saw looked at the freight industry as missing a strategic and analytical partner in order to optimize the logistics process and lower freight rates as much as possible.

Compare it to an in-house attorney vs. an outside law firm. Or the CFO with an outside CPA firm. Every company has them because in the long run they save the company millions. Our approach is much the same. We create a strategic plan and eliminate avoidable costs.  The result is thousands or even millions in cost savings.

More about the Freight Savings Program.

Every business wants to reduce cost, but how do you do it without impacting quality or service? Freight transportation costs are one of the largest expenses for many companies, yet for even the largest Fortune 500 companies with large freight departments, there is significant opportunity to reduce cost and increase efficiency

The Traditional Bid Process Doesn’t Work

The way companies typically tackle lowering freight costs is through competing bids. The problem with the bidding process is that it always delivers only marginal cost savings.

This is inevitable because a profit motive is present. Whenever a markup is added to the freight, you are never going to see the true cost of shipping your goods.  Costs are reduced slightly, but the real root costs are not shared, and you never realize maximum, long-term cost savings.

This is equally true with traditional logistics firms, where typically a markup still exists, even when their model is positioned as “pay-for-performance.”

We Flip the Process 180 Degrees.

Instead of just simply getting bids on your freight, we partner with you as a consultant. We develop a business plan and budget using our team of logistics professionals. Priority has saved millions for clients since 2001.

Our freight analysis team determines a price and works with you and suppliers. The result is a business plan free of hidden charges and bogus discount rates. You continue your core supply chain process, often with the same suppliers. But now, your playbook includes dramatically lower costs and increased efficiencies.

Weekly Reports Show Ongoing Savings

We analyze your shipping costs on a weekly basis and present detailed reports of your savings at every step in the supply chain. We generate weekly audits that assure suppliers are using the correct rates and acessorial charges on your invoices. You then pay the carriers knowing everything is correct.

Compensation Based Solely On Performance

As compensation, priority receives a portion of the savings generated from your current baseline rates. Our analysis and negotiating services are free. We only benefit by saving you as much money as possible, while delivering better and more efficient services. Isn’t that the way it should work? Compensation based on performance only?

The First Step: The Freight Review

To determine how much you may be able to save, we conduct a Freight Review. This process usually takes 3-5 days and will outline recommendations and strategies for reducing freight costs. We review the recommendations in person or via phone, which usually takes 30 minutes to one hour.

• Overall freight transportation expenses reduced by 56%.
• Freight collect program improved by over 78%.
• Carrier portfolio cut from 178 providers to 6 providers.
• Inventory and shipping system remodeled to JIT program.
• Damage claims reduced from over 5% to less than 1%.
• Established freight program as new profit center for company.

Download the IBT Case Study

Optimizing Existing Business and Establishing a Pathway for Rapid Expansion

Results

• Overall freight transportation expenses reduced by 43%.
• Carrier compliance improved from approximately 50% to 100%.
• Damage claims reduced from over 2% to less than 1%.
• Delivery lead times enhanced from approximately 3-5 days to 1-3 days.
• Importation program planning to move from United States to Mexico for additional savings.

Assessment

Eiko, Ltd. is manufacturer of lighting products under several popular brands serving a multitude of clients across the audio and video, photographic, automotive, medical and dental, electronic, industrial and electrical industries. Eiko was focusing on rapid expansion while concentrating resources on its areas of expertise, and needed to utilize capital more efficiently to subsidize its expansion plans. As new business development became a priority for Eiko, new competitive advantages were needed to gain market share. Priority Logistics was consulted to analyze existing freight transportation and logistics practices and provide recommendations to enhance expansion initiatives.

Objectives

Eiko sought to overhaul its existing freight transportation program with a comprehensive set of modifications and new initiatives, and turned to Priority Logistics to provide assistance in achieving the following objectives:

• Optimize freight flow activities between many facilities/locations.
• Consolidate shipments to minimize unnecessary expenses.
• Eliminate excessive assessorial fees and freight misclassifications.
• Establish regionalized distribution centers for better efficiencies.
• Eliminate inefficiencies created via improper use of carriers, modes, and routes.

Solution

Upon completion of its analysis and alignment of recommendations with Eiko, Priority Logistics implemented a series of initiatives to address every objective. A standardized set of criteria for mode and route selection for multiple facilities and locations ensured optimization of freight movement and consolidation of shipments. Favorable changes to existing freight contracts and an ongoing auditing program guaranteed Eiko would no longer be victim to overcharges. Tactical planning and lease negotiations for new and repositioned distribution centers minimized long and expensive hauling of freight across the country. New procedures implemented at all levels and locations within the company ensured all employees adhered to guidelines aimed at maximum efficiencies.

• Overall freight transportation expenses reduced by almost 30%.
• Carrier portfolio reduced from over 30 providers to 8 providers.
• New revenue stream equivalent to 3% of all LTL freight costs established.
• Shipments between Mexico & United States cut from 10 middlemen to 3 middlemen.
• Delivery lead times improved by more than 50%.

Download the Nitto Denko Case Study

. . . Because the numbers are huge.

On average, freight transportation costs exceed 50% of total logistics expenses for organizations handling products.  Freight transportation costs can vary as much as passenger transportation costs. There are literally hundreds of variables that impact the bottom line cost you pay.  This leaves an opportunity to uncover savings using our unique methodology.

Lack of standardization and industry regulation causes confusion and inefficiencies and burns working capital.  Our experience bears evidence that most companies can realize a 15% to 50% savings with NO change in their existing program or comprising service.

Learn how the Freight Savings Program works.

For the past 12 years, we’ve been able to save over $1 billion in freight charges for small shippers to Fortune 500 manufacturers.

We analyze all carrier portfolios, modes of transportation, classification systems, assessorial fee structures, available rebates and discount opportunities, route selection criteria, and much more to determine areas for improvements.

Once we determine the right  portfolio of carrier partners and associated working models, we typically restructure or rewrite carrier contracts ourselves to the maximum benefit of our clients, and institute a series of checks and balances to ensure ongoing compliance with services and billing practices.

In rare instances, even if we determine all existing carriers and modes of transportation are employed by a client are providing maximum efficiencies, we are still able to negotiate much better rate structures with such carriers to reduce overall expenses. No matter the size or sophistication level of our clients, we always provide consulting and contract management services to everyone, as we are certain to uncover opportunities for improvements which can be incorporated into existing programs whether or not additional services are appropriate.

Should Your Vendor Really Be Writing the Contract?

Freight transportation contracts between carriers and shippers are typically written by carriers.  As a result, often inherent terms and conditions are written to favor carriers, and are typically void of critical performance measurement factors which benefit shippers.  We write our own contracts with carriers on behalf of our clients, thus ensuring more favorable terms and conditions and delineation of performance measurements with financial consequences towards adherence to such measurements.   Additionally, our weekly auditing of the invoices assures compliance.

Domestic Freight Auditing

Carriers often make billing mistakes, whether through charging for late deliveries, incorrect rates and/or weight charges, incorrect classifications, overcharges and missing discounts, duplication of invoicing, etc.  Such mistakes in obligations and/or billing costs businesses money.

We also audit both historical and ongoing billing on a regular basis to ensure mistakes are monitored and billing reflects actual and verifiable services, and collect appropriate refunds whenever possible (typically uncovering up to 5% in additional refunds/discounts).

It cost nothing to determine what impact our program can have on your bottom line. Request a Freight Review to get started.