Here’s 3 simple tips from John Cole on how to save costs on freight. I thought John’s tips sounded really helpful, so Yes, we jumped out of the car on the way to the Airport to shoot this.
Rob: You know if you look at all the cost components in your Logistics operations very often, freight is one of the largest and it can be one of the cost areas that’s not that hard to actually reduce the costing. Hi, this is Rob O’Byrne from Logistics Bureau and with me today I’ve got one of our Freight Specialists John Cole who has very kindly agreed to share some of his secrets.
John: Good day Rob!
Rob: Okay you work a hundreds of companies all over Australia, Asia & South America, we can spend a long time talking about that, you must see some very common mistakes that people fall into with Freight. What would you say of that sort of the top two or three areas where people could easily have a look at their own business and start reduce cost.
John: With there are some that are very common probably the top of the list is an obvious one and that is people use too many carriers and following from that the obvious problems of if your’e using too many carriers, then you’re not aggregating volume, you’re not getting the best price you possibly could and I’ve seen companies ranging from companies that spend hundreds of millions of dollars per year than companies that aren’t spending ten millions of dollars per year. In fact I was talking to a company about it last week, that’s a 15 Million dollar company and they got 38 carriers.
Rob: Well I’ve certainly seen companies here in Australia with 200 carriers.
John: Yeah that is not unusual. I’ve seen diversified companies that have had 450 in excessive 450 carriers which is just impossible to manage, its impossible to get the best price at it the best possible service that would have to be the top issue.
Rob: What’s number two?
John: Number 2 is probably a little bit more complicated but it’s not hard to manage and that is people do aren’t manage the service selection in their business that really comes down to the people in the business who get to choose what services are being used, understand what services are cost, understand the companies service offer which is very important you need to set the service offer first then you use the transport services to support that and a lot of people would choose the wrong services because it’s convenient because they don’t understand what’s available and quiet of because they don’t understand the cost.
John: And that is a huge potential.
Rob: So support that simplistically maybe were buying express road freight in actually we only need
general road freight.
John: Correct yeah, A look at that a good example of that Rob would be a project I recall doing in the medical business where their consumables and there were medical improvements that help to guide towards there were to use operations and the company is using exactly the same service to move consumables as those particular improvement service, you know that’s a pretty simple example.
Rob: That’s a pretty simple thing though they can double check themselves so number three? Well one else for other secrets but maybe the third one.
John: Well certainly not down to get more we still want to get a living. Look it well number 3 is actually not going from the market it’s not tendering and I think certainly I know from my own experience that the reasons for this pretty much come down to peoples reluctant to go to the market with they don’t know who the players are they don’t feel confident that they can talk the language with carriers, there’s a bit mistake about carriers and so people tend to talk about you know close colleague group about who they should use, get recommendations from people really working tips on horse races you know it’s about as who you are. They have a three that I find most often again could use benefits for the client.
Rob: Okay thanks for that John. Now you’ve actually develop of that’s what would you call it health check for a worker freight.
John: Oh that’s right. Yes yes.
Rob: Where people can very quickly gets a sense of were doing the right thing and you know there are opportunities to save money say we all can go into that all of that maybe will just put a link below the video everyone can have a look at that and we have talked before about freights issues and will put some links below if there are any other relevant video’s for you as well. John needs to get a rush off and catch a plane well gonna get away from the sort of traffic behind us that’s will get you off to the airport and thanks very much John.
John: You’re welcome.
Here are some more freight tips:
And if you need help with managing your freight costs or carriers, check out:
Transport Contract Negotiation
P.S. Please feel free to leave a comment and tell us what other information or tips you would like to hear.