Profit Strategies: Negotiating the Transportation Terrain
With a significant increase in shipping costs anticipated this year – dominated by the possibility of LTL rates going up by as much as 7% on average – it is imperative for shippers to scrutinize not only their overall shipping costs, but also the specific modes of shipping and their associated risks. The delicate balance between cost and risk is a critical consideration, as both shipping costs and the potential for damage or delay have direct implications on profitability. A myopic approach to minimizing immediate expenses without accounting for the potential consequences of damaged goods or delayed deliveries can result in dissatisfied customers, operational inefficiencies, and ultimately, financial setbacks for the shipper.
To achieve timely, cost-effective, and safe deliveries while safeguarding their overall fiscal health, shippers should look for a strategic and holistic approach from their transportation management provider, encompassing both cost and risk considerations.
In our new blog series, we examine the intricacies of transportation management by looking in depth at several essential elements that shippers look for in their providers. In this first article, we look at ways shippers can work with transportation management partners like S-2 to improve their profit margins while also delivering exceptional and reliable service to their customers. We’ll explore the ways S-2 works to maximize profits with their clients by leveraging volume pricing with their shipping partners, optimizing modes of transport for cost-effective shipping, and implementing risk mitigation measures to protect against unforeseen backend costs due to delay or damage.
Leverage S-2’s Volume Pricing for Competitive Advantage
S-2's LTL management services empower clients with modest shipping volumes by providing access to competitive rates. This is made possible through strategic volume leverage with numerous carriers and third-party logistics providers (3PLs). Leveraging its extensive network, S-2 collaborates with numerous small to mid-sized shippers who share similar limited volume shipping requirements. By consolidating the shipping needs of these clients, S-2 negotiates on their behalf, securing highly competitive rates. This strategic approach enables small to mid-sized shippers to effectively compete against their larger counterparts, leveling the playing field in the competitive shipping landscape.
The Power of Strong Relationships
S-2 boasts a broad network of partner carriers and employs dynamic technology to source carriers as needed. Additionally, they execute thorough vetting processes that assess partner reputations, service performance, and insurance. Employing a number of digital compliance tools, these meticulous measures serve to reduce the risk of fraud and ensure clients access to compliant carriers, strengthening the overall reliability and quality of service.
Negotiating the Most Favorable Advantages
Let’s take a look at a few scenarios in which S-2 helped direct shippers and the companies who work with them to turn volume pricing into a competitive advantage and a boon to their bottom line.
1. Low-Volume LTL Shipping for Small Manufacturers
In the case of a small manufacturing company who uses a shipping partner to dispatch five less-than-truckload (LTL) shipments weekly, a main challenge lies in the lack of destination consistency. This makes negotiations with a single LTL company difficult for the shipper due to the diverse geographic requirements. By engaging S-2 through its proprietary Transportation Optimization Platform (TOP) and availing themselves of S-2's leveraged LTL services, the shipper is able to secure LTL shipping rates for their client comparable to those of shippers with 20-30 weekly shipments.
For the manufacturing company, this advantage not only enhances their competitiveness, but also improves the profit margins. By accessing favorable rates typically reserved for higher shipment volumes, the small manufacturing company can now effectively compete with larger manufacturers helping to increase sales and revenue growth. This results in a substantial boost to their overall competitiveness and financial performance.
2. A “Virtual Line Haul” for Small Freight Forwarders
Consider a small freight forwarder facing volume constraints for developing a dedicated line haul to consolidate export shipments to reach port. Leveraging S-2's dynamic pricing models and diverse customer base, S-2 facilitates the transportation of the freight forwarder's products by integrating them into S-2's consolidated network, effectively creating a "virtual line haul." This innovative approach involves merging the freight forwarder's shipments with those of various other S-2 customers, resulting in a collective volume substantial enough to secure discounted pricing. By tapping into the economies of scale provided by S-2's extensive network, the small freight forwarder not only overcomes volume limitations but also gains cost advantages associated with larger shipment volumes. This collaborative strategy not only optimizes the logistics process for the small freight forwarder but also underscores the power of synergy in achieving cost-effective and efficient transportation solutions.
3. Premium Heavyweight Air Cargo Services for Small Distributors
In the scenario of a small distributor with sporadic heavy-weight air transportation requirements, leveraging the capabilities of TOP becomes a strategic imperative. By engaging with S-2 through TOP, the distributor receives a comprehensive assessment to determine the most optimal mode of transportation. Additionally, the distributor benefits from its ability to piggyback on S-2’s leveraged pricing arrangements with national heavyweight air cargo providers. By tapping into the leveraged pricing afforded by S-2's extensive network of carriers, the small distributor gains access to heavyweight air cargo services and capitalizes on the cost advantages typically associated with larger-scale operations. By partnering with S-2, the adaptable and resourceful distributor can thrive in the complex landscape of logistics and transportation.
Optimize Shipping Modes Using Freight IQ
At the heart of S-2's strategic approach to transportation management is Freight IQ, combining state-of-the-art technology with human ingenuity. S-2's highly trained logistics professionals engage cutting edge software to navigate complexities such as routing, carrier selection, disaster recovery planning, and more, allowing them to craft optimal shipping solutions, even in the most challenging situations.
S-2 employs Freight IQ to collaborate with shippers in evaluating, on a shipment-by-shipment basis, the most suitable transportation mode. This involves a meticulous analysis of shipment characteristics, including factors such as weight, volume, and urgency. By tapping into a diverse network of partner providers, S-2 ensures access to the best available pricing for the mode that precisely meets the customer's needs, whether it's LTL, ground expedite, truckload, or air. Once decided, the S-2 team determines the best, safest, and most competitive route tailored to meet the specific requirements of each shipment.
Risk Mitigation to Save Time & Money
S-2 works to steer clear of risky scenarios, such as placing bulky shipments into less-than-truckload (LTL) networks that might jeopardize the integrity of the cargo. The Freight IQ experts at S-2 evaluate each shipment's characteristics to be sure the chosen transportation mode aligns with the specific requirements, minimizing the risk of damage or delays.
S-2 understands that prioritizing secure and timely deliveries may involve higher upfront costs, particularly in opting for elevated service modes like expedited shipping. However, the wisdom behind this strategy becomes evident when considering the potential consequences of damaged goods or delayed deliveries. S-2 assists shippers in making informed decisions about the safest route for their freight, acknowledging that the additional cost of specialized services is often justified by the protection it affords to sensitive cargo.
S-2 harnesses the capabilities of Freight IQ for proactive identification and strategic resolution of potential issues to ensure shipments arrive securely and on schedule. This comprehensive approach, integrating cutting-edge technology and industry expertise, enables S-2 to help shippers choose the right shipping mode from their network of carriers for every type of freight.
S-2's extensive history as a single solution source and premier transportation management provider manifests in a robust network of partner carriers and a multitude of options when it comes to transportation modes. This translates into reduced risks, more shipping options, and significant cost savings for shippers. The result of their decades of experience and dedication is a proven track record of delivering on-time and damage-free shipments for shippers of all sizes.
Stay tuned for our next article, where we will unveil the secrets behind crafting a seamless user experience in transportation management. If you are eager to delve deeper into S-2's comprehensive suite of services, discover how they can optimize and streamline your logistics, or wish to schedule a demonstration, don't hesitate to reach out today.
Bookmark https://www.s-2international.com/ to connect with the team to guarantee that your shipments will be sent in full confidence, guided by our committed staff and excellent partner carriers.