As a material handling solutions provider, we take pride in integrating the best mix of technology and people to maximize our customer’s bottom line. We believe that there is a “best” solution out there for every customer. This philosophy is typically applied throughout our business processes; how can we do things cheaper, faster, better, and provide more value to our customers.
One of the areas we recently focused on in this regard is freight management. Over the past 12 months, as Bastian as grown into executing more international projects, we have made a concerted effort to improve our overall freight management processes. The below are some key areas on which we have focused our attention and have seen real benefits:
- Consolidation – For large international projects, we have had a lot of recent success with consolidating multiple suppliers into one container. In the past, we might have left it up to our sub-suppliers to arrange freight. This might have been less than container loads or even 20’ containers. We now work with a freight forwarder to consolidate equipment from different suppliers into a central location and then professionally load all of it into the minimum number of containers. This minimizes cost, damage, and risk of lost goods.
- Over the Road vs. Rail – For domestic as well as international projects, real savings can be found through utilizing rail versus conventional trucking. One of the first things we do from a freight perspective is decide if rail in an option. It can typically be ruled in or out very early in the schedule. While using rail typically adds time to the delivery schedule, if the project can tolerate the additional time, then the savings are too good to pass up.
- Tracking – Something we take for granted in domestic freight is the ability to track shipments door to door. It is an absolute must to always know, or at least have the ability to quickly determine, where your freight is at any moment. We mandate that our freight partners have the ability to provide real time status of all our freight with a simple phone call or via a few mouse clicks on a webpage. This is vital for international projects where delays in port can quickly add up to big dollars.
- Commitment on Load Size in PO to Sub-Suppliers – Many times sub-suppliers are hesitant to commit to freight envelope (i.e. required space to ship our freight) at the time of purchase. We have undertaken a different approach lately where we require at time of purchase a commitment from each of our suppliers for the freight envelope. This means our suppliers must commit to how many containers, trucks, etc., is needed for their equipment, and if they go over, they are liable for the costs of the extra container. Then we integrate that envelope into our overall freight analysis to minimize cost. For a large international project, the savings can be significant.
- Consistency on Charges – While there are many variables that go into determining the cost of shipping, it is very important to analyze freight costs to make sure there is a level of consistency. While some cost components are going to always vary geographically, others should remain constant. It is very important to lock-in the rates at time of PO with freight providers. For example, the price invoiced for container #53 should be the same as container #1, regardless of the time frame between shipments.
- Air vs. Ocean for International Projects – For a successful international project, it is important to partner with a freight forwarder that can provide both air and ocean freight services. Regardless of how well you plan your freight, Murphy is always out there. Inevitably, air shipments will need to be implemented for that key component that failed at startup or that was “misplaced” in transit. It always happens. The freight providers we typically use can schedule a pallet load air shipment anywhere in the world within 5 days at very reasonable rates.
With any project, freight is usually toward the bottom on priority level; however, it can really have a huge impact on the success of a project. Spend the time early in the project, and make sure you are managing the freight, not the other way around!