Transportation Cost Optimization Techniques

“I got 90% off base shipping rates. I know a guy, I can connect you.” RUN. 🚩 When merchants ask for advice on how to optimize costs, there is always someone who “knows a guy” or someone who claims to be an amazing negotiator who can grind down your carrier. If you hear that, you should run. This isn’t exhaustive, but here are the real ways to save on shipping costs: 1) Is your inventory in the right place? Understanding where your demand comes from will dictate where to locate your inventory.  Placing your inventory in the right place drives down the distance that a package travels, and therefore drives down your cost.  If you aren’t doing a network analysis before you start, you are already off on the wrong foot. 2) Can you leverage scale? One reason 3PL’s exist is that they are points of aggregation. Labor can be shared across multiple accounts for order processing, and a carrier can pick up packages from multiple brands at one location, reducing the total cost. 3) Can you utilize multiple carriers? Different carriers focus on different weight bands and locales.  There are great carriers for lightweight packages and better ones for heavier products.  Regional carriers might serve one region really well, but not be nationally focused. 4) Do you have the technology in place to realize these gains? It’s a non-negotiable to have a system that can dynamically route orders to the correct fulfillment location.  Ask if your provider uses "rateshopping." This should not be hardcoded based on zip code. It should be dynamic based on your inventory levels and the location of the buyer.  Second, if you are utilizing multiple carriers, you want to ensure you have software that can shop for rates in real-time, looking at packages, destinations, and rates from the carrier. 5) Can you optimize your packaging materials? It is expensive to ship air.  Making sure you have the right boxes and are creating denser packages drives better returns. If someone’s “advice” for better rates is to talk to “their guy,” they are full of it. Run. There are concrete ways to optimize costs.   It takes great software and a plan to make it happen. There are also so many talented consultants who can help you with this (a few come to mind below). Nate Skiver, Kathleen Sullivan Garman , Robert Clemons, Timur Eligulashvili, John McClymont, Aaron Alpeter

Unlocking the Potential of AI and ML in #Logistics and #SupplyChain: The logistics and supply chain sector is ripe for transformation. As digital technologies evolve, artificial intelligence (#AI) and machine learning (#ML) have become central to enhancing efficiency, agility, and resilience in this complex industry. But the promise of AI and ML isn’t just theoretical. Through best practices in application and deployment, logistics and supply chain businesses can unlock tangible improvements in operations, customer experience, and cost management. 1. Begin with Strategic Use Case Identification The logistics industry is diverse, spanning warehouse management, transportation optimization, inventory control, demand forecasting, and reverse logistics. Rather than attempting to implement AI and ML across all facets simultaneously, leaders should strategically select use cases that align with business goals and deliver immediate value. Common high-impact areas include: Predictive #DemandPlanning: AI and ML can analyze historical sales data, economic indicators, weather patterns, and even social trends to predict demand. This is particularly powerful for avoiding stockouts or overstocks, especially for seasonal items. Inventory Optimization: ML models can evaluate data on product flow, shelf life, and demand cycles to determine optimal stock levels, helping reduce holding costs while ensuring availability. Route Optimization: For transportation and delivery, ML algorithms help identify the most efficient routes, factoring in real-time traffic, fuel costs, and delivery windows to minimize delivery time and costs. Best Practice: Begin with data-rich, high-impact areas where #ROI can be quickly demonstrated. Doing so builds confidence within the organization and generates momentum for further AI initiatives. 2. Leverage #Data Lakes and Real-Time Data Feeds In logistics, data flows in vast volumes and from multiple sources: shipment tracking, customer orders, warehouse inventory, telematics, weather data, and more. Creating a centralized data lake—a repository of structured and unstructured data—is essential for harnessing AI’s full potential. Real-time data integration allows ML models to adapt dynamically, providing insights and enabling rapid response to evolving conditions. 3. Enhance Customer Experience through AI-Driven Personalization Customers increasingly expect real-time updates and personalized interactions. AI-driven customer experience platforms can improve customer satisfaction by providing tailored recommendations, customized delivery options, and real-time order tracking. Case in Point: A major logistics provider might use AI to predict delays based on weather patterns or traffic data and proactively notify customers, offering alternative delivery options or adjusted ETAs. Best Practice: Implement AI solutions that add value to the customer’s journey, building trust and loyalty while streamlining interactions

Smart Shipping: Mastering Consolidation, FCL & LCL for Cost-Effective Logistics In the fast-paced world of global trade, choosing the right container strategy can make all the difference in cost, speed, and efficiency. Freight forwarders and businesses must decide between Full Container Load (FCL), Less than Container Load (LCL), or Consolidation—but which one is best? 🚢 1️⃣ Full Container Load (FCL) – The Fast & Secure Option FCL means one shipper uses the entire container, whether it’s full or not. Ideal for: ✔ Large shipments – Maximizes efficiency for bulk cargo. ✔ Faster transit – No waiting for consolidation. ✔ Better security – Less handling, reducing damage risk. ⚠ Consideration: Higher cost if the container isn’t fully loaded. 📦 2️⃣ Less than Container Load (LCL) – The Flexible & Cost-Effective Choice LCL shipments share a container with cargo from multiple shippers. Perfect for: ✔ Small & medium shipments – Pay only for used space. ✔ Budget-conscious shipping – Lower costs than FCL. ✔ Inventory flexibility – No need to wait for full container loads. ⚠ Consideration: Longer transit times due to consolidation and deconsolidation. 🔗 3️⃣ Consolidation – The Best of Both Worlds Consolidation (groupage shipping) allows multiple small shipments to be combined into one container, reducing costs while improving efficiency. ✔ Optimized space usage – No wasted container capacity. ✔ Lower costs per unit – Shared shipping expenses. ✔ Ideal for SMEs – Enables small businesses to access global markets affordably. Consideration: Requires careful planning to match cargo schedules. Which Shipping Strategy is Right for You? The choice depends on shipment size, urgency, budget, and handling risks. Smart freight forwarders optimize these strategies to reduce costs and streamline supply chains. Question: How do you balance cost and speed in your shipping strategy? Let’s discuss! #Logistics #FreightForwarding #FCL #LCL #Consolidation #SupplyChain

How do you save a $1M a year on their freight spend without even rate shopping? 👎IT'S NOT:👎 -Buying unnecessary tech or paying a bunch of money for insight into market rates. -Rate shopping every load and everbody 24/7 👍IT'S:👍 - Understanding your current data - Knowing what you're looking for and what you're trying to accomplish - Coming up with a strategy and executing and seeing it through The picture of the graph is an outbound freight analysis I ran a few weeks back for a pet food brand, showing their freight spend with a single national carrier across all their primary customer base (roughly 2 distributors and 7 retailers, with DCs across the country). This brand was not only using a single, national carrier for all of their LTL shipments, but was also shipping every. single. day. It was as maddening for the sales folks as it was for the finance and ops folks. We broke out the spend by customer and then consolidated it by region. The purple bars are the two main zones where: regional LTL carriers were implemented in the Midwest; and LTL --> FTL consolidation was increased going into Southern California. 👉SOLUTION:👈 - Routing Guide/business rules put in a system that: ⭐Utilized regional carriers for regional moves ⭐Waterfall and auto-tender preferred carriers to specific retailers and distributors - Stretch lead time on purchase orders from 7 to 15 days to build up consolidation pools to increase truck share on outbound purchase orders 👉OUTCOME:👈 ⭐$95K saved a month between all 9 customers (that's before even negotiating any type of customer specific or contracted pricing) Instead of spending a bunch of time beating up carriers for cheaper rates and/or spending a ton of money on a new tech stack, and figure out what's going on first. Remember... your supply chain is not an auction.

𝐑𝐞𝐯𝐨𝐥𝐮𝐭𝐢𝐨𝐧𝐢𝐳𝐢𝐧𝐠 𝐓𝐫𝐚𝐧𝐬𝐩𝐨𝐫𝐭𝐚𝐭𝐢𝐨𝐧: 𝐇𝐨𝐰 𝐑𝐞𝐚𝐥-𝐓𝐢𝐦𝐞 𝐃𝐚𝐭𝐚 𝐚𝐧𝐝 𝐀𝐈 𝐚𝐫𝐞 𝐃𝐫𝐢𝐯𝐢𝐧𝐠 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲 Imagine a world where transportation systems operate with unparalleled efficiency, minimizing delays, optimizing routes, and ensuring cargo integrity every step of the way. That future is here, driven by the power of real-time data and artificial intelligence. 𝐇𝐞𝐫𝐞'𝐬 𝐡𝐨𝐰 𝐢𝐭 𝐰𝐨𝐫𝐤𝐬: 𝐒𝐞𝐧𝐬𝐨𝐫𝐬 𝐚𝐧𝐝 𝐈𝐨𝐓: Vehicles are equipped with sensors and IoT devices that continuously track performance, cargo conditions, and even driver behavior. Think fuel usage, braking patterns, and temperature monitoring – all in real-time. 𝐀𝐝𝐯𝐚𝐧𝐜𝐞𝐝 𝐍𝐞𝐭𝐰𝐨𝐫𝐤𝐬: This constant stream of data is transmitted via high-speed networks like 5G and IoT, allowing for instant aggregation and analysis. 𝐀𝐈-𝐏𝐨𝐰𝐞𝐫𝐞𝐝 𝐎𝐩𝐭𝐢𝐦𝐢𝐳𝐚𝐭𝐢𝐨𝐧: AI steps in to process this information, identifying inefficiencies, optimizing routes on the fly, and even predicting maintenance needs before breakdowns occur. It's like having a super-smart co-pilot for the entire transportation system. 𝐈𝐧𝐟𝐨𝐫𝐦𝐞𝐝 𝐅𝐥𝐞𝐞𝐭 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭: Fleet managers gain access to a wealth of insights, enabling them to make proactive decisions, manage disruptions effectively, and improve delivery reliability. 𝐓𝐫𝐚𝐧𝐬𝐩𝐚𝐫𝐞𝐧𝐭 𝐒𝐮𝐩𝐩𝐥𝐲 𝐂𝐡𝐚𝐢𝐧𝐬: Real-time visibility allows businesses to track shipments at every stage, fostering better coordination and resilience across the entire supply chain. 𝐓𝐡𝐞 𝐈𝐦𝐩𝐚𝐜𝐭? * Reduced operational costs * Enhanced delivery reliability * Improved safety * Greater transparency * More resilient and adaptive supply chains 𝐊𝐞𝐲 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲: By leveraging interconnected systems and AI, transportation managers can make precise, data-driven decisions that keep supply chains moving efficiently and adapt to any challenge. What are your thoughts on the role of AI in the future of transportation? Share your insights in the comments below! #AI #Transportation #Logistics #SupplyChain #Data #Innovation #Efficiency

Real-time rerouting isn’t a luxury but the new baseline. Are your deliveries reacting fast enough? Traditional route planning stops at dispatch, leaving drivers locked into fixed schedules. But the world doesn’t operate on a fixed plan. Traffic jams, sudden weather changes, and unexpected order updates can derail even the best-laid routes. Modern logistics demands adaptability. Real-time rerouting powered by AI uses dynamic signals like: - Live traffic conditions - Weather forecasts and current updates - Vehicle location and status - Real-time changes in delivery priorities Imagine this: Sarah, a delivery driver, starts her day with a route optimized for efficiency. But halfway through, traffic builds up unexpectedly. Instead of wasting time stuck on the road, her system reroutes her around the congestion, saving 15 minutes and delivering packages on time. ✅ 30% faster deliveries ✅ 20% less fuel consumption ✅ Happier customers It’s about staying competitive. Predictive analytics help allocate drivers and vehicles effectively, reducing miles driven and cutting costs. Every signal matters, and the ability to respond to them in real-time is the edge every delivery business needs. If your current system doesn’t adapt mid-route, it’s time to rethink your approach. Dynamic rerouting isn’t the future, it’s the NOW. Are your deliveries keeping up? Let’s talk about how AI-powered solutions can transform your operations. #AIinLogistics #SmartDelivery #RealTimeRouting

🚛 Reducing Transportation Costs in the Supply Chain: The Digital Advantage 📉 In high-volume process industries, transportation accounts for 50-70% of total supply chain costs—meaning even small improvements can lead to significant profitability gains. While many “cost-saving” strategies are commonly recommended, most fall short in today’s volatile logistics landscape. Traditional approaches like route optimization, load consolidation, and carrier negotiation offer limited impact unless combined with digital transformation. Leading companies are moving beyond these generic solutions by: ✅ Eliminating unnecessary product movement (e.g., optimizing ship points dynamically) ✅ Reducing volatility in carrier selection (e.g., using AI-driven tools like LevelLoad) ✅ Optimizing truckloads with smart planning (e.g., Unilever’s AI-based load optimization) ✅ Minimizing carrier delays (e.g., dynamic scheduling with https://hubs.li/Q036YzmF0) Companies like Kimberly-Clark, Procter & Gamble, and Unilever are leveraging AI, machine learning, and advanced planning tools to drive 5-10% cost reductions and near-100% first tender acceptance rates. The future of supply chain cost reduction isn’t about squeezing carriers—it’s about intelligent, data-driven optimization. 🚀 How is your company tackling transportation cost challenges? Let’s discuss! 👇 hashtag#SupplyChain hashtag#Logistics hashtag#Transportation hashtag#CostReduction hashtag#DigitalTransformation hashtag#AI hashtag#TMS hashtag#FreightOptimization https://hubs.li/Q036Ypvm0

Transportation Management in SAP S/4HANA: 1. Transportation Management (TM) Module: • The TM module in SAP S/4HANA helps manage all aspects of transportation, including planning, execution, and monitoring. • It integrates with other modules like Sales and Distribution (SD), Materials Management (MM), and Warehouse Management (WM) to provide a comprehensive view of the logistics process. 2. Route Optimization: • SAP S/4HANA uses advanced algorithms to optimize transportation routes, reducing costs and improving delivery times. • The system can consider various factors such as traffic, fuel costs, and delivery windows to determine the best routes. 3. Carrier Selection and Freight Settlement: • The TM module helps in selecting the most cost-effective carriers based on predefined criteria. • It also supports freight settlement processes, ensuring accurate and timely payments to carriers. Integration of Bots and Transportation in SAP S/4HANA: 1. Automated Shipment Tracking: • RPA bots can automatically track shipments and update the SAP S/4HANA system, providing real-time visibility to stakeholders. 2. Automated Freight Booking: • Bots can handle freight booking processes, including sending requests for quotes (RFQs) to carriers and processing responses. 3. Proactive Issue Resolution: • Chatbots integrated with the transportation module can proactively alert users about potential delays or issues and suggest corrective actions. 4. Data-Driven Decision Making: • Bots can analyze transportation data within SAP S/4HANA to provide insights and recommendations for improving logistics operations. These integrations enhance the efficiency, accuracy, and responsiveness of transportation management in SAP S/4HANA, leading to better overall supply chain performance.

Over the past 3 years, I’ve guided shippers in enhancing their logistics strategies through effective benchmarking. Here are the top 5 techniques I teach every time. Technique #1: Transportation Rate Benchmarking How it works: - Compare your transportation rates against the market using DAT iQ Benchmark. - Identify rate discrepancies to improve cost efficiency. - Adjust procurement strategies based on real-time data. This technique helps you align with market trends and maintain competitive rates. Technique #2: Strategic Planning and Procurement How it works: Use benchmarking data to set accurate budget expectations. Plan proactively for RFPs and carrier reviews. Please make sure your team is prepared months in advance. Quick note: Don’t wait until the last minute. Start planning early to leverage data effectively. Technique #3: Operational Efficiency and Optimization How it works: Avoid relying on gut feelings. Do focus on data-driven insights to optimize daily operations. If you avoid assumptions and utilize data, you'll unlock greater operational efficiency and cost savings. Technique #4: Performance Evaluation and Monitoring How it works: Continuously monitor performance against benchmarks. Use data for root cause analysis when performance deviates from targets. Adjust strategies to stay aligned with objectives. Do these three things, and you’ll always stay ahead of potential issues. Technique #5: Rate Comparison and Communication How it works: Regularly compare your rates and performance with the market. Communicate these insights to senior management confidently. Use data to support strategic decisions and demonstrate competitiveness. That’s it! In the comments, let me know which of these techniques you found most helpful, or raise your hand if you're already using these best practices today. #Logistics #datIQ #procurement

One of the things I run into most frequently when trying to optimize costs is that the options are constrained by contracts and/or other business rules. Their planners were spending an entire day juggling spreadsheets, only to see carriers reject tours or overcharge. The paper walks through how the company replaced intuition with an exact set-partitioning model that mirrors real tariffs, covers two delivery modes, respects detour caps, and still solves overnight for 150 stores. A few thoughts / callouts: -> The model factors nonlinear zone tariffs, volume discounts, detour caps, and two delivery modes in one overnight run. -> Planners traded 32 daily spreadsheet hours for a transparent set-partitioning tool that still handles up to 150 store orders. -> It trimmed transport spend 8 %, worth €1 M a year, while slashing common-carrier use from 41 % to 17 %. -> Clear tour-level cost data now arms the team for tougher logistics service provider contract talks and future delivery-day tweaks.