You could be forgiven for head scratching at that title.
The freight rate, which is the invoice you pay a logistics provider for moving your goods from A to B, is surely the best place to focus if you're trying to improve company profitability. The provider who issues you with the lowest quote for the logistics will maximise profitability. Simple.
Well, not quite.
At WTA Group, we feel that by focusing so much on the freight rate, supply chain managers are missing out on huge savings elsewhere.
The freight rate has the most immediate impact on your bottom line, so it's understandable that is where the focus is. It's also been subject to intense scrutiny in recent years as a consequence of the Covid-19 supply chain surge. Boardrooms across the world have been cursing the freight rates that supply chain managers are being forced to pay in recent times. Placing its reduction as a core KPI.
But the best way to save money in your logistics, could be to look elsewhere.
Why is total landed cost important?
With an accurate total landed cost number, you have the complete picture of how much it costs to take your goods from origin to the customer. This figure is far more important than the freight rate.
While you could be successfully pursuing a low rate, you could be picking up excessive costs elsewhere in warehousing, demurrage, customs, and wasted journeys. These costs will almost certainly massively outweigh any small difference in quoted freight rate.
You need a logistics provider who performs a complete supply chain analysis, to focus on the wider cost savings. Moving away from a transactional relationship, to more of a partnership can have drastic consequences for your business.
In the know, with Keri Barton.png?width=149&height=179&name=Keri%20(1).png)
Marketing & Sales Director, WTA Group
"Increasingly we are seeing RFQs etc that just ask for freight rates. And then you are looking for a couple of pounds here and there on the 4%, whereas if you ask your freight forwarder to optimise supply chain costs through a written and financial RFI then suddenly you are being more strategic, and your cost savings are much larger."
Keri Barton, Marketing and Sales Director, WTA Group
At WTA Group, we pride ourselves on matching decades of experience in supply chain management with high quality service, backed up by our impressive Trustpilot rating. Finding supply chain optimisations is a core focus of all our key accounts, which is why over 50% of them have been with us more than 5 years.
To start a conversation about optimising your supply chain beyond looking at freight rates, reach out to Jade Blackburn below, who has been doing it for more than 20 years.
Jade Blackburn,
Head of Sales, WTA Group.
Want to learn more? Tune into Freight Club!
WTA Sales & Marketing Director Keri Barton joined our podcast, WTA Freight Club, to discuss what it means to move your attention away from the freight rate - and more importantly, how it could help your business profitability!
Listen to the episode here to discover the latest advice.
