As your company grows, your logistics needs will likely grow, too. You may outgrow a shipping vendor who only moves packages from origin to destination. Instead, you might find yourself searching for a solution to manage whole sections of your supply chain. At that juncture, you have a choice: Bring the expertise in house or outsource.
Outsourcing your transportation management offers several distinct advantages. It gives you near-instant access to expertise without having to train or hire a team member. Outsourcing can also help you simplify your operations, spot inefficiencies in your supply chain and solve logistical challenges to help your operations run even more smoothly.
To help you decide whether outsourcing your transportation management is right for your business, we’ll walk through three major advantages. You’ll discover how an experienced freight forwarder can give you access to the expertise and the resources that will help you optimize your efficiency—and your profitability.
Advantage #1: Creating Efficiency Through a One-Stop-Shop
Intermodal logistics—i.e., anything that moves by more than one method of transportation—can get complicated fast.
When you’re arranging the transport yourself, you may have to coordinate between multiple carriers on your own. For example, if you’ve got an ocean freight shipment, you’ll hire a trucking company to take your shipment to port, where it’s loaded on board with the steamship line you contracted with. Then, you’ll likely need to hire yet another trucking company to deliver your shipment to its final destination. For this one shipment, you may need to talk to three separate carriers, each with their own requirements, procedures and invoicing.
However, if you decide to outsource this leg to a freight forwarder, they can act as a one-stop-shop to get your goods where they need to go.
Here’s an example to show you exactly how this could work. Let’s say you’re a retail operation with a distribution center in California and a series of stores located throughout the Hawaiian islands.
If you wanted to move your inventory to your stores on your own, you’d have to:
- Hire a truck to pick up your inventory at your distribution center.
- Arrange for a shipping line to load that inventory onto a boat headed to Honolulu.
- Coordinate pickup at the port at Honolulu and possibly deliver to a central warehouse in Oahu.
- Sort your inventory by store.
- Hire a delivery company to distribute the goods to your Oahu outlets, as well as drop shipments back to port for distribution to Maui, the Big Island and Kauai.
Or, you could decide to outsource the entire operation. You could pull the right inventory at your distribution center, along with a bill of lading showing where each delivery goes. A freight forwarder could handle everything from there: Drayage to the port, ocean transport, delivery to your stores. In other words, with one phone call, you could set up absolutely everything to get your inventory from your distribution center to the stores that need them in Oahu, Maui, the Big Island and Kauai.
A savvy partner might even be able to help you reduce warehousing and labor costs along the way. Let’s take a look at how that works.
Advantage #2: Spotting Inefficiencies That Are Costing You Money
When you outsource your transportation management to an experienced vendor, you’ll get immediate access to expertise that it might take you years to develop in house.
Transportation is what freight forwarders do all day, every day. As a result, they know how to spot opportunities for efficiency and, as a result, cost savings.
For example, a freight forwarder might recommend changes like the following:
- Transitioning shipments to more efficient methods of transportation, like moving from 40′ containers to 53′ trailers to reduce the overall number of deliveries and associated costs.
- Packing ocean freight shipments more efficiently so freight can move directly to retail outlets, rather than getting re-sorted and re-repacked in a secondary distribution center.
- Changing from over-the-road shipments to rail to save on transportation costs.
In other words, when you choose an experienced transportation management partner, they’ll be able to find you the most cost-efficient, yet effective way, to get your freight from point A to point B.
While you could train an employee to develop that expertise—or hire an in-house logistics specialist—working a freight forwarder offers another opportunity for cost savings: Access to their existing relationships. Freight forwarders work with an established roster of partners with whom they do significant volumes of business. As a result, a freight forwarder may be better positioned to negotiate the better for your company.
Outsourcing your transportation management also has one more significant benefit.
Advantage #3: Solving Logistical Challenges Simply and Easily
While it’s easy to focus on getting your inventory to stores, a lot of retail businesses experience logistics challenges on the other end, including:
- Shipping returns back to a central location for processing, especially in the scenario we described above where the retail outlets are located in Hawaii and the distribution center in California.
- Returning re-usable packing items, such as plastic totes and wooden crates, to their warehouses for their next use.
Whereas this set of logistics might create an internal headache at your company, this kind of challenge falls squarely in the wheelhouse of a freight forwarder with transportation management capabilities.
As with getting your inventory to the right places, the right partner can help you create an efficient system to close the loop. They can also execute it seamlessly for you. For example, when they drop off new inventory, they can pick up returns, package them for ocean transit and get them on the next boat back to California. Rather than worrying about coordinating the details, you’ll simply receive those returns where you need them.
Seeing the Whole Picture
When you combine all of these advantages, you can start to imagine the impact that outsourcing your transportation management could have on your business.
In a retail scenario, a transportation management partner can take over as soon as your items leave your distribution center. They’ll handle all the logistics through and including receipt at your retail outlets. If you have returns they can manage those to the distribution center, where the cycle starts again.
Within a manufacturing scenario, imagine turning over all the shipping and delivery of your components to a transportation management partner. They could work directly with the vendors you select to transport components to your manufacturing locations as needed.
No need to negotiate shipping with vendors. No need to arrange for your own carriers. You source the items, you place your order and your freight forwarder does all the work in between to make sure they arrive seamlessly to your warehouse. Then, once finished items are ready for delivery to customers or resellers, that same forwarder can arrange that transportation as well.
Finding the Right Partner
If you’ve never outsourced your transportation management before, it pays to set up consultation calls with 2-3 freight forwarders or 3PL providers to get a feel for how each would approach your shipping and logistics needs. While there are some subtle differences between 3PL providers, 4PL providers and freight forwarders, each can offer your business different advantages. A consultation call will be your best bet to discover which is right for you. You may also want to check out this article on the 4 signs that it’s time to change 3PL providers to give you some ideas for interview questions.
If you’d like to talk to one of our experts about outsourcing your transportation management, we would be happy to help! Just reach out to us. We’ll schedule a call to discuss your needs and how we might be able to help you both streamline your supply chain and simplify your logistics.