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Ways to Reduce Costs Associated With Freight Train Shipping

Aug 14, 2008
Even shippers have to shell out more in costs for freight services more than ever even though there are valid reasons for it wondering why freight train shipping costs have increased? It's because the demand for domestic express package and less-than-truckload (LTL) freight services continues to decrease.

So rather than adjust revenue targets, carriers are forcing shippers to make up the difference by charging more for services. Even with that there are still things you can do about it to help curb your costs for freight train shipping.

First, keep in mind that you should and can negotiate your contract. But first let's consider the facts. In the shipping industry it's a known factor that the general rate increase for each of the past two years has been the highest in more than a decade. Ground rates for both rates went up 4.9%, while express rates in 2007 increased 5.9%, and 6.9% this year. Want to know what you can do to help alleviate charges?


- Separate freight charges and accessorial charges.
- Identify charges like residential fees, delivery area surcharges, declared value, weekly service fees and other handling charges.
- Quantify which accessorial charges have the greatest effect on your costs, and
- Target those charges for waivers or reductions during negotiations.

Because by sorting out these columns, you can quickly identify the actual discount you are receiving if at all. It just might surprise you to discover that many shipments receive partial or no discounts. You don't have to accept this even freight shippers are in the business of doing business so negotiate every aspect of your contract.

However, there could be exceptions to this if your choice freight train shipping carrier agreement specifically covers all services and clearly states so. Many shipments may be undiscounted, including offshore, third party and collect billed, certain service levels, and shipments affected by minimum shipment charges. It's up to you to identify where you're losing out on discounts, and meet with your carrier representative to address those issues for saving you extra money.

Another factor to consider for the rising costs of freight train shipping is the obvious Fuel surcharges. Perhaps the most substantial of all accessorial charges have reached an all-time high is what's considered a rule change to the dimensionalization policy. The carriers changed the ground policy to match the air dimensional policy, which boosted annual costs for shippers by an estimated $1 billion.

Accessorial charges are increased and new ones are added every year. While these surcharges for additional, supplemental or special services are designed to address the carriers' cost to serve model, they now account for up to 40% of your overall freight costs.

You can reduce your shipping charges by at least 10%. Did you know that Carrier sales representatives are partially paid on profit margin? Their job is to sell your account at the highest rates possible. As a result, three out of four carrier agreements could be improved by 10% or more.

Many freight train shippers do a good job negotiating upfront discounts off list rates. But they often fail to negotiate accessorial charges, fuel surcharges, general rate increases and other fees. Despite what your carrier representative may tell you, all fees and terms are negotiable.
About the Author
Negotiate to Curb rising Door-to-Door transportation costs and compare Moving Pods method, it's well worth the time and effort. Even small changes to your Freight Train Shipping carrier agreement can generate significant savings. Just compare & save money today!
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