How Technology Advancements Can Help Reduce Freight Cost

How Technology Advancements Can Help Reduce Freight Cost

Emerging technologies have made shipping more cost-effective than ever before. Businesses can leverage a freight procurement platform and other software in freight logistics, like automated Transportation Management Systems (TMS), to monitor and manage high freight costs. This makes it more effortless to manage expenses and reduce shipping costs.


This blog post highlights how technology advancements are changing the game in the transportation and logistics industry, leading to innovative digital solutions and significant savings in freight costs.


What is the Freight Cost?


Freight cost is a rate or price in the shipping industry at which a specific cargo is delivered from one point to another. 


The freight costs depend on numerous factors, including the type of freight, type of vehicle, mode of transportation (air, sea, rail, road), weight of the goods, the distance between the starting and departure destination, and the kind of goods being shipped.


Reasons for High Freight Costs in Logistics


Here are some reasons why companies deal with high freight costs:

Inefficient Processes and Communication Breakdowns


These interlinked issues can lead to unnecessary freight costs. For instance, without utilizing technology like Freight Management Solution, companies might manually compare carrier rates or track shipments, leading to inefficiencies. Furthermore, communication breakdowns among stakeholders can exacerbate these inefficiencies. An integrated digital logistics platform can streamline communications, optimize operations, and significantly reduce freight costs.

Poor Route Planning and Late Deliveries


If a company isn’t leveraging advanced routing software, it may select longer, more congested routes, resulting in higher fuel costs and delayed deliveries. Modern GPS systems offer optimal route planning by analyzing traffic conditions, weather, and distance. This technology ensures timely deliveries, reduces fuel consumption, and significantly reduces freight costs.

Manual Warehouse Operations and Integrated Issues


Without automation and integration in warehouse operations, companies may face higher labor costs, slower processes, and a greater likelihood of errors. Implementing warehouse automation and an integrated system synchronizing logistics activities can significantly improve efficiency, increase accuracy, and lower costs.

Lack of Real-Time Tracking and Missed Reporting


A lack of real-time data can result in costly delays or loss of goods and missed optimization opportunities due to insufficient reporting. IoT devices offer real-time tracking and the opportunity to promptly address shipment issues, while modern technology platforms provide real-time reporting features for informed decision-making, reducing freight costs.

Inaccurate Demand Forecasting


Absence of implementing predictive analytics leads to high inaccuracy in demand forecasting. As a result, companies may need help with inventory management. Both overstocking and understocking can raise logistics costs. AI tools studying past sales data for future demand forecasts can assist in better inventory management, reducing related costs.

Lengthy Payment Processes


Without innovative solutions like smart contracts, a company may deal with extensive, complex, and lengthy payment processes, increasing organizational costs and delaying revenue recognition. Technology advancements such as Smart contracts can facilitate these processes, ensuring quick, secure, and efficient transactions.

Damage to Goods


The chances of damage or spoiling of Goods are high due to unfavorable conditions during transport. This results in customer returns, refunds, and replacement of goods, which increase costs. IoT sensors monitoring the conditions of goods during transportation can prevent such losses, providing substantial cost savings.


Also read: 7 Less-Known Tactics to Cut Down Freight Cost


How Technology is Enhancing Transportation and Logistics Operations

How Technology is Enhancing Transportation and Logistics Operations

New technologies, including artificial intelligence, are optimizing the processes seamlessly in the freight logistics industry, transforming shipping companies’ operations. Logistics technology is improving the present in supply chain management and redefining the future of supply chain operations. 


Let’s explore how technological innovations are helping reduce transportation costs in logistics and facilitating freight cost reduction:

Real-time Tracking


With the start of GPS and IoT devices in business operations, anyone can track their shipments in real time. This helps determine and fix any issues immediately, thus avoiding costly delays. For example, if a truck moving goods is stuck in traffic, an alternate route can be quickly found, ensuring timely delivery.

Efficient Route Planning


Cutting-edge routing software helps in planning the most efficient routes, lowering fuel consumption and delivery times. For instance, a company could bypass routes with heavy traffic, thus saving time and reducing transportation cost in supply chain management.

Automated Inventory Management


Advanced inventory management systems allow companies in the supply chain to control their stock more effectively, reducing storage and spoilage costs. For instance, detectors can alert supervisors when stock is running low or perishable goods are nearing expiration.

Predictive Analytics


AI and machine learning help companies predict future trends and make informed decisions, leading to logistics cost savings. For example, analyzing previous sales data can assist in predicting future demand, preventing overstocking or understocking.


7 Impactful Digital Solutions for Reducing Freight Costs in Logistics


In today’s competitive landscape, the ingredients of success often lie in adopting modern technologies to streamline freight sourcing and supply chain operations while saving costs. These emerging technologies in logistics and supply chain management help in reducing freight costs in supply chain management:

Most Reliable Automated Tracking


This advanced system integrates multiple tracking modes into a single portal according to business needs and operating constraints, which results in significant freight cost reduction. 


This includes SIM tracking via driver mobile cell tower triangulation, GPS (fixed/portable), and easy integration with third-party GPS vendors. Moreover, features like native GPS hardware and software integration, app-based product tracking on a driver’s smartphone, WhatsApp location sharing, and FASTag-based monitoring provides real-time visibility for autonomous vehicles, increasing accuracy in tracking and reducing associated costs.

Customer Self-Service Portal/Transporter Portal


These platforms provide live tracking and collaboration of shipments. Customers can use a shareable link to pinpoint delivery locations or request delivery point changes, leading to improved service levels. This efficient communication platform significantly reduces logistics costs.

AI-Based Predicted Time of Arrival and Alerts


AI technology, utilizing real-time data from mobile devices, predicts shipment arrival times and sends alerts in case of likely delays. This increase in efficiency helps businesses manage their global supply chain and chains more effectively, reduce late deliveries and improve customer satisfaction – all contributing to cost reduction.

EPOD – With Configurable Mode


EPOD technology enhances shipping by capturing shipment or order line level shortages/damages as required via scanned documents or a WhatsApp bot. This real-time visibility into the delivery process can significantly lower costs associated with disputes, damaged goods, and time-consuming paperwork.

Live Control Tower with Advanced Rules Based Alerts


This advanced system monitors safety parameters such as overspeeding, night driving, harsh braking/cornering, and continuous driving to detect driver fatigue. Furthermore, it monitors for route blockages due to floods, broken bridges, riots, etc., and checks for route adherence, unapproved stoppage locations, and more. This sophisticated monitoring significantly optimizes routes and reduces freight costs by preventing delays, accidents, and theft.

Cargo State Monitoring


IoT devices monitor the cargo’s temperature, moisture, and light conditions. Any variation from the optimal conditions can be immediately detected and rectified, preventing potential damage to the goods and reducing costs. Integrating IoT in the whole supply chain management process ensures the significant impact of technological advances in logistics.

Impacted Metrics and Core Benefits


With these digital solutions, businesses can minimize late deliveries, enhance customer experience, optimize routes, and streamline communication with transporters. They significantly impact on-time delivery SLA adherence, safety compliance, and route adherence compliance. By increasing efficiency and optimizing processes within the supply chain, these solutions contribute considerably to high freight cost reduction.


Also read: Why Freight Cost is High in The Cement Industry


Bonus Section


Technology Benefits All Supply Chain Segments


Here is a quick overview of how technology benefits all supply chain segments and freight logistics:


  • Suppliers: Real-time visibility and Predictive analytics of orders particularly impact suppliers, enabling them to manage production schedules and raw material needs more effectively, hence lowering transportation costs in logistics.


  • Manufacturers: Automated systems and freight technologies significantly change the manufacturing process. They increase precision and speed while minimizing errors.


  • Transportation and Logistics: Improvements in technology have revolutionized the shipping process. Components like route optimization, real-time tracking, and electronic proof of delivery improve logistics efficiency and lower costs.


  • Retailers: Retailers employ technology to simplify the supply chain process, enhance processes, reduce costs, maintain optimal inventory levels, and manage dynamic pricing.


  • Customers: End consumers also experience the benefits of these technological advancements. Real-time tracking allows customers to track their orders, mobile applications for handheld devices offer effortless access to services, and AI-powered customer service tools enhance satisfaction.

Wrapping Up


This blog post highlights how technology solutions can optimize supply chain management, lowering costs for less-than-truckload (LTL) freight. By integrating tools like RFID tags and automation, businesses can improve their logistics processes, order fulfillment speed, and customer satisfaction and save money on transportation and logistics expenses.


In conclusion, using technology effectively is crucial to enhancing global supply chains and logistics operations while saving costs. 


Get in touch with Fretron to discover how our team can assist in integrating innovative technology to improve overall operational efficiency and reduce high freight costs.

Frequently Asked Questions [FAQs]

What is Freight Management Software? 


With Freight Management Solutions you can handle all shipping activities seamlessly using a single dashboard. It automates tasks, including freight sourcing, order placements, managing billings, tracking shipments, comparing carrier rates, and booking, saving time and costs.

How does route optimization reduce freight costs? 


The route optimization platform seamlessly locates the most efficient shipping route, decreasing travel time, fuel consumption, and costs using GPS. Eventually, it reduces transportation cost in logistics.

What are the benefits of adopting LTL strategies for cost reduction? 


LTL strategies help optimize freight consolidation, offering the benefit of specialized LTL carriers that eventually reduce freight costs.

How do auction delivery systems contribute to reducing high freight rates? 


Auction delivery systems help in choosing carriers with possible capacity at reasonable prices. With bidding mechanisms, capacity matching, and real-time demand, companies can ensure cost-effective shipping options that increase efficiency and reduce freight costs.

What are some specific logistics challenges that API-led connectivity can solve?


API-led connectivity seamlessly lowers the chances of challenges like data silos, manual data entry errors, lack of real-time information, and limited system interoperability.

How can radio frequency identification (RFID) technology help reduce freight costs in logistics?

With RFID technology, real-time tracking, optimized routing, and streamlined operations are easier for cost savings in freight operations.

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