A special thank you to Edward Griffin, Senior Vice President/General Manager at Price Davis, and Eric Martin, President at Lodging Kit Co. for their time and insights on all-things freight. In this multi-part blog post, you’ll get tips and tricks on what your dealership should do… and not do when dealing with freight orders and acceptance.

In 2021, trucks moved more than 10 billion tons of freight across America – about 72% of the total domestic tonnage shipped, according to the American Trucking Associations. That’s a lot of goods crisscrossing the nation’s interstates and highways, and the foodservice equipment industry contributed to those numbers with its walk-in coolers, combi ovens, conveyor dishmachines and other products.

Freight is a segment of business that doesn’t get a lot of attention, but it’s a part of every foodservice equipment dealer’s business and can range from 3%-6% of overall sales costs, if not more. While it might not seem glamorous to talk about the details of negotiating freight contracts and the best practices surrounding freight acceptance, for dealers that pay attention to those practices and fine-tune their policies, the attention given to freight can end up making a difference in their bottom line. Read on for eight tips on how you can improve freight efficiencies and costs for your dealership.

1. Practice Smart Ordering Habits

Saving money and improving freight acceptance procedures starts before you even get to the point of negotiating with freight carriers. Paying attention to how you place orders, and the timing of those orders, can play a big part in lowering freight costs and becoming more efficient in shipping processes.

2. Timing is Everything

Getting equipment to a job site is often like putting together pieces of a jigsaw puzzle. You have multiple moving parts to deal with, from availability at the manufacturer’s warehouse to coordinating with the job site’s construction schedule. The freight part is only one piece of the puzzle, but it’s an important one.

When possible, order early to ensure the equipment will be delivered with plenty of time to be installed for a grand opening, but also to save money on shipping….Expediting freight shipments only raises the cost of getting your product where it needs to be.

It’s also a good idea to have enough flexibility in ordering schedules to avoid peak times and days, allowing another opportunity to lower costs.

3. Consolidate When Possible

There are two ways to look at order consolidation. One is to try to purchase as much equipment from one place as possible. For example, if you have to buy multiple refrigeration pieces, order them all from one manufacturer, rather than having different units shipped in from different places. The second consolidation practice is to order equipment for multiple jobs at once.

4. Take Advantage of Free Shipping by Meeting Order Minimums

Many manufacturers will cover freight expenses with a minimum order. If there’s no offer of a freight deal, make sure to ask. Then make sure to place an order that reaches the stated amount. It seems like common sense, but in the rush of ordering it’s easy to forget to check that the final amount meets the free shipping requirement.

Bonus – By taking advantage of the manufacturer programs that absorb freight costs, you not only save money but can improve customer relationships by passing along that savings as a free shipping offer to them as well.

5. Shipping and Negotiating Freight – The Different Scenarios and What to Look Out For

Once the order is placed, it’s time to contract with a freight provider for shipping.

There are two instances where the methods of shipping and negotiating freight are entirely out of your hands. The first is if the order met the requirements for a manufacturer’s free shipping policy – then you are at the mercy of that company’s freight contract. The plus side is you don’t have to worry about costs. The second is by contracting with a freight consolidation company. It does the work of negotiating the best rates, lines up the shipments, and can save anywhere from 25%-75% over booking directly, thanks to discounted rates it’s negotiated with freight carriers.

In all other instances dealers are negotiating directly with freight carriers. The key to getting good rates is to understand pricing and be aware of hidden costs.

Freight rates are based on several factors, some set, and some variable:

• The shipment itself (dimensions, weight, and type of commodity)
• Distance
• Fuel costs
• Capacity (number of truck drivers available)
• Transit time

Optimizing Negotiation:

One way to optimize negotiations for freight costs is to have a database of weight and dimensions of the products you ship regularly, so you are knowledgeable going into discussions.

Transit time is another factor that can be managed for improved savings. As mentioned above, the ability to be flexible can reduce shipping costs. That not only means avoiding rush shipments, but also having the flexibility to coordinate with driver schedules and availability of lanes.

Other costs associated with freight shipments can show up on the bill of lading in a number of different forms:

• Handling fees. Many freight providers charge extra for loading and unloading product or sorting after the unloading. One dealer learned he was being charged for the time the truck driver waited at the dock for a shipment that was late. Avoid that issue by making sure you’re not responsible for costs until the freight is actually on the truck.
• Trucker fees. This category includes everything from fuel surcharges and dock fees, to tolls and special permits. Rather than being blindsided at delivery, ask for all fees upfront and get documentation in the contract.
• Delivery costs. Loading docks where trucks can back right up for delivery are the most efficient, but when not available you will have to coordinate for a forklift or other equipment or pay the costs for the freight company to handle it. Carriers also will add fees for delivering to out-of-the-way locations or at off-peak times.

When it comes to freight providers, it’s important to remember that almost everything is up for negotiation. It just takes time, effort, and research to get the best deals and build relationships.

Also, shipping rates constantly fluctuate, in part mostly to the volatility of fuel costs and driver availability. Rather than spending time searching for the lowest rate for each shipment, look for companies that are reliable and understand the type of products being shipped. In the long run, it’s typically more cost effective to ship with a carrier that gets product delivered intact and on time. Take the time to build relationships with carriers and you’ll benefit from better scheduling and the option to lock-in rates.

6. Fine-Tune Freight Acceptance Procedures

Once a shipment arrives, time is of the essence. Most freight carriers only give five to ten days to file a claim for damages during transit. Plan ahead to be prepared for the work that comes upon acceptance to ensure that you are able to meet that deadline, should you need to.

• Take pictures of freight as it comes off the truck.
• Open everything and take a complete inventory of all items.
• Inspect products for damage, looking for dents, broken glass, exposed pipes, and damaged tubes and coils.
• Document all damage in detail.

7. Deciding Between Filing a Claim or Refusing Product

Damage during shipping is an unavoidable fact of the industry. But the choice of whether to file a claim or refuse shipment depends on a few different factors. Take into consideration the amount of damage. Is it something your client can live with? An issue that can be easily fixed for less than it would cost in time to deal with the claim itself?

Industry experts warn to be careful before refusing a shipment. With supply chain issues causing long lead times in delivery, it might be more cost effective to file a claim and use a damaged product until the replacement comes rather than refusing shipment entirely. Also take into consideration which party is responsible for freight charges upon refusal of a shipment.

8. Mastering the Claim Process

Efficiency in inventory and inspection of deliveries is important because the window of opportunity to file a claim once a delivery is accepted is short. First, be sure not to sign the bill of lading until everything is inspected. Note any damage right away and be specific in your wording. In addition to the written description of the damage, take photos and keep the packaging for your own records. Remember, claims cannot be filed for damages that weren’t reported at the time of delivery.

Make sure to understand carrier liability and how it differs from cargo insurance:

• Carrier liability is generally included in the quote given by a freight carrier, but is usually capped at around $25 per pound shipped and covers natural disasters, acts of God, or damage resulting from improper packaging or loading. With carrier liability, you have to prove the damage or loss is the carrier’s fault and provide evidence.
• Cargo insurance is elective coverage based on the actual value of the product being shipped and covers almost any type of damage.

When filing a claim, be sure to follow all instructions, fill out the forms completely and provide additional documentation such as photos. Then follow up on a regular basis. It’s easy to lose money on unaddressed claims unless you do your due diligence and stay on top of the freight carrier.

From ordering to filing claims, there are many steps within the shipping process and each one requires a close eye. By fine-tuning your policies and procedures you can develop long-term relationships with freight carriers that will ease the burden of shipping and allow time for other aspects of the industry that can grow your business.