Freight costs are climbing, but customers still expect reliable, on-time deliveries. So how do logistics companies balance financial aspects and today’s global demand?
A lot comes down to the work of CFOs. Their challenge is to reduce shipping expenses without sacrificing service. Finding this balance requires focusing on strategy, technology, and careful vendor management. Here’s a clear step-by-step guide to doing just that.
1. Review Your Shipping Network and Lanes
Start by analyzing your shipping network and transportation lanes to identify inefficiencies, overlapping routes, or underutilized freight capacity. Companies often discover opportunities to reduce transportation costs by consolidating shipments, improving route planning, or eliminating consistently expensive lanes.
Because changes to freight operations can affect inventory flow, delivery timelines, and customer service levels, logistics decisions should involve finance, operations, procurement, and sales teams from the beginning. Many businesses also work with providers offering STG Logistics supply chain solutions to improve network design, carrier coordination, intermodal transportation planning, and overall freight execution across complex distribution networks.
2. Explore Mode Shifting for Cost Savings
Not every shipment needs to travel by the fastest method. Switching some deliveries from truck to rail or ocean freight, or using intermodal options, can reduce costs, especially for longer hauls or non-urgent goods. This approach, called mode shifting, is a proven way to lower spend, as long as it meets customer delivery windows.
Here technology can help: use ad hoc solutions, such as transportation management systems (TMS), to identify which shipments could switch modes while still meeting service requirements.
3. Negotiate Multi-Year Carrier Contracts
Locking in multi-year agreements with reliable carriers often leads to better rates and consistent service. This is especially important right now, as 2026 freight rates continue fluctuating and suffering from increased volatility. In this scenario, extending contracts can provide cost certainty and strengthen your relationships with key carriers.
Don’t just negotiate on price! Instead, insist on clear service-level agreements (SLAs) covering on-time delivery, reporting, and how exceptions are handled. Even with the right network, be sure to track performance regularly and be ready to adjust your carrier mix if market conditions shift.
4. Control Extra Charges and Surcharges
Accidental fees like detention, fuel surcharges, or special handling costs can add up quickly. Control these “accessorials” by setting clear expectations up front, improving your shipping schedules, and training teams on efficient loading and unloading procedures. You may even add an extra margin to factor in these potential issues.
Keep in mind that these overheads are not always immediately visible, but it’s important to notice them before they begin weighing significantly on your cash flow. To do this, take time to audit invoices to catch mistakes or repeat charges. By identifying patterns, you can push back on unnecessary fees or adjust your processes to avoid them.
5. Strengthen Your Audit-to-Pay Process
A careful audit-to-pay process ensures you only pay what you owe. Match every freight invoice to shipments and carrier contracts before approving payment. This helps catch errors, overcharges, or unexpected fees.
Modern TMS platforms can automate much of this checking process, making it easier for your finance and logistics teams to work together and spot problems early.
6. Align Technology and Service-Level Goals
When it comes to enhancing your logistics, it is essential to integrate and connect your systems, including your transportation tools (TMS), sales & operations planning (S&OP), and customer service agreements (SLAs). When these systems work together, you can quickly see when a potential cost-saving move might put service at risk and act fast to prevent issues.
A Smarter Way to Control Freight Costs
Today’s CFOs know that cost control doesn’t have to mean compromising service. By analyzing your shipping network, adjusting transportation modes, locking in favorable contracts, and using strong audit processes, you can manage freight spend while maintaining the service your customers rely on.
For more supply chain efficiency tips and logistics news, visit worldbusinessoutlook.com.
Article received via email
