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Why Choice Matters When Moving Your Freight Simplicity and savings, once elusive to shippers, are there for the taking.

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When booking air travel, it's standard practice to compare airlines, routes and prices. The savvy traveler either searches multiple airlines' websites or uses a comparison site to find the best deal. Want to travel from Boston to Baltimore? It takes just flew a clicks to find all the airlines, schedules, prices and seat availability. A few more clicks, and your ticket is in hand and you're ready to go.

If you've ever shipped a pallet of freight in the U.S., chances are you've found out that the experience is nothing like that of booking an airline seat. From determining the freight class to selecting the carrier and trying to compare rates, the process can be a bit daunting.

Why isn't shipping a pallet as easy as booking an airline?

Less than truckload (LTL) carriers in the U.S. claim their business is extremely complex because shipments come in all shapes and sizes. As a result, they have adopted a complicated set of rules—which for some carriers can stretch to be 100 pages long—that they use to determine the pricing for their services. The rules revolve around "freight class," which can be based on density or on the type of commodity.

This system works well for the carriers, so they impose the need to become familiar with it on shippers of all sizes. High-volume shippers master it and learn to work within it. But for most small and medium-sized businesses, it can be extremely difficult. And mistakes are costly because freight class dictates how much the carrier will charge you and how much compensation you will receive in the event that the carrier loses or damages your shipment.

Additionally, LTL customers are frequently quoted an all-inclusive rate by their forwarder or broker without any disclosure of the underlying carrier, the promised level of service or what alternatives might be available.

Dealing with the complexity.

To work around these challenges, many businesses use the same providers they hire for parcel services, and as a result they pay premium rates. Others use a carrier rep who helps them navigate the rules and ship with only that carrier.

Neither approach enables small business owners to optimize the amount spent on transportation against the level of service received.

Technology-based solutions are emerging.

Thankfully, help for LTL shippers is finally here. A new breed of logistics companies that are built on emerging digital technologies is making it as quick and easy to find shipping options as it is to search for airline schedules.

Intuitive user interfaces help shippers navigate the complexity of the freight industry and get accurate pricing the first time. The best sites provide shippers with the same simplicity around price discovery and a similar shopping experience to arranging air travel.

Not only is it easier—it also saves you money.

Furthermore, choice matters. Koho's research shows that enabling shippers to choose from a selection of reliable carriers for each individual shipment can save up to 20 percent compared to booking all shipments with a single preferred carrier.

Example A: Wholesale food company delivering to a major retailer

  • 90 shipments per month
  • Saved > 10 percent by using four carriers

Example B: Home decorations manufacturer in Massachusetts

  • 30 shipments per month
  • Saved > 20 percent by using four carriers

Example C: Machinery manufacturer in Michigan

  • 10 shipments per month
  • Saved > 17 percent by using three carriers

But the best part is that nobody at these three companies spent any time or effort gathering data or analyzing historical costs to achieve these savings. It happened organically as a result of having multiple carrier choices available for every individual shipment. This enabled them to select the best option without having to commit to a single carrier, conduct an RFP, or shop around.

Are simplifying shipping and saving money things that could benefit your business? To learn more, visit us on the web at gokoho.com/entrepreneur.

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