How Machine Learning Improves Freight Cost Management

In an industry that has become so essential and dominant, it would make sense to assume all carriers and truckers follow a shipping freight costs standard for bill payment. However, there is no all-encompassing standard; freight costs can vary significantly based on several factors. This, of course, makes getting an accurate freight shipping estimate extremely complicated.

As highlighted by Forbes, "On average, a typical company relies on external suppliers for over 80% of the components assembled into a given product. Supplier quality, compliance, and the need for track-and-trace hierarchies are essential in regulated industries." Shippers can minimize shipping costs with better technology and insight as shippers and carriers work more seamlessly with suppliers and other industry platters.

Understanding what goes into shipping costs and how to keep expenses low and offer competitive rates is essential to maintaining a competitive advantage. Shipping is a multi-layered industry with many variables to consider when determining the suitable modes and lanes and how much to charge for each load and container shipping. Knowing what affects freight bills and shipping costs can help shippers, carriers, drivers, and customers enjoy more affordable shipping and transportation services.

What Affects Shipping Freight Costs?

By their very nature, freight costs have a tremendous impact on profit margins and customer satisfaction. Thanks to continued pressure from e-commerce shipping, same and following day delivery services, and other market influences, shipping freight costs remain volatile and challenging to manage. The following are just some factors brought to light by deep learning and AI automation that affect freight cost considerations:

• Weight and Dimension. Oversized and overweight loads usually incur more costs due to the specialized handling they require in shipping.
• Freight Type and Class. Hazardous materials, reefer cargo, and other specialty freight classes and types are more expensive to transport.
• Distance Shipped. Obviously, it is worth remembering that the farther something has to be shipped, the more it will cost.
• Type of Destination. Drop-off locations can also make deliveries more expensive as commercial and residential requirements differ.
• Shipping Mode. There are also variations in shipping rates for reefer trucks, dry vans, LTL, TL, and other shipping methods.
• Fuel Costs and Mileage. While consumer fuel rates climb and fluctuate, diesel fuel is more expensive and adds to shipping rates.
• Customs, Taxes, Surcharges. Some cargo incurs more costs for customs, duties, taxes, and other legally requires charges.
• Equipment and Tools. If a load requires particular loading and unloading or other custom services, the equipment rentals can increase rates.
• Accessorial Charges. There are charges and additional fees that carriers might or can add to final freight invoices.

Understanding shipping freight costs and factors that can impact these fees and rates helps shippers and carriers keep rates as low as possible for their customers. Machine learning and improved AI and automation can help better manage and monitor freight cost shipping trends in today's market. Combined with actionable analytics, today's shippers are more innovative and can make decisions on the fly.

How Machine Learning Drives Reductions in the Cost of Freight

Predicting changes in the going cost of freight becomes difficult due to the many contributing factors. Manual calculations, out-of-date data, ineffective processes, and repeated mistakes and errors add to continued difficulty managing transportation services and shipping freight costs. Machine Learning, Artificial Intelligence, and Robotic Process Automation all impact costs and must be included in new and innovative methods of predicting, monitoring, and controlling shipping freight costs. Machine learning and related services make it easier to match cargo and drivers, monitor routes for disruptions before they occur, and enable a fast and accurate response to issues during shipping.

The following are just a few ways machine learning, advanced technology, and tech stack innovation improve freight cost management:

• Faster action when disruptions occur.
• Better insight into market trends.
• Easier communication with third parties.
• On-demand tracking and monitoring.
• Better control of freight cost factors.
• Fewer overall errors and mistakes.
• Insight into parcel volumes and insight.
• A more effective response to problem areas.
• Generally more efficient services and processes.

Shipping freight costs are somewhat of a necessary evil, but that does not mean that they cannot be controlled and monitored. Shippers and carriers can keep up with freight cost factors more effectively with the proper insight and technology. Good onboarding and embracing machine learning, AI platforms, and innovative tools can improve shipping services and keep costs low through actionable analytics and insights.

How to Unlock the Benefits of New Tech to Boost Overall Scalability and Adaptability

Freight cost shipping management is one of shippers and carriers' most significant issues. As highlighted in an interview conducted by FreightWaves, industry leader Ziad Ismail had this to say: "The more that we can match the best carriers to each load, provide reliable service, and reduce empty miles, the more we can help shippers drive down costs while also helping carriers earn more. Machine learning is at the heart of that." Issues of machine learning, AI, automation, and advanced supply chain technology all tie back to freight shipping costs. By better understanding how they reduced operational costs, it is easier to implement cost control measures while offering competitive pricing and services.

Freight costs play a significant role in overall customer satisfaction and shipping service availability. The following tips can help shippers and carriers of all sizes improve their adaptability and scalability while managing shipping freight costs more effectively:

• Use predictive analytics to get an accurate snapshot of past trends to predict future shifts in freight payment and freight costs.
• Implement automation and focus on improving mundane processes to avoid human error and improve overall productivity.
• Automate inspections and audits to check shipping freight costs and rates to look for anomalies and discrepancies in expenses.
• Improve carrier relationships with real-time communications and on-demand access to freight costs, invoice reports, and data figures.
• Integrate current systems with new technology and automated tools to streamline vital yet cumbersome aspects of freight shipping.
• Streamline back-office functions and services to stabilize shipping freight costs through technology-driven automated management practices.
• Reduce costs with alternative shipping options such as hub injection, zone skipping, and advanced freight cost and delivery management.
• Coordinate remotely with drivers, carriers, customers, and 3PLs in real-time with advanced AI, machine learning, and automated tools.
• Improve profits and reduce risks of errors and fraud by utilizing secure payment processes and monitoring shipping freight costs.
• Quickly generate freight costs reports and share them with team members through automated processes for all involved parties.
• Network with industry experts to expand the overall impact and reach while keeping costs and expenses manageable.

The impact of changing freight costs and volatility in the market continues to impact freight transportation service providers. McKinsey & Company pointed out in early 2022 that "the experiences of a few major CPG companies show that autonomous supply chain planning can lead to an increase in revenue of up to 4 percent, a reduction in inventory of up to 20 percent, and a decrease in supply chain costs of up to 10 percent." However, fully capitalizing on these benefits is a journey, not something that happens overnight.

Starting with innovative technology, machine learning, and advanced analytics is where to start. The shift towards better management and control over freight charges and shipping costs remains critical to shippers' and carriers' continued growth and success.

Partner With Intelligent Audit to Lower Your Freight Costs Today

Managing freight costs, keeping up with competitive rates, and adapting shipping freight costs as needed are vital aspects of standard shipping and transportation audits and freight accounting. Lowering costs and managing shipping expenses ensure profits remain high while customers continue to get the quality delivery services they deserve. Working with industry experts can make technology easier to integrate while also providing real-world insights and support to keep freight cost shipping factors a priority.Get the tools and technology you need and see how easy it can be to manage freight costs day in and day out. Stop letting freight costs dictate what you can and cannot do. Gain control over finances and learn how to manage costs and maintain competitive and profitable rates. Contact Intelligent Audit today to kickstart your data strategy to make the right decisions and get expert insight and guidance while ensuring shipping freight costs remain low.