Cut out the middle man and save!
Who could possibly disagree with that wisdom? Me! As a middle man, I say not all middle men are created equal. In fact, some middlemen (like me) will actually save you money.
I represent a company that buys freight from Less-Than-Truckload (LTL) carriers and resells it to our clients who are shippers. Even though we are reselling a service, our new clients typically save 10-15% on their freight spending when they switch to us. Over time, they save even more by staying with us.
Predictably, prospective clients are skeptical about how we get involved and they still save money. It certainly is counterintuitive, that we can save money for our clients, while still making a little profit for ourselves.
We accomplish the savings through combination of better carrier negotiation and using the right carriers.
Better Carrier Negotiations
We negotiate with the LTL carriers every day and they treat us differently because we are a logistics company. Since we have lots of clients, databases full of shipping data and work with over 40 carriers, we know the best price for a shipment. This knowledge gives us a definite edge over shippers when it comes to negotiating with carriers.
In exchange for better pricing, our partner carriers expect a lot from us. We need to provide market intelligence, great customer service and most of all we need to direct some freight their way. The carriers know that we direct millions of dollars in freight and they expect us to involve them when it is a good fit.
Using the Right Carriers
Most shippers don’t use the right carriers because they see them as all the same. Because we partner with the carriers, we understand the type of freight they want and where they want it. By understanding the LTL carrier preferences, we are able to pick just the right carrier for the job. At the same time, the carrier will give us better pricing to get the right type of freight or the right pick-up and delivery locations.
Bottom Line
The conventional wisdom of cutting out the middle man makes sense in a lot of situations; however, before you cut determine if the middle men is adding value.