$23M in savings identified for a multi-billion-dollar food distributor

Freight Rate Negotiation Truckload & LTL Food and beverage Cold chain

Carriers:

CJ Logistics

Multi-mode freight rate negotiation case study

WHO

Business model

A multi-billion dollar distributor of food products, delivering into Costco, Wal-Mart and grocers, where delivery windows are tight and a missed appointment costs money. Transportation execution was outsourced to a managed transportation provider.

Industry

Food and beverage, temperature controlled. Carriers need real experience in the temperature controlled, food distribution vertical, which narrows the pool before price is even discussed.

PROBLEM

What they felt

Transportation cost too much and the carriers were not dependable enough. They needed to reduce the cost of transporting their goods and secure dependable carriers with experience in the temperature controlled, food distribution vertical.

What we found

Not all managed transportation providers are the same, nor do all perform equally in all lanes and geographies. This one preferred to maintain current relationships over pushing for new, improved providers. Our benchmarking found:

High rates across the network
Over reliance on brokers
Little ingenuity in utilizing different methods to bring value and savings
Freight bill auditing done occasionally, and usually only on very large claims
No shipment-level visibility to support the delivery appointments

WHAT WE DID

Prep and analysis

Extensive benchmarking of the network, lane by lane, against what comparable shippers actually pay. That is what surfaced the $23,000,000 and separated the savings that would come from rates from the savings that would come from how the freight moved.

Execution

Comprehensive RFPs, then a rebuild of the carrier base:

Regional smaller asset based carriers on short haul runs
Lanes aligned to larger national carriers, where complementary freight yielded lower pricing
Backhaul matching, dedicated fleet optimization and continuous move alignment
Increased volume to some incumbent carriers, which produced savings beyond sourcing lower rates alone

Changes we made stick

We did not stop at rates. We introduced a multi-modal freight bill auditing and payment firm, which streamlined the process, captured critical data, tracked KPIs and provided better visibility of the freight. We also required carriers to provide "breadcrumb" tracking, so the team could reach the driver and adjust appointments to accommodate reality.

RESULTS

What they got

9.2% in annual savings, from truckload rates and mode optimization

Truckload rate improvement and mode optimization generated 9.2% in annual savings, against over $23,000,000 in identified savings opportunity.

Past the money, they kept a carrier base matched to their lanes rather than to the incumbent's relationships, freight bill auditing that runs continuously instead of occasionally on large claims, KPI tracking and shipment-level visibility they did not have before, and the ability to hold appointments at Costco and Wal-Mart because they know where the freight is.

How much are you leaving on the table?

Instant estimate based on data from 600+ clients we have helped

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