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Distribution Centers Respond to Rising Freight Rates

Two industry consultants share their strategies for coping with raising freight rates.

(Boonton, NJ, September 24, 2012) — Shipping rates are on the rise again. FedEx, YRC Freight, Conway Freight, and ABF Freight System raised rates 6.9 percent this summer. UPS Freight announced a 5.9 percent increase, and Old Dominion Freight Line boosted prices by 4.9 percent.

So how do you cope with a continuing squeeze on the shipping side of your budget?

George Yarusavage, principal at Fortress Consulting LLC and Chris Ferrell, director of Tompkins Supply Chain Consortium, offer seven tips for coping with rising freight costs in the September issue of Distribution Center Management.

Tip number two stresses the importance of "understanding the negotiating game."

The rate increases announced by UPS, FedEx, and other carriers probably don't affect you directly, because your prices already are set in a contract. And when you call your carrier to negotiate, they say you're a valued customer and that they'll give you a break.

But, Ferrell says, the overall rate is just part of the picture. Zone charges and accessorial charges (such as inside delivery and wait time or fuel surcharges) complicate the calculus behind your cost structure.

"Beyond the price increases, they've been getting more and more exotic with their accessorial charges and their surcharges," Ferrell says.

"They're getting everything they want and more because of those things you never asked a question about."

That indicates that carriers aren't always your best buddy. But Yarusavage advises looking for the cliched win-win solution.

"Treat a carrier more like a partner and less like an adversary," Yarusavage says.

The September issue of Distribution Center Management includes all seven of Yarusavage and Ferrell's tips.

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For more than 40 years, Distribution Group publications have helped distribution center and warehouse managers increase productivity, cut costs, and meet increasing customer demands. Distribution Group publishes Distribution Center Management newsletter, books and reports, and a free e-newsletter.

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