FREIGHT COSTS AVG 8 - 12% OF COGS BUT ARE VOLATILE; 3 QUESTIONS TO ASK
For manufacturing and distribution companies, transportation costs typically account for[redacted]% of COGS. Over the last 18 months, freight costs have been unusually volatile, with 2018 rates increasing by double digits (up to 35% in some markets) due to capacity constraints, regulations and other factors. However, in 2019 rates have fallen by double digits. Where does your company / target company stack up?
While each company is different, you can learn a lot from asking a few basic questions:
1. Are freight purchasing decisions made at the plant level, or from a centralized location?
2. If you ask the company for their freight data, can they provide it without having to gather it from vendors?
3. When was the last time the company conducted a freight RFP?
These three questions are just the start of the process of understanding the opportunity that exists to increase your company's value through reducing freight cost.
If you believe you have opportunity within your freight spend category and want an expert to quantify it for you, email me direct at [redacted]