TRANSPORTATIONMGMT [ INSIGHT ]
by Mike Hammel VP of Logistics, KDL Logistics mhammel@kdlog.com | 412-429-6339
6 Ways to Reclaim Margin For many mid-size companies, freight costs have quietly become a dangerous threat to profit margins. These six strategies offer actionable starting points to reclaim margin and build more resilient logistics operations.
controls or incentive programs that reward compliance. 5. Balance cost, service, and carrier partnerships through smarter routing. Smart routing gives your customers options and protects your margins in a market where cost pressures are increasingly misaligned with service. Some buyers value speed; others prioritize low cost or reduced handling through regional carriers. A balanced network that blends national and regional partners allows shippers to meet expectations without compromising quality. A modern transportation management system (TMS) reinforces this strategy by automating carrier selection, applying service-level rules, and surfacing the lowest-cost compliant option in real time. This ensures that you consistently execute your network strategy on every shipment, not just on paper. 6. Automate, integrate, and elevate your freight strategy. The biggest unlock for mid-size shippers often lies in technology integration. Connecting ERP systems with a robust TMS creates a “control tower” view of transportation operations. This integration enables better forecasting, reduces human error, and allows real-time data to drive smarter routing, rate shopping, and cost allocation decisions. In short, it turns freight from
3. Use free shipping as a precision tool—not a blanket incentive. Free freight promotions can drive order volume, but when poorly structured, they erode margin. Regularly review the percentage of orders that qualify and determine whether the threshold meaningfully influences buyer behavior. For non-qualifying orders, it’s critical to consistently apply the mark-up policy. The goal is to balance revenue growth with profitability, not to offer free shipping for the sake of competition. Yet many companies absorb product cost increases without adjusting their free-freight threshold, unintentionally pushing more orders into the “free” bucket. Shifting customer behavior drives more frequent, smaller shipments, further elevating freight expense. Periodically recalibrate thresholds to ensure the promotion works as intended and protect margins as conditions change. 4. Enforce policy adherence across sales and distribution. Even the most well-designed freight policies fail if not consistently enforced. To protect the integrity of the policy, implement internal
1. Modernize freight policies to reflect today’s landscape. If you haven’t reviewed your freight policies in the past two years, they may be doing more harm than good. Outdated practices such as measuring freight solely as a percentage of sales revenue fail to capture the nuances of today’s shipping environment. Instead, develop customer-level freight profiles and track costs on a per-order basis. This granular view provides clarity and control, helping leaders align logistics decisions with financial outcomes. 2. Implement a market-responsive freight mark-up model. A structured freight policy protects shippers when the market moves. Rather than passing costs through blindly, a thoughtful framework helps ensure freight is covered without surprising customers or putting sales at risk. In softer markets where price sensitivity is high, even small adjustments can prevent heavier or harder-to-ship items from eroding margin. The goal is to create a consistent approach that aligns freight expense with reality and keeps both customers and profitability in balance.
a reactive function into a proactive contributor to margin protection.
20 Inbound Logistics • December 2025
Powered by FlippingBook