KNOWLEDGE Base CONTENT PARTNERS
Stop Managing Freight Rates. Start Managing Freight Behavior.
You negotiated the savings. Where did they go?
By Tom Cannizzo VP of Sales KDL Logistics kdlog.com
M ost companies wouldn’t allow multiple employees to make thousands of purchasing decisions without policies, controls, visibility, and accountability. Yet that is essentially how many manage one of their largest variable expenses: freight. Every day, decisions are made about which carrier to use, which service level to select, when to expedite, when to waive charges, when to override routing, which facility to ship from, and in general, when an exception is justi ed. Individually, these decisions may cost $50 here, $200 there, but across thousands of shipments, they relentlessly increase the freight expense line on the P&L.
Govern the Decision, Not Just the Rate The next opportunity in transportation management is not related to negotiating another percentage point from carriers. It’s understanding and managing the decisions taking place between the contract and the P&L. To do this requires connecting transportation data to nancial outcomes, establishing clear freight policies, measuring the exceptions, and creating accountability for what materially affects cost-to-serve. Employees need the information and guardrails required to make better decisions. At the end of the day, optimal freight performance requires four things: clear policy, disciplined execution, visibility into decisions, and governance that keeps those decisions aligned with nancial intent. Companies that master these can turn their negotiated savings into realized savings and prevent margin from quietly leaking from the P&L. Rates determine what freight should cost. Behavior determines what it does cost.
variable of how well employees adhere to the company’s freight strategy has a signi cantly greater impact on nancial performance.
The freight rate is the input, and behavior determines the nancial output. Small Decisions Undercut Financial Strategy Consider what happens after a
transportation strategy is established. Sales may promise expedited delivery to protect an important account. Customer service will waive freight to resolve an issue. Shipping picks a familiar carrier instead of the most cost- effective option, or an order ships from the wrong location. None of these decisions are necessarily wrong. In fact, each may be perfectly reasonable. The problem arises when nobody measures them collectively. Without visibility and governance, exceptions become habits. Habits become processes and eventually, higher freight costs become accepted as normal.
The Negotiated Rate Is Only the Starting Point
Transportation strategies often center on carrier negotiations. For example, a company will conduct a bid and negotiate an 8% savings. They’ll award the business, and project the savings. After a few months, they are disappointed that freight expense did not actually decline 8%. A negotiated rate establishes what a shipment should cost. Some uncontrollable market factors like fuel, carriers, or changing volume can impact actual rate, but the manageable
18 Inbound Logistics • September 2026
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