Freight Procurement FAQs

High freight costs often hide in urgent shipments, half-empty trucks, penalties, or invoice errors. According to Chainalytics, up to 18% of freight invoices contain hidden charges, inflating costs well beyond contract rates. The most effective approach is Integrated Freight Orchestration: use contracted capacity for stability, pre-negotiated spot for flexibility, and on-demand only when continuity requires it. This layered model helps companies cut 20-40% of hidden costs while keeping service performance stable.

FAQs are a great way to help site visitors find quick answers to common questions about your business and create a beSpot freight can appear cheaper in soft market conditions, where carriers compete aggressively for volumes. However, during peak seasons or market disruptions, spot rates often surpass contracted rates by a wide margin.

The best strategy is a “hybrid” or Integrated Freight Orchestration approach:

• Use contracted freight for predictable, stable lanes;

• Leverage pre-negotiated spot capacity for flexibility when needed.

This balance allows companies to benefit from cost predictability while retaining the agility to pivot, without being locked into one model.

Express or expedited shipments can cost 20-40% more than planned transport, especially in tight-capacity situations. The most effective defense is prevention, not elimination: use Integrated Freight Orchestration - combining contracted capacity for baseline flows, pre-negotiated spot for flexibility, and on-demand only when truly necessary - so urgent shipments become rare exceptions, not costly norms.

End-to-end visibility means knowing where your shipments are, when they will arrive, and how disruptions may affect operations. The challenge is that updates are often scattered across multiple carrier portals, emails, and systems - making it hard to see the full picture.

To achieve visibility, leading companies focus on three enablers:

• Integration: consolidate carrier data, ERP and TMS feeds into a single view.

• Real-time tracking: use consistent status updates and ETA predictions across all modes.

• Exception alerts: identify delays early so teams can act before problems escalate.
  

When contracted, spot, and on-demand shipments are managed in one environment, procurement and operations share the same information in real time. This orchestration reduces blind spots, shortens reaction times, and transforms visibility from a reporting function into a daily decision-making tool.

KPIs in freight procurement must balance cost, service, and process quality. Focusing only on base freight rates can be misleading because hidden costs often hide in urgent shipments, invoice disputes, or under-utilised trucks.

Some of the most critical measures include:

• On-time delivery rate (or OTIF: On-Time, In-Full)

• Total cost per shipment / per ton shipped

• Share of urgent or expedited transport

• Freight invoice accuracy
  

According to recent benchmarking from RXO, many shippers rate 95% on-time delivery (including pick-ups) as a minimum acceptable standard. Consolidating these metrics in a single dashboard allows companies to see trade-offs between cost and service in real time. Integrated Freight Orchestration (with contracted, pre-negotiated spot, and on-demand flows) turns KPIs from retrospective reports into proactive levers for decision-making.

Integrated (or Hybrid) Freight Orchestration is a structured approach to transport management that combines three layers in one framework:

• Contracted freight for stable, predictable flows.

• Pre-negotiated spot for flexible volumes at agreed terms.

• On-demand transport for urgent or time-critical shipments.
  

Instead of forcing every shipment through a single model, orchestration ensures each movement is matched with the most suitable option. The goal is not to choose between contract or spot, but to coordinate all layers so they work together.

Companies that adopt this model gain more control over cost, higher service reliability, and fewer emergencies. Industry benchmarks show that structured orchestration of freight flows can deliver double-digit savings and reduce urgent shipments by up to 25% compared to siloed management.

Benchmarking freight costs means comparing what you pay with external market references and your peers. To get an accurate picture, companies must look beyond headline contract rates and measure the true total cost of freight - including urgent shipments, penalties, surcharges, and invoice disputes.

Key steps:

1. Normalize your data by unit (cost per shipment, per ton, per km).

2. Use external references - trade-lane benchmarks or neutral indices - to see if your rates are above or below average.

3. Factor in hidden extras, since exceptions and disruptions can significantly distort the baseline.
   

According to APQC, expedited freight costs (urgent shipments above normal service) are tracked as a separate KPI by thousands of companies. Not surprisingly, firms that integrate these benchmarks regularly are better positioned in negotiations and avoid paying premiums.

When contracted, spot, and on-demand flows are consolidated in one dashboard, procurement teams gain reliable benchmarks. Integrated Freight Orchestration turns benchmarking from a one-time comparison into a continuous, actionable process rather than an after-the-fact exercise.

When plants or sites manage freight independently, the result is fragmented processes, inconsistent rates, and frequent invoice disputes. To standardize procurement across locations, it starts with visibility - collect all purchasing activity into a single environment so you can transparently compare costs and decisions.

From there, organizations establish shared rules: when to use contracted capacity, when to activate pre-negotiated spot, and when on-demand is justified. Consistent rate cards and approval workflows reduce errors and ensure alignment with corporate policies.

Industry research shows that fragmented freight management can add 15-20% to total logistics costs due to duplicated processes, urgent shipments, and invoice errors (McKinsey, 2023). Standardization significantly reduces these inefficiencies.

Integrated Freight Orchestration enables this alignment by combining different freight models in one framework. Plants keep flexibility to respond locally, while procurement gains centralized governance - resulting in fewer disputes, faster approvals, and more predictable costs across the network.

Freight invoice disputes are common because rates are complex, negotiated differently across sites, and influenced by extra charges like waiting time, missed pickups, or last-minute changes. Poor documentation and manual entry increase discrepancies.

Industry research shows:

• Around 15-20% of freight invoices have some kind of inaccuracy or overcharge.

• In Less-Than-Truckload (LTL) shipments, auditing nearly 250,000 invoices found errors in ~4.5% of them, many involving mis-calculations of weight, accessorials, or classification issues.

Decentralized procurement makes it worse - different plants or departments apply their own rules, so validations and resolutions are inconsistent. The cost isn't just admin work; it's financial leakage and friction with carriers.

The remedy is standardization: align processes, apply consistent rate cards, enforce clear approval workflows, and manage all freight flows in one system. Integrated Freight Orchestration makes this possible. With orchestration, invoice control becomes predictable, fewer disputes arise, and you shift from fire-fighting errors to preventing them in real time.

Data is one of the strongest levers in freight negotiations. Carriers respond much better when procurement teams can show the true profile of their shipments - instead of relying on generic assumptions. Useful inputs include volume per lane, seasonality, load factors, and historical on-time performance. Showing consistency and reliability lets carriers price more competitively.

It’s equally important to track the cost of exceptions - urgent shipments, penalties, or recharges. When these hidden costs are visible, procurement can negotiate not only on base rates but on the total value of the relationship.

Industry data suggests that many enterprise shippers who benchmark their contracted AND spot rates gain 8-15% savings overall in freight spend.

Integrated Freight Orchestration helps by consolidating data from contracted, spot, and on-demand flows into one structured view. With this full picture, procurement teams walk into negotiations with facts and external benchmarks - getting better rates, stronger alignment, and more balanced partnerships.

ROI in freight procurement goes beyond rate reductions. It includes avoided costs like line stoppages, penalties, invoice disputes, and CO₂ emissions from inefficiency.

Industry benchmarks show that companies applying structured freight procurement often achieve 10–20% cost reductions on total spend (McKinsey).

With Integrated Freight Orchestration - managing contracted, pre-negotiated spot, and on-demand together - ROI becomes measurable, turning savings into a long-term competitive advantage.

Freight procurement can directly influence emissions - the biggest CO₂ contributors include empty or partially loaded trucks, frequent use of air freight, and unnecessary urgent shipments. By embedding sustainability into procurement decisions, companies reduce costs and emissions.

Some key actions: consolidate shipments, choose carriers with fuel-efficient fleets, prioritize routes that cut down empty miles, and monitor load factors (even small improvements make a difference).

Global data says freight and logistics emissions (road + warehousing) make up at least 7% of total greenhouse gas emissions, so improvements here have large leverage.

With Integrated Freight Orchestration - balancing contracted freight, pre-negotiated spot, and on-demand capacity - urgent air shipments become rare, trucks run fuller, and CO₂ per shipment drops. Sustainability and efficiency go hand in hand.

Freight disruptions that halt a production line can be extremely costly - lost output, idle labor, missed customer commitments, premium recovery transport, scrap, etc. The ripple effects go beyond the immediate hour of downtime.

Industry data: In manufacturing, unplanned downtime can cost a company up to US $260,000 per hour depending on scale and complexity.

Also, studies show that 82% of manufacturers have experienced unplanned downtime in the past years, with average losses of $2 million per outage when disruptions are severe.

With Integrated Freight Orchestration - keeping contracted flows for stability, having pre-negotiated spot for flexibility, and using on-demand only when continuity is at risk - companies can prevent minor disruptions from turning into multi-million-euro losses.

Pre-negotiated spot agreements give companies a way to handle demand swings without being caught off guard by market volatility. Instead of scrambling for capacity at the last minute and paying inflated spot prices, terms are agreed in advance, creating a safety net when volumes rise.

This approach strengthens flexibility in three ways:

• Speed: shipments can be booked quickly without restarting negotiations.

• Cost control: agreed rates avoid panic premiums in tight markets.

• Predictability: procurement knows the conditions before the crisis hits.
  

According to a recent analysis by DAT iQ, comparing spot vs contract rate trends helps shippers identify lanes where spot rates are rising sharply - enabling pre-negotiated spot contracts to yield savings of ~10-20% per lane during volatile periods.

Within an Integrated Freight Orchestration model, pre-negotiated spot acts as the buffer layer between contracted stability and urgent on-demand moves. It ensures that companies can adapt to sudden changes while keeping costs in check - often protecting margins rather than eroding them.

Hidden costs in freight rarely appear on the rate sheet but can account for a significant share of total logistics spend. They include urgent shipments booked at premium rates, penalties, invoice disputes, and excess inventory to buffer unreliable transport.

One solid benchmark: In the chemical sector, inbound freight costs (often hidden in raw material costs) typically make up 8-12% of total raw material spend, yet full negotiations of those costs yield 5-10% savings on that portion when visibility is improved and exceptions are managed more strictly.

To reduce hidden costs, companies should:

• Track these extra spend items separately (urgent freight, penalties, etc.)

• Enforce clear purchasing rules and rate cards

• Validate invoices vs agreed terms

• Establish escalation paths before things become emergencies

Using Integrated Freight Orchestration - managing contracted, pre-negotiated spot, and on-demand flows together - helps systems standardize, exceptions drop, and hidden costs shrink. The outcome: lower spend, more predictable budgets, and stronger carrier relationships.

Truck utilization measures how efficiently you use capacity. When trucks travel half-full or underloaded, you pay for unused space - that pushes cost per unit up and increases CO₂ emissions per ton, because the trip burns nearly as much fuel whether loaded or not.

Industry data shows that empty or under-utilised freight capacity contributes to over 125 million tons of CO₂ emissions annually globally - a footprint equivalent to emissions from tens of millions of homes.

With Integrated Freight Orchestration - combining contracted flows for stability, pre-negotiated spot for flexibility, and on-demand only when needed - trucks can run fuller more often, logistics spend drops, and you achieve measurable progress toward your sustainability goals.