Hiring another transportation planner is easy to justify when volume is up and your best planner is chasing trucks at 8 p.m. The team is swamped, freight is piling up, and adding a person feels like the easy way out.
Until the market shifts, and volumes back off.
Now you’re carrying the salary, the systems, the management layer, and everything else that came with solving a temporary workload problem permanently. Do that often enough and you’ll end up running a freight department built for your peak month(s) of the year.
That’s where we have seen a lot of companies get freight costs wrong. They beat carriers up over rates while leaving their own operating model untouched.
We ran freight inside of Koch long before offering freight management solutions to outside companies. So we’re familiar with this.
From our experience, if you want to turn freight into a variable cost, you must start by asking a more difficult question:
What work truly belongs on your payroll, and what are you paying to own year-round simply because you’ve always done it that way?
What Part of Your Freight Bill Is Actually Fixed Overhead?
If you want to know how much of your freight operation is truly fixed, don’t start with carrier rates. Start with everything you’re still paying for when volume drops.
That means the planners, the TMS, the integrations, the vetting tools, the benchmarking subscriptions, and the contracts that renew whether you move 4,000 loads or 2,000.
Most companies don’t see that number clearly because the costs are scattered across different budgets. Operations carries payroll. IT carries software. Procurement owns the rest. Each expense looks reasonable on its own, so nobody spends much time looking at what they add up to together.
But they add up quickly.
Logistics pay now averages $126,400, and the license itself can be only about a quarter of a TMS’s total cost, before integration work starts piling on.
Why Is Fixed Freight Overhead Riskier Now Than It Was in 2023?
Back in 2023, you could get away with carrying more freight overhead because the market was unusually forgiving. Capacity was everywhere, spot rates were soft, and a strong planner could hide a lot of inefficiency simply by finding another truck.
That cushion has since thinned. Carriers kept leaving the market while enforcement reduced the driver pool, and by June, contract truckload rates excluding fuel were 13% higher than a year earlier.
Meanwhile, your payroll didn’t get any lighter.
You’re now paying more to move the freight while still carrying the team built for the easier market. Even rail and intermodal deserve a harder look on some lanes, which creates another problem: most mid-market teams don’t keep that expertise sitting on the bench.
How Do Freight Management Solutions Turn Freight Into a Variable Cost?
Freight management solutions change what you have to own. Instead of keeping enough planners, technology, carrier relationships, and support overhead on the books for whatever next month throws at you, you buy the capacity as freight moves.
As volume climbs, your spend follows it. When volume falls, you’re not left paying for an operation sized for the high-water mark.
That’s the appeal for a CFO. Cost management is now the top internal concern for more than half of North American CFOs, and finance teams are being pushed toward cost structures that can flex with demand.
Freight can work the same way. Instead of hiring every time volume outruns the team, shipments can grow without the department growing right behind them.
Does Making Freight Variable Actually Make It Cheaper?
Sometimes. But making freight variable and making freight cheap are two different jobs.
You can outsource every load tomorrow and get a clean per-shipment price. That still doesn’t tell you what freight really costs. Accessorials, detention, expedites, and service failures have a habit of showing up after the rate sheet looks great.
The same goes for capacity. A low per-load price isn’t especially useful when tenders start getting rejected, especially in a market where volatility has become part of the operating environment.
The better test is whether your provider has an incentive to lower your total cost. If they make more when you ship more expensively, don’t expect them to volunteer that three lanes should consolidate.
Variable works best when lower cost and lower risk are pulling in the same direction.
How Should a CFO Evaluate Freight Management Solutions?
Four questions, handed to every provider. Including us.
1. What Are We Paying to Own Today?
Put every salary, license, subscription, integration, and support cost on one page. If a provider can’t help you build that baseline, they don’t know your business well enough yet.
2. What Does Freight Really Cost Us?
Set the rate sheet aside and pull 12 months of accessorials, detention, claims, expedites, and service failures. Linehaul never tells the whole story.
3. What Happens When Volume Moves?
Run the model at 25% down and 40% up. A variable-cost model should still make sense when freight gets weird, because sooner or later it will.
4. Who Owns the Outcome?
Count the contracts, invoices, and vendors you manage today. If those don’t shrink, you haven’t really simplified anything.
Then put the answers into a framework the board can follow, using industry benchmarks and a clear outsourced-freight ROI case.
If keeping it in-house still wins after that, keep it in-house. Run the comparison honestly and let economics make the call.
How Does a Shipper-Built Provider Like KBX Change the Equation?
KBX Logistics™ learned freight from the side of the table that was paying for it.
Long before we offered our freight management solutions outside of our own operations, we were moving 8,000 loads a day and managing $2.5 billion in annual freight across more than 80 countries for Koch companies.
We had to live with every bad routing decision, every unnecessary expedite, and every dollar of overhead that stuck around after volume changed.
To this day, that history affects how we look at a network.
If three lanes belong together, we’ll say it. If rail makes more sense than truckload, we’ll model it. Georgia-Pacific™ cut shipping costs 57% by putting that kind of scrutiny across the operation.
A shipper-built provider comes at the problem differently because we’ve already been the shipper asking the same question you are: what are we paying for, and do we still need to own all of it?
If you want to put your own freight operation through that same test, start the conversation with us.