$2.58 trillion in U.S. logistics costs, and procurement never touches it. Freight is the largest unmanaged spend in American business — not because it's small, but because nobody owns the gap between procurement and logistics.
$2.58T
US logistics costs in 2024
8.8% of GDP — bigger than most industries
$896B
US road freight spending
Single largest logistics component
5–8%
Savings via quarterly mini-bids
vs locking into annual RFPs
The Organizational Split
Procurement
Focuses on unit prices and payment terms for materials. Freight is treated as an operational expense — logistics handles the RFP, not procurement.
Like booking a flight — logistics picks the carrier, but no one negotiates the fare.
~15% above market on key lanes
Logistics
Manages carrier relationships, routing, and mode selection with deep operational knowledge — but lacks procurement's structured sourcing discipline.
Like knowing exactly which train to take, but never shopping for the ticket.
5–8% savings when combined
The Cost Trap
Risk
The annual freight RFP locks in rates for 12 months in a market that moves weekly. Ocean rates remain 20–50% above pre-COVID and fuel surcharges fluctuate weekly — a 12-month contract is obsolete before it's signed.
Like booking a flight a year in advance — the price changes every day, but your contract locks you into last year's rate.
What This Means in Practice
01
Map freight spend first. Pull data from accounts payable, TMS, and carrier invoices for a one-month spend analysis by mode and lane. Without this, you're negotiating blind.
02
Embed procurement in logistics for 90 days. One procurement pro shadows the logistics team to learn operational requirements — lane characteristics, service levels, carrier history — while identifying where sourcing discipline adds value.
03
Pilot 20 lanes with quarterly mini-bids. Run RFPs on the most volatile lanes every quarter. Procurement manages the structure; logistics qualifies carriers. Typical result: 5–8% savings per quarter, compounding.
Jargon Decoder
RFP Request for Proposal — a formal process to ask carriers to bid on your freight.
TMS Transportation Management System — software that plans, executes, and tracks shipments.
Mini-bid A short, frequent sourcing event for a small set of lanes — like buying plane tickets quarterly instead of annually.
Lane A specific origin-to-destination shipping route (e.g., Chicago → Dallas).
Category Mgmt A structured approach to buying — segmenting suppliers, negotiating strategically, tracking total cost.
Fuel Surcharge An extra fee that adjusts with fuel prices — usually 20–30% of total freight cost.
Sources: CSCMP State of Logistics Report, Gartner, Keelvar, Reload Logistics, FreightAmigo, Freightos