Steel procurement is often more about logistics than raw material. Delivery timing is critical—especially when you’re working with high-demand items like cold-rolled sheet, hot-rolled coil, or structural beams. As a steel buyer, understanding how freight impacts your purchase order (PO) strategy can save time, reduce costs, and prevent unnecessary headaches.
Start by acknowledging that freight costs are not just a peripheral expense—they’re a central component of your total landed cost. A low price on steel can be quickly negated by high freight charges or delivery delays. Understanding this relationship is essential when making buying decisions.
One common pitfall? Relying too heavily on “best price per ton” without factoring in delivery timing. A seemingly great quote from a mill might be undercut by shipping costs if the freight window doesn’t align with your production needs. Conversely, a slightly higher price from a master distributor might offer a more suitable delivery window, allowing for a faster turn and minimizing costly delays.
Factor freight timing into your PO decision-making process. If you can accept a longer lead time, you may be able to get a better per-ton price from a mill. But if you need quicker delivery for an urgent project, don’t hesitate to prioritize distributors with shorter lead times—even if their pricing is higher. The key is finding a balance that suits both your operational and financial needs.
Work with your traffic and logistics teams to understand carrier schedules, capacity, and availability. Freight carriers are not always flexible, especially during peak shipping seasons. By having early conversations with your logistics partners, you can help ensure that your POs are aligned with their schedules and avoid delays. A carrier who is overloaded during busy periods can quickly push your steel delivery to the back of the line.
It’s also essential to have a contingency plan for delayed shipments. Whether it’s having a back-up distributor or using a freight forwarder to expedite delivery, having options in place can prevent supply chain disruptions. Many buyers make the mistake of “assuming” that a late shipment will be “just a few days,” only to find that their production is delayed by weeks. Flexibility is crucial, and buyers should always have a backup plan for critical orders.
As with all procurement decisions, communication is key. Keep a close relationship with both your suppliers and logistics partners to stay updated on any shipping delays, freight challenges, or last-minute changes to delivery schedules. Transparent communication will help you adjust quickly, whether it means shifting deliveries or re-prioritizing orders to prevent bottlenecks.
Finally, consider freight consolidation. If you can combine orders to reduce the number of shipments or share loads with other buyers, you can reduce your overall freight cost and improve delivery efficiency. Consolidation not only cuts costs but can also streamline the shipping process, making your operations more efficient.
Freight timing plays an outsize role in the success of your steel procurement strategy. When you understand how it impacts both pricing and delivery schedules, you can optimize your purchases, reduce risk, and keep your steel supply chain running smoothly.
