Transport costs usually account for a large part of an organisation’s overheads, especially if you ship internationally. It has been estimated that transport and supply chain costs could amount to as much as 50% of a product’s total landed costs in some cases. If you feel like you’re spending too much in this area, then you need to evaluate your whole supply chain and processes to spot inefficiencies. You could also make savings by making the right choices with suppliers. Let’s take a look at a few ways your organisation can lower its transportation costs.
Calculate Your Transportation Costs
You cannot fix or improve your transportation costs if you don’t know how to calculate them in the first place. You’ll first need to take your sales revenue and put it against your transport-level costs. This will include things like your driver’s salary, fuel, outsourced work, leasing/purchasing vehicles, etc. But before you calculate sales revenue, make sure that you subtract your labour, utilities, material, utilities, and other costs associated with production.
If you want to learn more on how to calculate and control transportation costs, we suggest you check out the resources at RollPallet. They go more into detail on the factors that can affect your costs, and how the costs can add up. They also touch on logistics costs as a whole and other costs like insurance or customer expectation costs which many organisations don’t always consider.
Be Flexible
You have to be creative when it comes to shipping. There are so many different shipping solutions nowadays, and if you’re ready to think outside the box, you could make massive savings. One transport mode that is still largely underused and misunderstood is rail. Rail transport is much cheaper than trucking, so if you’re relying mainly on trucks to deliver products, you are making a big mistake. Instead, you should see if you could use a combination of rail and truck or other forms of intermodal transport.
Use Warehousing and Fulfilment Services
If you’re moving a lot of product from point A to point B, you could use warehouses or fulfilment centres to bring your product closer to your customers. This would allow you to lower costs significantly. You will save money when doing this domestically but also if you ship overseas. This will allow you to use slower but more affordable transport modes like sea transportation without shipping times being affected.
Look at Automation
Automation is one of the most efficient ways to cut labour and transport costs in your organisation. One of the things you should look at is automatic container loading systems. Not only will they reduce your reliance on human employees, but they will also reduce the chance of accidents and shipment damage, so learn as much as you can about them and see if they could be a good option for your business.
These are all simple ways that you could lower transportation costs in your business. Always remember to keep a close eye on these expenses and constantly find ways to be more efficient.