High Supply Chain Transportation Costs and How You Can Offset Them
“High trucking costs are expected to last through 2021, adding to retailers' challenges,” reports Business Insider. What can companies do to offset or respond to these high costs?
In this blog, we'll cover three key ways companies can adapt:
- Cutting Overall Costs With Fleet Management Software
- Operating Like You Own Your Network—Even If You Don’t
- Building Up Your Own Fleet To Control Costs
What’s Contributing to These High Transportation Costs?
If you’re in the supply chain industry, you’re probably affected by some or all of the more recent causes of high transport costs.
In some cases, the effects of the COVID-19 pandemic are creating an increase in demand. “The overall freight environment has seen strong demand over the last few months, as consumer spending remains strong and weighted toward goods rather than services,” Supply Chain Dive reported. In other cases, factors like “the computer chip shortage that spread from the automotive side into commercial trucking” have had an impact. For others, it may be a combination of all of these creating a “perfect storm”.
More specific factors include:
- the need to keep up with increased demand for key goods resulting from the COVID-19 pandemic
- increased external distribution network costs, like discretionary bonuses for drivers
- shortage in equipment or fleet maintenance supplies
- shortages of drivers
- a need for companies to make pivots
- shifting production from one facility to another
- pivoting to a costlier option because of a need for flexibility
So how can you offset high transport costs that eat into your bottom line or have to be passed on to customers?
While the best option depends on each company’s unique needs, there are a few possible solutions.
1. Start Cutting Costs With Supply Chain and Fleet Management Software
The right supply chain technology helps you discover efficiencies and streamline your processes. This option can help you save without requiring you to significantly reconfigure your existing operation.
Additionally, this is true whether you’re building up your own fleet, working with distributors, or using a combination of both.
Implementing routing and delivery optimization tech is also a great option for companies opting to “wait out” the rising transportation costs. That's because often, these tools digitize and enhance tasks that your company is already doing.
Even if spiking prices aren’t putting too much of a dent in your bottom line, the right solution can:
- speed up your operations
- make fleet management and route planning easier
- help you serve your customers better
help you better prepare for future disruptions which may have a larger impact
Plus, going beyond transportation, these tools can also help with the administrative and warehousing sides of your business. Savings in these areas can help offset high transportation costs even further.
To give an example, here is how Routeique™ helped one of our large enterprise clients. Using our combination of software and IoT solutions, they achieved:
- significant fuel savings
- reduced wear and tear on trucks
- faster settlement times
- a higher perfect order rate
- a smaller carbon footprint
2. Streamline and Connect Your Distribution Network
In everything we do, we focus on building seamless supply chains. We believe in working on the hard problems: connections between the nodes of a network. We make sure you have the same visibility whether it's your fleet or your distributor's fleet delivering your product.
By connecting your supply chain, you can:
- easily receive, place, and store orders online
- choose and assemble partners and assets in the most efficient way
- track orders, vehicles, and shipments as clearly as if they were your own fleet
- view and analyze key insights and data
- create efficiencies with co-loading and route optimization
Some of these measures, like route optimization, offset costs directly. Others, like the data collected, make it easier to spot areas where you can add efficiency.
We know that coordinating with your distributors to adopt new technology can seem like a challenge. That’s why we’ve made Routeique™ easy to roll out across your entire network. Tools like our Delivery Management System app (a cloud-based TMS app) make it easy for any of your distributors' drivers to download and use from their phones.
3. Build Up Your Own Fleet to Control Costs
When it comes to cutting costs, many people often see outsourcing as the key. But that’s not always the case. Some companies are taking the opposite approach. They are expanding the role of their own fleet.
There are a few reasons why this can be a good option, and one of them is the level of control you can achieve.
This control extends to what sort of fleet management software and hardware you can use. Supplementing your routing and delivery software with IoT hardware can make it easier and more affordable to manage your own fleet and keep costs down. Our VP Services, Kaitlin Mercier, notes, “when you own your own fleet, it’s easy to extend your tracking and data collection with IoT tools like the vehicle intelligence hub.” The VIH provides additional data for cold chain compliance, vehicle health, and more.
At the same time, when you internalize your fleet, you’re also creating new challenges. To get full visibility, orchestration, and efficiency, it’s key to choose the right tools.
Summing It All Up
The right supply chain and fleet management technology can help control or offset high transport costs. It can also bring more flexibility and helps you prepare for future disruptions. To learn more, get in touch with our team through the contact form below!