For as long as I’ve been in the logistics industry, companies of all sizes are constantly looking for ways to lower logistics costs, especially trucking costs. Every year most trade publications and logistics providers publish scores of lists addressing the topic.
No wonder, logistics is one of the largest expenses many companies have, particularly for manufacturers and distributors. According to Inc. magazine, “Choosing how you get your company’s products from point A to point B to point C is one of the most important decisions you can make. After all, shipping products faster and cheaper will make for happier customers. That’s where logistics comes in.”
Also, transportation management is an increasingly critical component of the supply chain, according to an article in Food Manufacturing magazine. “The biggest hidden cost of a poor supply chain is transportation — and the cost of getting goods from one place to another may well mean the difference between profit and loss,” said author Brad Forester. Therefore, for a lot of low margin businesses, “Transportation economies are a vital component of establishing profitability.”
Of the four major modes of transportation—trucking, ocean, rail and air—trucking is the most common method of freight transport in the U.S. Companies use a variety of trucks to ship products, food and raw materials throughout North America: dry van, small parcel, flatbed and less-than-truckload (LTL). Inc. says the average cost of trucking goods coast to coast can cost you anywhere from $2,000 to $5,000, a cost that compares to our experience, too.
Truck operators also have a lot of expenses, beginning with fuel—the truckers number one operating expense. See the infographic here for a breakdown of trucking costs.
Since trucking is the most popular mode of transportation, it also represents the largest opportunity for saving transportation costs. I’d like to share how you can lower your tips you can begin immediately to save 10 percent or more on your trucking costs.
Give your shipper at least 48 hours notice
If you’re using a freight forwarder, 3PL or broker, give them at least 48 hours notice so they can find you a good rate. At LPS, for example, we only hire truckers with top safety ratings and $1 million in liability insurance coverage. Good drivers are in higher demand, and you want to make sure you give your shipping or logistics provider enough time to line up a resource.
Reduce the truck driver’s nondriving activity
The more time the truck driver is supervising loading, the less time he will have for actual road time. Drivers work 13-14 hours per day, but only 11 hours of that is “highway time.” Plan ahead to help him spend the majority of his time on the road, not dealing with unproductive minutiae.
Make sure the load is “no-touch freight”
Again, plan ahead so your driver can pick up the load and roll. For instance, if the load is a flatbed, and it has to be covered with a tarp, valuable time is chewed up by your driver covering the load or securing it. Most of the time, this work can be provided by someone else in advanced of the driver showing up at your warehouse.
Offer wide shipping windows
The more time flexibility you give the truck driver when picking up a load, the better. If the driver and truck must wait in line to pick-up or drop-off, your costs will go up. A wide pick-up or drop-off window of three to four hours will help you avoid “waiting around” costs. Some companies are notorious for giving truckers a 30-minute window in the middle of the night to drop off their loads. If their prescribed time is missed for any reason, it could mean waiting in line for three hours or more!
Next time you hire a trucker or trucking company to work for you, try applying these tactics. I think you’ll be surprised by how much money you’ll save. And in this business environment of creeping logistics and transportation costs, a few percentage points can result in thousands of saved dollars to your bottom line.