Logistics Cost Reduction, while keeping your customers and employees happy, is by no means an easy task. It can take a herculean effort; that’s probably why it's much more challenging to run your own business. One way to reduce the cost of business operations is by adopting better logistics practices. Since our primary focus is on trucking, logistics cost is the main expense anyways, so it's a win-win.
Types of Trucking Logistics
Right after manufacturing, hauling freight is the most important part of the business, and it’s not as simple as just loading and unloading. The 3 main cogs that spin the wheels of logistics are:
In logistics cost, you have drivers on the road, employees in your warehouse, and then some employees that handle other aspects of the business, like management. This is one of the major logistics costs, and one should pay attention to input vs. output. The law of diminishing returns explains that there is an exact number at which things are optimal; any more or any less would result in increased costs.
Any trucking logistics business needs a place to store freight, which can be fairly costly depending on the location. You also have to consider the cost of insurance, security, utilities, and miscellaneous expenses.
You will have to get creative for logistics cost reduction ideas in your warehouse. Because you can work around labor costs but in warehousing, you have to pay a fixed cost no matter what. For example, you can consider renting out space that you do not occupy.
This is the biggest and most important expense of a trucking logistics company. Logistics cost reduction has to be very carefully planned in this department. Moving products from their starting point to their intended destination can be a complex process involving multiple stages. Companies can handle transportation themselves by using their fleet, or they can outsource it to third-party logistics providers, freight carriers, or brokers.
Depending on the distance and route, various modes of transportation might be used, like trucks, ships, and trains, which can result in additional costs. The trucking/transportation company must also consider ongoing expenses such as fuel, vehicle maintenance, and insurance, as well as costs related to driver uniforms, routing and dispatching software, and employee training.
Logistics Cost Reduction Strategies
I know things are easier said than done, but when done correctly, the points I am about to make can have a massive long-term impact on logistics cost reduction.
Automate What You Can
Automating logistics processes can reduce warehouse and shipping costs while improving accuracy and speed. This results in a more streamlined process, fewer staff needs, and centralized production operations. With cloud technology, automating logistics is now more accessible and affordable.
Automation software’s like LoadStop help you reduce the cost of business processes, as you require fewer employees to maintain orders. Things like payments, load searching, space posting, dispatch, and others can be automated, requiring fewer employees.
Identify Fixed & Variable Costs, Then Cut Costs Where Possible
Variable costs are those that keep fluctuating with changes in conditions like labor cost, fuel cost, packaging materials, and things as such that can cost more or less every month based on the volume used. A fixed cost is a cost that remains constant unless there is a variable that changes it. Like heating bills and management salaries.
So when you can clearly define what cost is what, then you know where you can cut costs and what you have to pay.
Cut Maintenance Cost
When your business adopts a preventative maintenance plan, it means it's being proactive in maintaining its assets to keep them in the best condition possible. There are different ways to approach this plan, including time-based, usage-based, failure-finding, or prescriptive methods, which all aim to prevent unexpected and costly malfunctions and downtimes while maximizing asset availability.
In addition to improving the reliability of your vehicles, following a preventative maintenance plan can also save your business money by avoiding the high costs associated with neglecting issues. Moreover, it can help you extend the lifespan of your assets, leading to overall financial benefits.
Optimize your Route Planning
It is important to pay close attention to how your trucks are being used. One way is by using software to monitor road conditions and routes to identify issues that lead to more deadhead miles driven or extra time idling.
Optimized routes also mean less travel time, and quick deliveries, which has a positive impact on your business. It not only saves money, it also makes more money for you in the long run, thanks to a more positive public image.
Smaller routes also mean less money spent on fuel, less money spent on maintenance, and your drivers have more time on their hands to be utilized for the next job.
Prevent Theft and Equipment Misuse
It's crucial to take precautions against cargo theft because it's usually an act of chance. Start by instructing your workers on the best ways to prevent cargo theft. Inform drivers about current events, recognized hotspots for hijackings, and ways to increase safety when stopping for petrol, a meal, or a layover.
GPS tracking is not that expensive, considering the numerous options available. It is better to invest in tracking software; even cargo can be tracked. Geofencing is also a great way of tracking if your goods are in uncharted territory. Moreover, in case a theft does occur, GPS will help the police authorities track your goods.
Consolidated shipping is the process of combining several less-than-truckload (LTL) shipments. Combining shipments enables a company to benefit from full-truck-load (FTL) prices. Consolidating customer shipments to load the truck can also result in cost savings for the fleet. This usually helps companies make more profit from a single truckload.
How Does LoadStop Help in Logistics Cost Reduction
There are numerous ways in which LoadStop can help in logistics cost reduction. So many tasks can be automated by LoadStop, that would otherwise require a lot of man-hours. This allows you to do more in less; you also require fewer people at the office since most things are automated.
There are over 50+ integrations in LoadStop, including fuel cards, factoring companies, load sourcing, and more. This helps you manage most tasks from a single window, and you also require fewer employees to manage them.
LoadStop emails and posts the availability of trucks & loads. You can send invoices with the click of a button.
You can store logs of maintenance, accidents, and when you buy new things. Moreover, you can also manage your fleet with real-time data; for example, you can identify how much one truck had traveled compared to another, when was the last maintenance, and more.
There are many other ways LoadStop can reduce your operations costs, but as each business is unique, I would recommend you book a product tour while talking to our representatives in detail.
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