Along with the cost of a gallon of gas, your transportation costs are rising (but fuel isn’t the only reason)
It’s more immediate of course, when the cost at the pump jumps, but rising fuel costs are a reality in your shipping operations whether you are pushing product to customers or bringing it into your facility. We’ve all seen the fuel surcharges and continually-rising freight rates.
According to Operations & Fulfillment, labor developments may have just as much impact over the next few years. Over the next 5 years, the latest UPS contract amounts to a $9 per hour labor cost increase, which will certainly make its way downstream to shipping charges. Developments in other companies such as FedEx and labor negotiations across the shipping and freight world mean that even if fuel prices stabilize, it’ll cost you more to ship and receive products.
Curt Barry’s article at Operations & Fulfillment recommends some of the steps you can take:
- Look at transportation in the context of the total supply chain efficiency. (see Curt’s article for tips).
- Institute vendor compliance policies, include routing guides for inbound carriers. Do not permit vendor-controlled freight.
- For high returns businesses, use return services.
- Join an inbound freight consortium with contracted carriers and negotiated best rates.
- Do your homework. You have to understand your volume and shipping characteristics, etc.
- Consider a freight consultant, which can reduce costs 15% to 25%.
Scott Stone is Cisco-Eagle's Marketing Director with three decades of experience in material handling, warehousing and industrial operations. He writes on automation, warehousing, safety, manufacturing and other areas of concern for industrial operations.