How to Reduce Transportation & Logistics Costs

If you’re in the particular business of transportation and logistics, you may find yourself spending an obscene amount of money on something that shouldn’t cost a fortune. There are numerous ways to be cost-effective and significantly increase your budget for other endeavors.

When you’re in the logistics field, every penny counts. You can save them in a myriad of different ways, such as:

Rethink Your Methods of Transportation

When you’re in business, shipping, transportation, and other such things can make a significant impact on your budget. Unlike many different fields, transportation and logistics are changing every day, and the industry seems to be evolving with the blink of an eye. But when it comes down to it, reducing logistics costs isn’t too hard; it just requires an idea.

But the process is not as simple as it sounds. Like many other things in the field, it’s never truly black and white. You will have to consider a wide range of things when you switch your transportation method, such as:

  • Cost/Saving
  • Speed
  • Quality
  • Insurance

An excellent way to go about cutting down on shipping costs is the combination of shipping methods. Trucking, air shipping, and rail all have very different price points, but if you combine the three into a shipping plan, you can get the cheapest and most effective method out there.

Make sure to always work with the most reliable people and companies in the industry, as shipping can make or break your logistics business.

Cut Down on Estimation

Try to cut down on estimates you give your customers for transportation time. If the estimation is a bit off, the customer is more likely to choose a faster, but more expensive transportation service.

When shipping time is not both short and affordable, the receiving party is more likely to stock up. Now, this can be a costly warehousing nightmare for you, and wind up costing a lot of money.

Oversee Your Overseas Transportation

Outsourcing overseas is a great way to go around shipping, transportation, and logistics as a whole. It’s even brought in its own industry of drop shipping, but ask yourself, is it worth the price? While the initial price tag may seem low, you need to take into account all of the expenses that aren’t that visible.

Fees, duty, tax, brokerage, inventory carrying costs are all a money leech on your lengthy supply chain and can stack up quite a lot. If you’re experiencing an issue with this, consider switching it up to a different transportation method.

Informed & Knowledgeable Decision Making

When you’re considering switching anything up in your business to achieve a more effective and less costly business flow, making informed decisions is critical. If you’re a professional on a specific topic, you should always try to learn more about it.

If you’re looking to cut down on shipping costs, really get into the issue. What is causing so much money to flow out of your hands? When you’ve determined the root of your problem, consider the solution before making any decisions.

More often than not, your costs are going sky high because of poor decision making. Remember these golden rules:

  • Tariffs and tariff blocks are significant
  • Strategies and plans pay off
  • Consider sourcing to one company only
  • Negotiation is key
  • Cost-effective warehousing is essential

Consolidation and Shipments

Consolidating your shipments is perhaps the best way to reduce costs. If you’re using different carriers for your purchases, the rates are going to vary depending on:

  • Weight of the cargo
  • Distance the load has to travel
  • Density of the cargo
  • Size of the cargo
  • Fuel costs
  • Tariff rates
  • Freight classification

A great way that you can cut down on costs is to consolidate the shipments, so fewer trips are required to deliver all the cargo. This means more for less, but requires a strategic approach to it.

Larger shipments have lesser costs in the long run. That is an essential strategy in cutting down on transportation and logistics costs.

To cut down on your logistics and transportation costs, reach out to JRC Dedicated Services today!

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