How logistics minimize cost in road transport?

Here are four steps that can help your organization save money on transportation and shipping costs:

1. Work with a third-party logistics provider (3PL).

“If you want to rein in transportation costs but you don’t have the expertise in house, use a 3PL. They can save you money by determining which mode of transportation and which carrier is best for each particular shipment,” says Anthony Pagano, Ph.D., Director and Senior Research Associate at the Center for Supply Chain Management and Logistics, University of Illinois at Chicago.

“Hiring a 3PL can benefit companies of all sizes,” agrees Cosmo Alberico, Executive Vice President and Chief Financial Officer, Odyssey Logistics & Technology (Greenwich, CT). “Businesses gain a partner that can focus on logistics and transportation management in a way that most companies cannot do internally.”

Good 3PLs provide value in several ways. They…

• Have a strong handle on the marketplace. 3PLs know how best to optimize a customer’s freight network, laying it out in such a way that the flow of freight transportation is more efficient and timely.
• Can leverage multiple carriers. Because 3PLs work with many carriers, they can arrange for companies to get the best deals on transportation.
• Have excellent tracking capabilities. A good technology platform will give you secure access, total visibility, and the ability to track cargo and submit queries.
• Offer flexibility. You can implement part of a 3PL’s technology or the entire platform.

The average cost of hiring a 3PL will depend on your needs. Alberico notes that most 3PLs will provide prospective clients with a free savings forecast based on their specific shipping information. “If you cannot afford to hire a 3PL at this time, you can still make improvements to your shipping processes that will help you boost efficiency and lower your transportation costs,” says Alberico.

2. Map out shipping criteria with your carriers.

“Companies that fail to work jointly with their carriers to map out shipping criteria can spend up to 25 percent more on transportation services than those that do,” Anderson points out. “Sit down with your carrier to match their services and fees with your shipping requirements. Discuss how quickly you need delivery to occur, and identify the modes of transportation the carrier has available, so you can come up with the most affordable plan for your business.”

3. Consolidate shipments strategically.You can reduce transportation costs by consolidating shipments, especially if you have “less than a truckload” (LTL) shipments, says Pagano. “Look for transportation companies that work with freight consolidation services. They can  combine small shipments from more than one company that need to go to the same destination.”

4. Be realistic about the service level you need.If your customers expect deliveries in three days, you don’t need to overpay to get shipments to them in one day.