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Saudi arabia ( low fuel cost ) + Consider material insurance cost + Maintenance cost
the comparison between using the own ones and hired is which of them make the cost low with satisfied return
1- to imply on the company transportation , based on the available budget set from the firm the you have to plan method of the transportation cycle to avoid the break downs , the late charges , the extra maintenance, the absence of drivers , to make the invested capital without unused amount ,
2- to get hired you have to reserve money to invest outside instead of the high cost of owing afleet
in fact the decision is created based on the nature and status of the firm at all not standard base
Some maths need to take place to calculate the running cost of your own fleet against the 3rd party Logistics fleet. You need to make lots of calculations as this is a one way ticket calculation and you do not want to be in a bad situation.
Based on company capital investment and business growth.
In retail industry, having own transportation will help to improve your sales by quoting some offer such as " free delivery" on or above some fixed value . Those cost were certainly added in the material costing in primary pricing.
nothing is standard
1- if you are sure that your work capacity will utilize your resources capacity without any idle capacity - then you can use your won fleet.
2- if your work capacity in growing stage, then it is better to depend on a rented company and i prefer if you can acquire a full logistic solution which includes warehousing and transportation services
Thanks for invitation,
In most cases "YES", as this will minimizing transportation and logistic costs in addition to the propre handling and delivery.
Obviously if you hire Transportation form outside it will very cost effective
1. Cost Reduction
2. No over head Burden
3. Maintain proper Track of Record then it will go for good profitable
4. Build a good communication skillwith the Lower to Upper Grade
Owning your own transportation reduces the overall cost during the year as it will be re-used for all operation. Also the rent fees adds to the cost of the items and narrow down the profit margin as it has to be added to the cost. and it depends on the financial status and strategy of the company but as a Fleet Manager i prefer owning the vehicle to have complete control on the process and be sure all standards of the company are met and assuring the customer satisfaction in terms of planing and operation.
If you hire a transport from out side sources and takes its commission, it will be a fruit ful for company. However, please contract with them that all requirement/standard of company should be implements. Company should make own standard keeping mind latest requirement/safety standards of transportation.
If your make own transport then it will be more profitable, but management / staff should be qualified.
