Get Ready for the Long Haul: Reduce Trucking Costs Now
Trucking companies continue to feel the pressure of a struggling economy. As trucking costs continue to rise, the entire supply chain will feel the effect. Some of the large transport providers will be able to absorb some of the costs, while the small and medium size fleets will have no choice but to pass these increases on to their customers. The ripple effect will cascade to manufacturers, distributors, retailers and other freight and trucking customers.
Reasons for the Increase
There are several factors that are causing an increase in trucking costs going into 2013:
- Fuel costs are a primary factor. Gas and oil prices continue to be highly volatile, and trucking companies cannot stay ahead of these very unpredictable price changes.
- Licensing and permit expenses skyrocket. Over the last four years the costs for licensing and permit expenses has seen the largest increase, a 147% increase over the last four years. This added regulatory burden has affected fleets nationwide.
- EPA and aging fleets. Environmental regulations are an added expense for fleets to bear as they bring their vehicles into compliance with the new laws. Also many carriers have kept older vehicles on the road during the difficult economy, which adds to fleet maintenance expenses.
- National and regional carriers. Whether your business relies on a large national trucking provider or a local fleet, all are feeling the pinch from these increases and are handling the expenses in different ways.
While the American Trucking Association and other groups do a great deal of lobbying to try and reduce the regulatory issues, there are still far too many challenges that will cause freight expenses to rise. Trucking costs going up is a reality, and your business may feel pain as trucking expenses rise each year by just under an unprecedented 10%.
What Can Your Company Do?
If increased trucking costs are inevitable, what can a business that relies on fleets do to help in controlling these expenses? One of the best methods to help curb rising costs is to perform an in-depth assessment of your transportation costs.
Manufacturers, retailers, and distributors who depend heavily on quality transportation providers should:
- Evaluate their current transportation own procurement processes
- Review detailed metrics with key shipping providers
- Renegotiate strategies and service agreements where ever possible.
Using an objective third party to review all of your transportation expenses is a prudent step. Some businesses may make shipping decisions in a very fragmented manner. By looking at consolidation opportunities and service guarantees a business can save a substantial amount of money on their transportation expenses – possibly more than offsetting the increased trucking costs that are passed on.
Before your business feels the burden of increased shipping expenses, consider a transportation assessment as a proactive approach to deter inevitable increases.