Offsetting Today’s Rising Transportation Costs
Transportation costs are rising at an aggressive rate. Some of the key contributors include rising cost of diesel fuel, driver shortages and the introduction of CSA (Compliance, Safety, Accountability) regulations. The U.S. Energy Information Administration is projecting diesel fuel to average $4.09 this summer. Carrier bankruptcies and consolidations have reduced capacity, while demand has been increasing by almost 7% year over year, according to industry sources. Additionally, CSA is removing drivers with poor safety records from the pool of available drivers. The transportation industry forecasts this will reduce the pool by 5% to 12%, creating a driver shortage and further restricting supply. This drop in capacity coupled with increased demand and fuel costs will force carriers to raise their rates.
How Can You Offset Rising Transportation Costs?
Sourcing Carriers Effectively
- Match customer needs with providers’ strengths
- Qualify providers for safety, insurance, terms and conditions
- Conduct RFP and negotiation to reduce transportation cost and improve service levels
- Review and recommend geographical transportation efficiency
- Review and recommend DC and RDC density and scope
- Compare TL and large LTL pricing against intermodal options
- Review and recommend cross docking options
- Review and recommend multimodal solutions for cost/service improvement
- Review and recommend stop-off options
- Review order fulfillment frequency for load consolidation opportunities
- Review large LTL pricing options against TL pricing options