7 Smart Strategies to Reduce Transportation Costs with Automation


7 Smart Strategies to Reduce Transportation Costs with Automation

Fuel expenses, miles traveled, asset monitoring and maintenance, and more – there are many complex variables when it comes to transportation costs. 

How can businesses ensure comprehensive management, tracking, and control of all these variables to reduce overall transportation costs? What steps can they take to make their transportation operations more efficient, and how can intelligent automation help them?

Below, we discuss the answers to these and many other questions at length. 

Why is it Difficult to Reduce Transportation Costs?

How To Reduce Transportation Costs

Reducing transportation costs is notoriously difficult to achieve due to the intricate interplay of various factors within the supply chain. Several reasons contributing to this complexity are shared below.

Multifaceted Cost Variables

Transportation costs are influenced by an array of variables such as fuel prices, distance, route efficiency, vehicle capacity, labor costs, regulations, and more. These variables often fluctuate, making it challenging to save costs and predict expenses accurately.

Dynamic Market Conditions

The logistics landscape is subject to rapid changes in market demand, seasonal variations, geopolitical events, and economic shifts. These external factors can disrupt transportation operations, leading to unforeseen transportation costs.

Fragmented Supply Chain

Modern supply chains involve multiple stakeholders, including suppliers, manufacturers, distributors, and carriers. Each entity may operate with different technologies, processes, and priorities, making coordination and logistics cost reduction complex.

Last-Mile Challenges

The final leg of delivery, known as the last mile, presents unique challenges. Urban congestion, diverse delivery requirements, and customer expectations for speed and precision add layers of complexity to cost optimization. 

Data and Visibility Gaps

Inaccurate or insufficient data about shipments, routes, and performance can hinder effective decision-making. Without real-time visibility, businesses may struggle to identify inefficiencies and reduce labor costs.

7 Exceptional Techniques to Reduce Transportation Costs

7 Excellent Ways Businesses can Reduce Transportation Costs

#1 – Route Optimization for Decreasing Empty Miles

The logistics automation market is growing at a CAGR of 12% and is expected to hit the USD 158 billion mark by 2032. Further, the global transportation and logistics services market is expected to reach USD 1,804.49 billion by 2029

Yet, 50% of shippers cite high transportation costs as their biggest challenge, and the last mile logistics costs continue to be the single largest cost contributor in the last mile – 53% of the total shipping costs

Utilizing route optimization & planning software to identify the most efficient routes for deliveries can do wonders when it comes to reducing transport costs. 

Intelligent software with in-built automation and real-time tracking can easily minimize detours, reduce mileage, and avoid congested areas to optimize fuel consumption and decrease transportation time. 

This can help reduce the overall transport costs by 12% and increase vehicle utilization by 31%.

#2 – Load Consolidation for Reduced Trips

Combine multiple smaller shipments into a single larger shipment whenever possible. This maximizes vehicle capacity and reduces the number of trips, leading to lower fuel, labor, and transport costs. 

Reducing the LTL (less than truckload) shipments or clubbing them for planned deliveries, etc., can significantly reduce transportation logistics costs.

Want to learn more about LTL and FTL load planning for cost-efficient logistics – Click Here

Achieving efficient load consolidation in a manually managed ecosystem is neither possible nor scalable. Hence, we recommend investing in a transportation management system (TMS) that comes with in-built automation workflows for load planning and vehicle capacity management to increase full load shipping. 

#3 – Intelligent Carrier Management for Increased Efficiency

Working with only one carrier can significantly reduce the chances of having the upper hand at the rate negotiations and also limits the overall ability to reduce costs. Working with multiple carriers based on their value proposition, unique strengths, such as express shipping, geography-specific shipping, consignment nature, etc., can help businesses reduce overall transportation logistics costs. 

Intelligent transportation management solutions come with advanced functionalities, such as automated freight shipping procurement across all modes of transportation, carrier management, intermodal transport management, individual performance tracking, etc., that enable businesses to drastically reduce transport costs. 

#4 – Vehicle Capacity Planning for Optimal Resource Utilization

Allocate shipments among available vehicles/riders as per multiple factors contributing to direct logistics costs, such as cost per delivery, volume commitments, consignment nature, physical consignment characteristics, rider costs, etc. 

Further, club the orders to make the deliveries more resource-efficient and reduce logistics costs, such as clubbing the deliveries for a specific route/area code or clubbing returns with deliveries or pickups.

Intelligent transportation management systems come with in-built routines that help businesses choose the most optimal vehicle for all types of shipments based on custom parameters. They also facilitate optimal vehicle capacity utilization and cut down the requirements for market vehicles, thereby helping logistics managers optimize transportation costs.

#5 – Real-Time Tracking for Robust Monitoring

Track shipments in real time and get updates for key milestones, such as hubs or destinations. Compare them with the expected timelines and track delivery professionals/drivers while they are out for deliveries for reducing logistics costs due to inefficient movements. 

Achieving such granular visibility over shipment and asset movements is impossible without the assistance of smart technology. Hence, we recommend opting for smart transportation management software that offers real-time tracking, improves overall visibility, and helps save money by cutting down empty miles, idling, etc. 

#6 – Set, Measure, and Track KPIs for Higher Productivity

Set KPIs for adherence to expected delivery times, delayed deliveries, parcel loss, number of delivery attempts, etc. Setting and measuring performance KPIs for individual carrier partners and in-house workforce can help uncover the hidden inefficiencies and achieve overall cost reduction.

Advanced software for transportation management comes with in-built KPI benchmarking capabilities, and logistics managers can set custom KPIs for all their carriers and individual riders. They can easily get actionable insights from the exhaustive reports and can constantly steer their operations towards greater efficiency.

#7 – Carrier Prioritization for Reduced Transportation Costs

Measuring performance metrics for each carrier helps in making highly strategic decisions that enable cost savings, such as the best carrier for long-haul transportation, the most reliable carrier, the best carrier for express shipments, etc. Likewise, businesses can also set criteria for choosing the best carrier based on cost, delivery requirements, areas, etc.

AI & ML powered transportation management systems come with advanced carrier selection and prioritization routines that allow businesses to set specific parameters for specific shipments and automate carrier prioritization. This helps reduce the inefficiencies introduced via poor carrier selection and also helps unlock higher cost savings across transportation logistics. 

Wrapping It Up

Shipsy’s advanced Transportation Management System (TMS) comes with highly advanced features, such as intelligent vendor selection and prioritization modules, automating optimal vendor suggestions based on specified parameters, generation of optimal dispatch plans, real-time tracking, etc. 

The TMS integrates transportation rates masters, cost calculators, and serviceability masters for automated vendor comparisons considering contracts, costs, and delivery types. 

Additional features involve an indent management portal, automated invoice generation, and a configurable route optimization module that help reduce transportation logistics costs and unlock:

  • 14% Decrease in transportation cost
  • 20% Decrease in delivery time
  • 40% Decrease in vehicle requirements

To experience Shipsy’s advanced TMS firsthand or to know how you can save costs with it, please connect with our experts for a personalized demo today.


Related Posts