Businesses need to employ transportation companies to get their goods to market, whether they rely on long-haul carriers or fleets that complete direct store delivery. While these services are essential, they are also rising in cost - a new report revealed a spike in logistical costs for U.S. businesses.
According to the annual "State of Logistics Report" from the Council of Supply Chain Management Professionals (CSCMP) and Penske Logistics, transportation expenses are on the rise. The information showed that overall, 2012 company logistical costs rose to $1.33 billion, a 3.4 percent jump when compared to the year before.
Truck transportation expenses experienced a 2.9 percent jump in 2012, but the balance the industry has maintained could be thrown off July 1, when new hours-of-service (HOS) rules begin to impact carriers across the nation. The report anticipates lower driver productivity resulting from the new mandates will lead to "capacity pressures" within the industry. This could result in rate increases for businesses that rely on trucking companies to move products across the country.
"This report identifies important trends that are impacting the U.S. logistics system, and reveals how logistics and supply chain costs are affecting the greater economy to help executives proactively manage their businesses and their supply chains," said Rick Blasgen, president and CEO of CSCMP.
Rising costs could spur carriers to employ routing software
Businesses are still struggling in the tumultuous economy, meaning they don't have endless resources to spare. When transporting goods across the country becomes prohibitively expensive, companies may investigate other options to get products to retail outlets and distributors. Whether clients look to a carrier's competitors or other means of shipping, higher costs can deter customers and have a significant impact on transportation companies.
As such, it's increasingly important for carriers to cut costs wherever possible and streamline processes to see a reduction in expenses. By employing software that allows drivers to travel along the most direct route, fleet managers can limit fuel spend and enhance productivity, an essential concern as the new HOS rules approach.
With lower fuel expenses and heightened productivity, a company may see its operational costs decline. Minimal spending can help ensure a transportation business doesn't need to raise its prices annually and watch clients turn to other providers. By keeping internal expenses reasonable and processes as efficient as possible, businesses could manage to keep prices down and experience additional growth.