What are transportation costs influenced by and how you can reduce them
The main factor affecting transport costs is fuel. While we have no influence on the price of fuel, we can try to reduce its consumption.
In addition, transportation costs include insurance, taxes, tolls, employee salaries, maintenance and use of the vehicle of a certain value. It is worth analyzing your transportation expenses to see if any of them can be reduced.
Fuel costs can account for up to 40% of a company’s expenses
Fuel costs are related to the current prices on the market. Over the past few years fuel prices have increased significantly and the near future does not look optimistic either. Increasing taxes on energy products cause fuel and coal prices to increase.
It is estimated that in the coming months the cost of fuel in Poland may increase by 40%. Even a small reduction in combustion can result in big savings for companies.
As a first step, it is a good idea to take meticulous measurements of fuel consumption to see at what point there is a chance to reduce the related costs. Telematics tools that allow obtaining complete information about fuel consumption can be very useful. As a result, it is possible to implement solutions that will reduce fuel consumption and, thus, the company’s expenses.
One way to reduce fuel consumption is to optimize the driving style. Frequent acceleration and braking causes more fuel consumption. There are eco-driving trainings available on the market which can significantly reduce fuel consumption. Trimble, a transportation services company, applied gamification to its telematics product, which allows drivers to see one another’s fueling results. The very form of competition results in greater awareness while driving. Many companies use this as an additional bonus system.
Another matter is regular examination of the technical condition of your vehicles. Servicing allows you to catch any possible faults. An efficient vehicle usually means lower fuel consumption and the lack of frequent repairs means no downtime in transportation. Furthermore, increased fuel costs can be caused by, for example, faulty brakes or damaged tires. A study by the German Technical Monitoring Association (GTU) has shown that under-inflated tires can result in higher fuel consumption. 0.2 bar less pressure increases combustion by 1% and 0.6 bar by 4%. Considering that the average fuel consumption of a truck is 35l/100 km, with a 4% increase in fuel consumption, the truck will use 140l more per 10,000 km. In terms of annual transports, it is easy to calculate how much money under-inflated tires can cost. Drivers should also check their tire pressure for another reason: too low pressure increases tire wear, which leads to additional costs.
Choosing the most optimal routes also helps to reduce fuel costs. The shortest route will not always be the best choice, while on a longer one the driver is able to maintain a constant speed. It is worth looking at different driving options, sometimes it pays off to choose a different route for which there is no additional toll. Use route optimization tools that are available on the market to help you plan your transportation with the best possible route.
What else can generate savings?
According to Eurostat, 12.5% of international cargo transport in Europe was carried out by empty vehicles. While not always possible, reducing empty runs can help generate greater savings. For this purpose, it is worth using exchanges and order handling platforms that let you quickly find a suitable load. If you are driving empty or with a semi-trailer partially loaded, it is worth checking if there is a load on the route that can be added. An additional benefit of using this type of a system is the possibility of gaining regular business partners and more orders for transportation.
Another reason may be trivial, as everyone wants to avoid a fine, but it is worth considering. Penalties vary and in cases of high fraud, can be severe for the carrier. Exceeded driver’s hours, overloaded car or permissible axle load are the most common sins of transport companies. Knowingly and frequently exceeding these limits is not only dangerous, but also affects the overall market rate. A load planning application can help you distribute cargo correctly, taking into account the permitted gross weight and axle loads.
Do not forget that time is money, so consider activities that can be done faster and more efficiently. For example, loading a truck with many different loads will take much less time if the driver or storekeeper has a loading plan that avoids mistakes or situations where goods will not fit on a given vehicle.
Based on your expenses, you can calculate the transportation rate you should receive for your orders. Are you interested in how much you should earn? Use our transportation cost calculator.