Lowering Logistics Costs in Consumer Goods Distribution

Any business whose operations include the transportation or shipping of goods to their customers or vendors would agree that logistics can be costly, and would end up increasing their products price in order to cover such costs. It’s important to keep your logistics cost low in order to increase profitability as well as price competitiveness. As such, we’ll be taking a look at ways for your business to cut logistics costs:

Consider Warehousing Services

If you’re frequently sending goods to certain areas, then you might want to consider renting or investing in a warehouse. Investing in a warehouse or renting out one allows you to stock up in that area, reducing the cost to frequently have items shipped or transported to your customers, vendors, retailers. However, you also need to be smart about your inventory management when warehousing, as you may end up stocking more than you need, and would have to ship out or ship back certain goods to be delivered in other areas.

Be Smart About Insurance

It’s always important that your goods are always ensured during transit, which is why many businesses and companies use their logistics company or carrier’s insurance, which can sometimes be quite costly. However, many companies are self-ensured, and you should check if your business/company’s own insurance policy has shipment/logistics coverage for goods. If there is, it means that you wouldn’t have to pay extra or choose a logistics company with added costs for carrier’s insurance.

Consider All Modes of Transportation

It’s possible that you’ve gotten used to air, rail, or truck shipping, but it’s important that you try to consider all modes of shipment. You have to consider both costs and the time it takes, as not being able to meet your shipment schedule could also cost you. As such, try to find quotes through different modes of transportation: air shipment, water shipment, rail, or truck. Do your research and find out which one is the best in terms of cost and time efficiency. Lastly, you don’t have to stick to one mode of transportation: you can go for intermodal transportation, utilizing a combination of different mediums of transportation such as land-air, or sea-air, or land-sea. Depending on where you’re shipping, intermodal transportation can be quicker and even cheaper than single-mode transportation.

man delivering a parcel

Less-than-Truckload Shipments

If the size and weight of the goods you’ll be transporting won’t require it to use the entire truck, then you should take advantage of logistics companies offering less-than-truckload (LTL) shipment. LTL, also known as partial or part load shipment is a good option when the goods you need to be transported is less than the truck load. So, instead of paying a logistics or shipping company the entire full-load delivery, your goods will be grouped with other goods from other clients and will be delivered by a single transport unit. As such, it’s cheaper than dedicated full-load delivery but may take slightly longer time to deliver.

Conclusion

While it’s important to minimize logistics costs, it’s also important that you shouldn’t sacrifice your products’ safety by picking low-quality, unsafe, or uninsured logistics options as it might end up costing you more than you’d save; if you skimp out too much, you might end up having damaged goods, or not being able to claim insurance due to loss or damage. So pick your options wisely; find ways to cut costs but still ensure that your goods arrive at their destination on time and unscathed.

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