Have your Logistics costs reduced in 2017? Are fuel surcharges reappearing or are you expecting a price increase from your transport provider? It is a fact that diesel prices have increased severely in recent weeks but this 5% increase should not significantly impact your logistics costs as fuel constitutes only 17-32% of your supplier’s total annual vehicle operating costs*.
Does your business depend on the efficient and effective delivery of parcels, boxes, pallets or containers to your clients? If so, have you benchmarked the non-price aspects of the service e.g. quality, innovation and reporting capabilities?
If you are interested in reducing transport costs or increasing quality services, talk to us today, as there are daily changes in the transport sector which will benefit your business in 2018 e.g;
- Automation: Globally, automation is well-established in many distribution centres and is becoming more prevalent in Ireland now too, with a range of robotic solutions offering the ability to introduce automation into DC operations without the need for major structural alterations.
- Labor Costs: Have been increasing due to a severe shortage in drivers and rate pressures on ground-staff in most logistics operations. While OPEC play monopoly with global oil supply and prices, a real concern for the transport industry is the impending labor cost increases (while thankfully, Insurance cost increases borne by all over the past few years are not expected to continue).
- Consolidation: There have been a raft of mergers, acquisitions and alliances within the global freight industry over the past 5 years, which are turning traditional supply chains upside-down. The increased competition and coopetition is triggering supply efficiencies and price wars, which is flooring global freight rates (and we hope it is sustainable)
- Technology: There are very few industries immune to the technical breakthroughs of the last 5 years, while the transport industry is no different with ground-breaking advances expected to continue via drones, autonomous vehicles, Blockchain, IoT solutions, automation (as above) etc, with customers benefiting from increased efficiencies, reduced risk, improved governance, transparency and service etc.
- Customers: The aforementioned technical advances are fuelling customers expectations and demands, where same day deliveries are being explored by many retailers. Argos are leading this campaign, with their 2017 Christmas advertising highlighting online orders delivered in as little as four hours through its nationwide Fast Track same-day delivery service.
So will a single trend above or a combination of all impact your supplier and customer deliveries in 2018?
As Arvo have managed Logistics Reviews recently with clients benefiting from commercial savings in the region of 25% – are you interested in such reductions for your business? Contact us today to discuss further.
*FTA’s ‘fuel fractions’ table shows fuel costs as a proportion of total annual vehicle operating costs