The real price of transportation

How much does transportation cost ? If few consumers ask themselves this question, considering the delivery service as free, the professionals of the sector are confronted every day with this cost issue. Whatever the mode of transport, its nature or the expected quality of service, transport has a price. Let’s zoom in on the elements of understanding and optimizing the latter.

Who pays ? How much ? For what service ? The world of transportation is vast and complex. It includes a large ecosystem of actors, issues and services. In this sense, the question of estimating the price of transport can be compared to a two-sided coin.

On the one hand, there is a consumer-oriented vision, which considers transport to be too expensive because it is convinced that it should be free. On the other hand, the shipper’s vision is the opposite, as he is aware of the real value of the service and therefore of its price. Aware that price is no longer the only criterion for choosing transport services, shippers are now integrating the notion of services, capacity, visibility, information transmission and also the environment.

However, on a day-to-day basis, the situations vary according to market balances and very different modes of transport. While the balance is now generally satisfactory for road transport, the situation is still abnormal for air and sea transport. Finally, the market addressed is also a determining factor. Logistics and work units are different depending on whether you are in B2B* or B2C**.

Understand the global costs of a transport chain

To understand the costs of the transport chain, it is first necessary to control and secure it. Knowing your partners and their ability to operate, ensure the delivery and tracking of goods on time, determine the expected service levels and then put a price on it. Because the carrier does not only sell a route of pallets or parcels over a given distance, he offers a global service. In this sense, the manipulation of information is now a strong expectation of shippers. The shipper can therefore provide its carriers with technological tools such as platforms or mobile applications to facilitate their management. But the management of this data represents a cost for the carrier that must be integrated into its price and whose margin must be calculated and passed on in whole or in part to the shipper.

At the same time, in order to calculate the overall cost of their operations, importers and exporters must integrate the purchase price of their products and their logistics costs. It is by identifying the best sources of supply and by controlling their margins that they ensure their profitability. Actions such as grouping orders in containers or trucks, simulations on the best routes or transport partners can also help to better control the costs of its transport processes.

The use of TMS software and collaborative platforms dedicated to transport

The health crisis related to the Covid-19 epidemic has highlighted the importance of reliability and operational efficiency, but also the fact that many companies are lagging behind in terms of digitalization. And yet, this digital transformation is not only beneficial for cost reduction, but also represents a quick return on investment. And above all, many solutions are available on the market. If they first respond to the desire to control processes, to increase collaboration between the different actors in the chain and to provide a complete vision of all flows, they undoubtedly lead to gains and a rapid ROI in terms of service quality, budget, transport emissions and productivity.

Features of the DDS Shipper solution such as exception management, automated invoice control and truck filling optimization doubled productivity for some customers, with a constant shift. We have seen profits of 3 to 8% on the transport budget. On a more general level, digitalization of transport improves team productivity by 10 to 50% and reduces the budget for purchasing transport services by 5 to 15%.

Sustainable gains for transport actors

Long considered expensive, digital transport management solutions have been democratized and adapted to the needs of large accounts, but also to those of SMEs. In light version, composed of different modules depending on the business and sector; or simply in the form of mobile applications or collaborative platforms such as Join2ship. Today, digital solutions are available for all sizes of companies. Shippers and forwarders benefit from a control tower for their supply chain while simplifying exchanges with carriers. They offer their customers end-to-end visibility on the entire process. They anticipate delays, production and delivery disruptions and have the leverage to implement alternative solutions and guarantee a constant quality of service to their end customers.

Another positive impact is on the environment. Speed of rotation, truck fill rate, reduction of emissions are virtues made possible by the use of a transport TMS software. And this impact is also favorable to cost control. Shippers have integrated these ecological and economic arguments, as shown by their growing commitment to initiatives such as the one initiated by ADEME and AUTF: Fret21. Lastly, these transport software programs also allow for the optimization of organization and transport plans in the long term. They have dashboards and provide key performance indicators to help decision-making. Scheduling of flows and operations, cost analysis by product type, country or supplier are sustainable improvement levers offered by TMS software.

_{B2B* : business to business. B2C** : business to consumer}

Other articles that might interest you…

• How to control your transport costs ? 
• Technology to fill the transport gap
• Road transport: shippers and carriers work together toward optimization