New York businesses spend anywhere from 10 to 50% of their operating budgets on costs associated with the transportation and delivery of goods. While costs can vary based on volume and complexity of logistics needs, almost without exception, transportation spend is one cost center regularly put under the microscope as business’ look for ways to cut costs. Long Island-based Purolator USA recently compiled an overview of ‘expectations’ that businesses can use to ensure that they are receiving maximum efficiency from their logistics provider.
‘Many businesses don’t realize that there can be a great deal of flexibility in putting together a logistics plan,’ says Purolator USA, Director of Transportation Michael Locke. ‘Businesses need to make sure that their logistics provider is working with them, understands their business and is taking advantage of every potential savings opportunity.’
Consolidation can be a key factor in reducing transportation costs. A good logistics provider will have the capability to combine shipments so that trucks are traveling at near-to-full capacity. Consolidation can also help business’ avoid costly and inefficient distribution stopovers. ‘For example, Purolator USA has access to deep distribution networks both in Canada and within the United States,’ Locke explains. ‘We use these extensive networks to consolidate shipments so they reach their end user without stopping at a DC. This saves improved service to the end customer by saving time and money, and also avoids the need for a business to maintain a separate inventory in a DC.’
Consolidation can improve Canadian shipment efficiency. Last year, New York businesses exported more than $13 billion in goods to Canada. In most instances, a logistics provider will combine smaller shipments into one large shipment, and move the entire load across the border at once. This significantly cuts down on border crossing wait times, and minimizes regulatory paperwork.
Businesses can also reprioritize service levels. The cost of overnight air shipping runs an average 50% higher than ground service. Within the ground category, there are several options available, depending on delivery deadlines. Locke noted that many businesses send non-urgent shipments via next day overnight, because they’ve always done it that way, and they are simply unaware of the alternatives’. ‘With 75% of the Canadian population and business centers lying within 100 miles of the US border, many shipments moving by ground can be delivered next day without incurring the significantly higher expenses associated with shipping exclusively by air.
‘Given the current economic climate, it’s very important for business owners to realize that they have choices when it comes to logistics services,’ Locke said. ‘Businesses can better manage their transportation spend by being aware of those choices, and ensuring that their transportation dollars are being spent as efficiently as possible.’