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Over the past two years, the logistics market has seen significant changes. Firstly, today there is a clear shortage of transport supply from carriers due to a shortage of drivers, which pushes prices up, and at peaks in demand, price jumps are sharper.

Secondly, if previously companies could predict logistics costs a year in advance with a high degree of certainty and practice annual tenders, now this is much more difficult due to the high saudi arabia telegram variability of factors influencing the carrier’s tariff.



How companies can reduce transportation costs
Ultimately, the price of cargo delivery consists of the cost of transportation and the carrier's margin. Accordingly, the price can be reduced either by reducing the margin or by reducing the cost.

If the shipper company has its own (or leased) fleet of vehicles, in order to reduce costs it can manage the cost of transportation, which consists of:

cost of vehicle ownership: expenses for spare parts, leasing, depreciation, repairs;
cost of fuel and other consumables;
expenses for salaries and maintenance of drivers and other staff.

If the shipper uses a contractor carrier, it can influence its margin by reasonably negotiating for better rates. Another working approach is to ensure maximum competition among contractor carriers for the offered flights. This can be done by diversifying the carrier portfolio (but this increases the risk of losing service quality) and by increasing the frequency of rate updates. This is a market trend, since due to the growing global uncertainty, there are fewer long-term contracts.

As a rule, having your own fleet is more expensive than outsourcing logistics completely. But it reduces the risks of supply disruptions and other force majeure events. Therefore, large companies, such as retail chains, most often use a hybrid scheme: part of the cargo transportation volume is carried out by their own transport, and part by hired transport. In this case, work to reduce costs can be carried out in both directions.

It is also possible to reduce costs by optimizing routes: loading transport on the way back from the unloading point, combining several directions, creating more complex routes, thereby reducing downtime.