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Also aspiring to reduce transport costs? How do you approach this?

IDS, the 4PL non-asset Transportation Director, explains

The transport and logistics sector is showing signs of recovery after a turbulent 2023. Something like this is always accompanied by interesting challenges again for both shippers and carriers. Understanding costs and putting yourself in a position to proactively influence and/or reduce them is certainly one of them.

From practice, we see that savings can be made in many ways. In this blog, we highlight some of them.

1. Digitise administrative tasks.
Organisations that use digitisation in the right way see a solid boost in productivity and job satisfaction. An important step here is to standardise and automate communication between supply chain partners. In other words, sharing data and documents digitally by making smart use of EDI and API. Less paper, fewer e-mails, fewer phone calls and less handling around orders, transport orders, invoices, waybills, etc. Connecting with each other allows organisations to respond faster to disruptions, plan better, minimise risks, increase customer satisfaction and therefore reduce costs across the board. And moving towards a Managed EDI platform, savings of 70% to 90% on components are no exception.

2. Compare carriers at shipment level and via a tender.
If you have your own TMS or if you use a 4PL independent transport director / non-asset Control Tower, you can, as described above, automatically transfer your orders from your ERP to your TMS or 4PL partner and thus already make significant savings. Then, as part of the transport procurement process, you can select and contract multiple carriers and assign them to specific lanes. A TMS or 4PL independent transport director can then use dynamic carrier allocation at shipment level to immediately assign the best-suited carrier. This can be based on maturities, specific shipment specifications such as ADR and also price.

The group of carriers you select for this purpose can be brought together by executing a tender. A tender helps you find the best value for money. In addition, a tender also allows you to directly contract several carriers yourself, thus saving you the margin of intermediaries. This way, you can work towards an optimal number of carriers in terms of coverage, price and required capacity and assign them to shipments on-the-job through dynamic carrier allocation.

Finally, it can be interesting to allocate a large parcel to a specific carrier. A carrier that exactly matches your shipment profile. This too can result in a more competitive price.

3. Use time slot booking or dock planning.
Dock planning or time slot booking eliminates unnecessary waiting times. The queue of waiting drivers disappears and that makes everyone happy. Carriers can reserve slots and know when they are expected. In the price, carriers can then factor in a short loading/unloading window and avoid additional waiting costs. Warehouse managers can then also adjust staff and floor capacity requirements accordingly. By distributing loading and unloading more evenly throughout the day, you avoid peak loads. The savings here are both in lower waiting costs from carriers and better staffing on the own floor.

4. Know your ETAs.
As with dock planning and time slots, knowing your ETA (Estimated Time of Arrival) is crucial for managing your transport costs. As with dock planning or time slot books, knowing an ETA also helps with your staff capacity planning and more efficient organisation of work.

In addition, knowing an ETA also helps you manage demurrage and detention costs as well as possible, and it helps you pick up all kinds of preparatory activities earlier to make the whole process as efficient as possible and avoid surprises. Think of customs activities, having all kinds of documents ready on time, informing internal teams and maybe even informing customers.

5. Consolidate shipments.
A TMS or 4PL independent transport director has a range of ways to consolidate shipments intelligently. For example, you can look at delivery window optimisation: For example, instead of daily delivery, can you switch to every-the-day delivery. Or combine a shipment from tomorrow with one from the day after tomorrow by sending the former a day later or the latter a day earlier. By cleverly coordinating loading and unloading dates and times, multiple transport orders can be cleverly combined into 1 transport. This leads to fewer separate shipments, lower costs and fewer empty kilometres.

Similarly, it is also possible to financially merge transport orders with the same pick-up and delivery location and the same carrier into 1 shipment. This too leads to lower costs and less administrative handling. A third option is to cleverly combine transport orders with a delivery date and address in a certain period and radius, e.g. 50 kilometres. We call this geographical consolidation.

Finally, a 4PL non-asset partner can also operate as a 4C centre. Here, 4C stands for Cross Chain Collaboration Centre. This centres on cooperation across supply chains with the aim of combining freight, reducing empty kilometres and thus saving costs for all parties.

6. Dare to let go and work together.
What are you good at and what do you prefer to do? Do you still organise your own transport but is that not really your core business? Then explore the possibility of cooperating with a carrier or a non-asset Control Tower/4PL independent transport director.

Outsourcing all or part of the organisation and optimisation of transport frees up time within your organisation. Time you can spend on growing your business. In addition, you do not need to invest in hardware and software to set up and keep up with an internal transport department. By working together, you automatically benefit from your partner’s knowledge and expertise and opportunities to make cross-supply chain savings.

Finally, starting with insight and building trust
Your schedule and the delusion of the day usually go hand in hand. It is also often not easy to find and implement the right solutions every time. On top of that, everyone is good at something, but no one is good at everything. Realising savings starts with creating insight from data, by proactively working with the right 4PL partners and carriers and using smart technology. Hopefully, the above tips will guide your ambition to reduce transport costs.

You may not be able to apply all of them and there are certainly more so see this as a starting point and if there is anything else we can help with, we’d love to hear from you.