Corporate cards

How to reduce transportation costs in logistics

Apr 05, 2024

If your business is in the supply chain industry, transportation cost is no doubt a priority concern. This is because the rising prices of fuel and machinery keep you on the constant drive, wondering how to reduce transportation costs in logistics.

To optimize the transportation costs in logistics, there are various strategies and methods that can be implemented.

However, transportation logistics is a highly sensitive area, where one wrong decision or inadequate planning can cost the company millions. Keep reading to understand how to reduce transportation costs in the supply chain.

7 Strategies to reduce transportation logistics costs

1. Consolidate shipments

The delivery rate is set on the basis of trip type, weight, distance, and other factors. Try to consolidate your company shipments. This is a strategy through which the company can pay lower for bigger shipments, and the trips will be fewer.

In order to do this, you can shift from Full Truck Load (FTL) to Less than Truckload (LTL) method. FTL means that your company books the entire shipment for your goods, even if the goods do not occupy the whole space.

In comparison, LTL means the transportation of goods that does not require the entire truck space. Instead, separate shipments can be transported in one truckload. Discounts on larger shipments are common and will definitely help you save costs.

2. Invest in technology

Another smart way to reduce transportation logistics costs is to adopt relevant technologies. 

For example, route planners, transportation management systems, digital record-keeping solutions, etc. Logistics managers can make quick decisions based on the digital records captured by the automated system. All types of communication can be done easily, and all inaccuracies can be solved within seconds with the help of a computerized record-keeping system.

Along with this, route planning software can help you plan transportation smartly by providing all sorts of traffic, construction, and accident information. It helps you choose the best route to reach the destination in the least possible time.

3. Collaborate with carriers

It is not feasible to choose a new carrier every time you have a shipment. Instead, conduct thorough research on the different carrier companies or transportation providers.

Look for the one that offers the best facilities but at the lowest price. Shortlist some companies and try each one. It is beneficial to maintain relations with two-three carrier providers. So, in case one proves to be inefficient, you have a backup.

Also, when you have a good partnership with these companies, discounts on shipments are given. If you collaborate with one partner frequently, you can negotiate the terms and get them to agree on a lower price.

4. Decentralized warehousing

Another practical way to reduce transportation logistics costs is through decentralized warehousing. This means that you store your goods in warehouses in different locations. Meaning that your goods will be nearer to the customer, which will reduce the distance, time, and cost of goods transportation.

It is not necessary for your company to handle these warehouses on its own. You can hire a third-party logistics provider. In this warehousing model, an intricate system of communication and data management for planning the best transport route and saving costs will be required between the head office and all the warehouses.

5. Automatic container loading system

In any supply chain workflow, the loading and unloading of heavy and bulky goods like metals and wood materials is an important part.

Instead of applying manual labor for this task, an Automatic Container Loading System is the best alternative. There is one loading plate that is used to carry goods in and out of shelves and also load and unload into transport vehicles.

Using this automatic system, you can avoid all the extra costs of labor, transport, and product damage.

6. Evaluate and monitor spends

Along with implementing different cost-cutting strategies, monitoring and evaluating the spent money is also essential to actually reduce transportation costs in logistics.

All strategies you implement, like automatic container loading system or consolidated shipments, or decentralized warehousing, everything still costs some money. Keep track of all the money spent and evaluate where most costs can be saved.

For example, if one of your warehouses is facing a bug infestation and your products are such that they can get affected because of it. Using that warehouse for a long will cost you more for good protection or damage control; instead, a better option will be to shift the goods to another warehouse instantly.

7. Monitor drivers and vehicle maintenance

This may not seem so significant, but it is a great way to save some costs: monitor driver activities and be on top of vehicle maintenance.

Drivers might take unnecessary breaks, which will make them speed over the limit to be on time. This can cause accidents that will again increase your costs. Or the drivers may intentionally take the longer route to charge the company more. So it is best to GPS track both the driver and the vehicle.

Along with this, always ensure that the vehicles used for transportation are in good condition. If any part of the vehicle is not in optimal condition, it might cause mishappening, and the cast will have to be bared by the company.

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How do corporate cards help reduce transportation costs?

Increased control over spending

All corporate cards can be set with spending limits, so all expenses under the spending limit will be automatically approved. Any higher amount will have to be approved by the managers or admins.

Along with this, corporate cards also provide real-time expense tracking through which you will instantly be updated about every expense made through every card. 

Rewards and incentives

Many corporate cards are such that offer rewards and cashback incentives, such as discounts on amounts or types of expenses, access to premium travel features or extra travel points, cashback on completing a total amount of payment, etc.

These incentives are extremely helpful and also aid in cost-cutting on the edges. 

Centralized payment

You can assign corporate cards to managers or employees for all kinds of spending, such as fuel expenses, meal and accommodation expenses for drivers, repair and maintenance expenses, etc.

All the cards will be connected to one central source of funding and one management system.

Meaning all the money will be extracted from the company-allotted funds and will be tracked on one single platform.

Improved expense tracking

As corporate cards are connected to either a mobile app or expense management software, all card transactions are tracked and recorded. The expense data is stored in one centralized database that can be accessed anytime easily.

Plus, many platforms also provide expense reporting features that highlight expense patterns and strategy results. With this, you can make better effective, and more informed decisions on how to reduce transportation costs in the supply chain.

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How to incorporate corporate cards in transportation logistics

1. Fuel cards

There are corporate cards specifically available for fuel expenses. Fuel cards are the best to make fuel expenses are they offer cashbacks and other rewards for making fuel payments. 

Along with this, drivers will not be required to store fuel receipts. Meaning all that time spent on manually gathering and assembling fuel receipts for administrative tasks can be saved and put to better use.

2. Purchase cards

Another category of corporate cards available is purchase cards. Purchase cards can be used to pay for transportation logistics-related goods and services.

For example, loading equipment, transporting vehicles, repairs, maintenance, etc. Having a specific card for these purchases will help you streamline all expenses and process the data in one place.

3. Travel and entertainment cards

Travel and entertainment cards are among the most popular in all business industries. This is because these cards are extremely convenient to make both domestic and international payments.

Plus, these cards are known to offer the best rewards, such as international lounge access, extra fly miles, cashbacks, etc.

4. Fleet management cards

Fleet cards allow businesses to manage expenses related to the vehicles owned by the company. Fleet cards are installed with high-tech security to prevent any breaches or fraud.

Along with this, with these cards, you can track every movement of the vehicle. Meaning you know where and when the vehicle was used.

Volopay cards for effective logistics expense management

What if we tell you that all the above-mentioned benefits can all be availed through one card? This is possible with Volopay.

Volopay corporate cards are the best in the market to track expenses, empower the manager with better spending control, and give employees easier but monitored access to company funds.

Not only this but with advanced expense reporting features, you can get access to accurate data using which further strategic decisions can be made easily. 

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