Have carriers exhausted all the ways which could save businesses money? Equipment shows no signs of becoming cheaper; drivers need more payment – and yet regulatory growth is pushing with each passing year. All these come upon shippers as dead weight, impaling their access to capacity at a reasonable cost. It becomes huge when you factor in operating costs, along with operating expenses that make up a carrier’s expense. It’s a nightmare that thwarts the financial health of your business. We talked to some of the renowned experts to examine the remedies and form a cost control task. Here are the rewarding highlights:
Find out, value each factor that influences cost control
The first step to control the carrier’s finances is to identify each operating cost involved in cargo transportation. It’s not just about the overheads, but a complete picture of every penny that goes out of cash and where it goes.
It’s observed, without this out-and-out cost control, shippers end up bearing “ghost” operating costs that don’t show up in a more generalized financial management. The hidden expenses prey on your profit.
Let’s take a real example. The fuel price varies from one state to another or even between cities. If the base calculation of this cost of operation is the lowest price, the financial management will be surprised by an excess expense. It also rings true while estimating the unit cost of vehicles; it’s necessary to individualize it and add each one up instead of taking the expense of a single truck as a reference, even if they are similar models.
Track carrier operating costs
Unlike other expenses, operating costs point to those expenses that are involved in the core activity of the business. It maintains the most vital function- cargo transportation. Therefore, the greater the demand, the higher the operating cost.
Record each of the transport expenses in a systematic and easily accessible way. Note whatever goes in and out of the system and try establishing a point-of-reference for future implications.
Modernize your financial control
In today’s world, cost control should be done through a virtual tool and in the cloud (SaaS), stored on a server external to the company. Thus, it will be possible to add expense records and make financial management possible in real-time.
The best example in hand is the TruKKer digital freight platform. It captures and analyzes every transaction occurring anytime on any touchpoint between the shippers and their carriers. Everything is automated and happens in real-time. So, you, as a shipper, can experience a one-stop-shop solution for all your financial data in one place, and you have central control. Right from billing to documentation (POD, border clearance), everything resides in the platform, and all your transactions are mapped onto predefined yet customizable graphs. It helps you assess your performance and optimize control accordingly. Think of this as a self-learning tool with actionable insights that monitor, learns, and equally recommend your financial footing.
It’s financial planning time
Once you have a clearer view of the carrier’s operating costs, get into the habit of recording them one by one and do it in a practical and modern way. The result is now you can enjoy predictive cost control.
Besides knowing exactly how much and what to spend on, you will be able to pre-plan your company’s finances for the coming months based on your actual performance. It will translate into the increased financial stability of your business, in addition to supporting strategic decisions focused on carrier cost control.
The right questions to ask (yourself)
What you can measure is what you can manage only. So, if you have the foggiest of accessorial costs are rocketing, you need to counterbalance them. Here are some conversation starters that should get you into thinking:
What’s my total landed cost of goods per shipment? Is a large part of the cost ensuing from accessorial charges?
What are some of my frequent accessorial charges? Fuel? Incorrect address backlash? Extended service area surcharge? 3PL account number ambiguity? Large shipment exceeding standards? All you need to do is catch the pattern or trend that’s forcing carrier fees to stack up on you.