Shippers have used many colorful adjectives to describe the state of the supply chain over the past few years, but one of the nicer ones is VUCA (volatile, uncertain, complex, ambiguous). The volatility plaguing every aspect of the economy has led to an unprecedented number of disruptions, including material shortages, transportation delays, and fluctuating demand, all contributing to astronomical shipping costs. The only thing worse than these challenges is that experts see no end in sight, making this VUCA supply chain the new norm.
Shippers need clear and reliable strategies and tools to streamline their processes and reduce their costs. But it’s not enough to partner with more secure suppliers, plan shipping routes more effectively, or optimize carrier selection — to be successful, shippers must do all of the above, and more. That’s where a transportation software suite comes in.
The Current State of Shipping Costs
While the market landscape is still reeling from the impact of the pandemic, new causes of supply chain strain have emerged. Today, some of the leading factors in the VUCA supply chain are the geopolitical conflicts disrupting trade routes. Energy market fluctuations from volatile oil prices also directly impact the cost of fuel for transportation, increasing costs for shipping across the board.
Cargo container costs remain much higher than pre-pandemic levels, with the latest Drewry WCI composite index estimating the cost of a 40-foot container at 131% more than average 2019 pre-pandemic rates. Meanwhile, high fuel costs put increasing pressure on domestic ground shipping.
How to Streamline Processes to Reduce Shipping Costs
There’s no single magic bullet for shippers to reduce their shipping costs — it requires a comprehensive, end-to-end effort to streamline processes and shave off inefficiencies wherever possible. Transportation software suites play a key role in automating repetitive and labor-intensive tasks and freeing employees up to take higher volumes and more engaging work.
Transportation suites like 3G’s can help shippers improve cost efficiency at every touch point in their supply chain, with features and capabilities like:
- Automated Route Planning
Software for transportation management can pull maps and schedules to find the most efficient routes for trucks. Cutting down on unnecessary detours, traffic, and other factors translates to dramatically streamlined deliveries, reducing both fuel consumption and labor expenses. Real-time tracking and updates even enable users to respond proactively and re-route drivers to avoid travel disruptions or loading dock congestion. - Shipment Consolidation
With insight into all the deliveries a shipper needs to make, software for transportation management can easily identify opportunities to combine multiple shipments into fewer, larger loads. This ultimately reduces the number of trucks needed for deliveries, resulting in less fuel consumption and lower costs, as well fewer man-hours and labor expenses. The software also considers factors like delivery schedules and capacity constraints to ensure load consolidation does not compromise agreed-upon service levels. - Load Optimization
Often working in tandem with load consolidation, software can group shipments into optimal loads over multiple legs of a delivery, reducing the number of trips drivers need to take, improving fuel efficiency and cutting transportation and labor costs. - Rate Shopping
By integrating directly with different carriers, software for transportation management can display shipping rates, discounts, and service in real time, allowing users to easily compare and select the most cost-effective options, even for complex LTL and multi-carrier shipments. - Carrier Performance Monitoring
In addition to controlling costs by improving efficiency, software for transportation management helps shippers minimize costly risks by helping them choose better carriers. The software tracks and analyzes key metrics like on-time delivery, damage rates, and invoicing accuracy to quickly and concisely rate each carrier’s performance. This helps identify underperforming carriers and ways they can improve so stakeholders can select more cost-effective options or negotiate lower rates. - Internal Shipping Performance
The software can also streamline all of the warehouse processes involved in picking, packing, and shipping products out the door, improving metrics like shipment accuracy, compliance, and on-time shipment processing rates. These improvements can dramatically increase throughput, allowing shippers to send more packages in less time (and with fewer errors), and decrease labor costs. - Multi-Modal and Multi-Carrier Capabilities
Many transportation solutions focus only on specific modes like TL, LTL, parcel, or drayage. Comprehensive and integrated transportation software that features multi-carrier and multi-modal capabilities empowers shippers to compare and choose the most cost-effective and efficient shipping options across different carriers and modes of transport in one single platform. It even automates the most labor intensive aspects of coordinating transport across these options, like bidding and booking processes, and improves accuracy in logistics planning.
Master Transportation Management With the 3G Transportation Suite
With no end to supply chain instability in sight, industry stakeholders need to take every step possible to reduce their shipping costs. 3G Transportation Management Software (TMS) is an industry-leading solution for better route planning, load optimization, and workflow automation, helping users trim costs throughout their operation. Schedule a demo and start lowering shipping costs today.
