Factors affecting Transportation Costs

November 19, 2021

Transportation costs can impact crucial areas of business. They can affect the pricing of products as well as the competitiveness of an organization in the market. Let’s take a look at different factors affecting transportation costs.

1. Handling – Damaging goods and products in transport can result in unnecessary costs to an organization. Sensitive or perishable products require more shipping costs as they need to be handled and packed carefully.

2. Delivery Area – The cost of transportation is dependent on the delivery area covered by an organization. A local delivery service can be cost-effective by covering short distances with larger volumes. Whereas a nationwide delivery system will require a lot of strategic planning and resources to be cost-effective.

3. Inefficient Routes – Setting up a cost-effective route is the core of any transportation strategy. An inefficient route can affect the cost of transportation. Nowadays, organizations are using digital tools like vehicle route optimization software to automate the process of route planning cost-effectively.

4. Inefficient Schedules – Inefficient schedules can lead to more time on the road resulting in extra fuel and toll costs. This can be a real bottleneck during pick-ups and disrupt both the supply chain and last-mile delivery.

5. Urgency – Urgency of delivery will always hike up the transportation cost. Usually, organizations try to cover some extent of the cost of urgency by the customers.

6. Vehicle Capacity – Vehicle capacity can affect the cost of transportation. It determines the number of pick-up stops to complete a delivery consignment. The increased number of trips will result in additional fuel as well as labor costs.

7. Distance – Distance is the main reason behind a higher transportation cost. A good way to control this factor is the optimization of routes adopted by the transportation system and reducing the distance between various pick-up and drop-off points.

Try out the free demo for Transportation Cost Analysis using Microsoft Power BI here.

How to reduce Transportation Costs ? Click here to read more.

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