How to Reduce Transportation Costs in Supply Chain Management

5 min readFeb 4, 2022

Transport total logistics costs are on the rise for a variety of reasons: customer dissatisfaction, force majeure, route changes, and common transport disruptions. All of this can be avoided with proper fleet planning and management. How to properly manage your assets to save money, and what tools will help you to understand how to reduce transportation costs — in this article.

Transportation Market Overview

The global smart transportation market is expected to grow to $156.5 billion by 2025. At the same time, the compound annual growth rate will remain at the level of 10.6%. The development of the sector is due to the development of IoT technologies and the constant expansion of vehicle fleets.

The COVID-19 pandemic has temporarily halted all international shipping. But now most of the logistics companies have regained their strength, adapting to the new rules. For example, to automate warehouses, which minimizes human involvement, reduces the spread of the virus and, as well as, giving shipping cost savings.

What Place Does Asset Transportation Take in the Supply Chain?

Supply chain management is the practice of organizing the safe flow of goods and services. The management process is often associated with a specific industry, but it always includes the entire cycle: from working with raw materials to getting into the hands of the consumer.

The main task of managers in this area is to reduce logistics costs and minimize the expended resources and efforts. This leads not only to increased competitiveness but also to increased customer satisfaction. All this is achieved thanks to a good and clear strategy for the development of the transport vector. A streamlined delivery flow increases repeat orders and improve performance over time.

10 Ways to Reduce Freight Costs

There are many ways to reduce transport costs, and they are not that difficult to implement. Let’s take a look at the key ones.

1. Ensuring constant contractual lane volume and pre-connected logistics

With constant work with the carrier on the same route, it is possible to arrange transit delivery.

2. Delivery on less popular days

Sending a day earlier or later can provide significant savings in transportation.

3. Search for a consolidation program

To do this, you can combine your LTL deliveries with the deliveries of other companies nearby into one network for direct delivery.

4. Don’t Be a Consistent Buyer

It is necessary to maximize assets, then you can win at the expense of more favorable rates.

5. Increase delivery time and speed uploading

Delivery time notifications, on-site downtime scheduling, and timed loading all contribute to business savings. It is also important to secure transportation and introduce compulsory insurance.

6. Reduce workload and outsource

Some functions in the delivery chain can be outsourced. These may be the least promising areas that you do not want to give up.

7. Boost your download speed

Reducing download times is a huge savings item. If your shipping time is fixed and more profitable than competitors, you can even include it in the tariff.

8. Minimize pallet space

This helps to make it easier to pack more cargo, which means you can deliver more cargo and increase the profitability of one route.

9. Sending more items much less often

You can offer loyalty programs for large customers or motivate them in some other way. You can also provide options for canceling prepayments for goods that are not in stock.

10. Using carriers near delivery points and offering later delivery times

Late transfers can save you from traffic jams and increase your competitiveness. And carriers close to the delivery points are another point of savings in warehouse management.

How Custom Transportation Software Can Help

Transport management systems are key players in the supply chain. Automation leads to optimization, which in turn leads to savings. The entire life cycle of logistics is divided into stages and analyzed, demonstrating the overall profitability and / or unprofitability of the business.

Understanding the numbers in general and individually, you can understand the strengths and weaknesses, improving them. You will also be able to organize the data and derive patterns.

Other benefits of transport management systems include:

savings on transporting costs;
optimization of routes for transportation;
the ability to track in real time;
timely update on the state of warehouses, fleet and transport serviceability;
monitoring the performance of each employee.

In addition, automation allows you to comply with trade policy and regulatory requirements.

TopDevs Experience in Transportation Processes Improvement

Our portfolio contains several examples of working with logistics services. One of them is the Solocator app, which allows you to take photos and put marks with compass direction, GPS location, altitude, date, time, etc. This is a great solution for both businesses and individuals, such as travelers.

The application even managed to get into the top 20 best navigation applications in the App Store. An important aspect of the application is the continuous improvement of the product. Our team has been supporting the project for more than 8 years, constantly adding new features to it. More information about the case can be found on our website.

Conclusions

Freight cost optimization is your top priority for process managers. It is necessary to constantly improve approaches and choose innovative solutions that work and have proven themselves from the best side.

Do not put off data analysis indefinitely, as a vehicle tracking system can save a lot on transportation budgets. The supply chain has many gaps that eat into your money, resulting in excessively high costs. Implement automation, with a solution designed specifically for you and your needs by a logistics app development company, and you will see the difference.