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Falling Fuel Costs May Not Equal Smaller Transportation Budgets

14 Nov 2014

The cost of diesel fuel has fallen recently. While this is certainly good news for those involved in the transportation industry, it may be a little too early to start celebrating just yet. A recent article on Forbes.com makes the valid point that transportation budgets may not necessarily be affected by the reduction in the price of diesel. Although the article by Steve Banker is aimed primarily at an American audience, there are still many excellent considerations included which everyone involved in the industry should be aware of, no matter where their business happens to be located. These points are hugely important in order to stay on top of your logistics budget and crucial for the effective planning of how best to ship goods to your customer base.

The Forbes.com article by Mr Banker also draws inspiration from a logistics white paper published by CH Robinson. The authors have highlighted the following three main factors which are absolutely crucial for your logistics budget and choice of pallet.

Shipment Size

It is important to remember that it is far more cost-effective for your business to ship by truckload as opposed to shipping less than truckload (LTL). This will have a bearing on your pallet choice. When considering your choice of pallet, make sure that each lorry can be fully packed with those pallets. It is a fact that unused space often leads to lost money. It is quite conceivable that your transportation costs will be driven up as a result of poor space planning.

Changes to Shipping and Distribution Networks

It is an inevitable fact of life that as time progresses, things change. The demand for certain goods is prone to fluctuation, and this can have a significant impact on your shipment sizes. As a result of this, there is a strong likelihood that distribution and order sizes will change, leading to an increase in your cost per unit. When constructing your logistics budget, it is important to ensure that you have taken into consideration the year-round peaks and troughs in demand for the particular products that you may be selling.

Mix of Products

In addition to considering product demand, it is also important to take into consideration your actual mix of products. Obviously, there are certain items which cost more than others to transport. Some items may well be more prone to fluctuations in the market over a fiscal year. You need to ensure that you have considered both of these possible factors. On a similar note, if goods subsequently require different forms of palletisation, you will need to decide which is the most appropriate size of pallet on which to pack the goods and also fully take advantage of the space in your lorries. Remember that maximising shipment sizes helps to reduce transportation costs.

By taking into account all of these factors when planning your logistics budget, you can ensure that your transportation business is highly efficient and therefore profitable.

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