Faster delivery costing logistics companies
As the drive to offer even faster delivery escalates, companies of all sizes within the logistics company are seeing rising costs and other associated effects. Let’s take a look at some of those costs and what that could mean for the consumer.
Transportation industry insurance is on the rise and we would not be surprised if it continues to go up as more drivers are on the road, especially those learning to navigate a 26,000-pound truck instead of a standard vehicle. Drivers are trained, but statistically speaking, the more people you have rushing on the roads, the more likely an accident will occur.
This is the biggest area where logistics companies are affected. Companies of all sizes must make sure they hire enough crews to manage the deliveries. Not only to handle the volume, but the increase in runs made to a given area. It used to be that we would make perhaps a weekly run to certain parts of our delivery service area but now we are often finding ourselves having to make more frequent trips to accommodate the delivery demands. Other companies are hiring entire departments just to handle the influx in deliveries.
We have done more to centralize our operations, which means more technology and equipment. By centralizing dispatch and other management operations including scheduling, we are able to be more efficient.
You may remember that we constructed a new facility in Benton County, which we will move into soon, and we have plans to construct a second dock at that same location. Expedited delivery requires more, and specialized facilities including more, smaller distribution and warehousing facilities. Our new building will allow for better cross-docking and makes us even more efficient than before. But, construction costs money and time. This is an issue that logistics companies and even retailers must factor in.
With the rise in the number of delivery runs, as well as a wider variety of load sizes, logistics companies are investing in a higher number of fleet vehicles of all sizes. Regular maintenance helps reduce vehicle management costs, but it is still a factor.
What does this mean?
As much as possible, logistics companies are striving to cut costs in parts of their business to help defray the impact of rising costs in other places. They are also absorbing some of the costs, which cuts down on profits and makes growth difficult. We foresee that these rising costs will force prices to rise. Some consumers will accept that and will be willing to pay for the convenience. Others will not and we hope that retailers and others along the supply chain work harder to provide delivery options that allow for fewer costs for everyone.