The current economic climate as it is, companies of all sizes are looking for ways to cut expenses, and reducing their shipping and delivery costs is a sought-after prize. For this reason, companies are also weighing their shipping vs delivery options.
To stay competitive, fleets of all types need to take a close look at each step in their shipping and delivery processes and identify opportunities to bolster cost-effectiveness and efficiency. With both diesel and gasoline topping out at a national average of over $5 in mid-2022 and inflation requiring higher wages to keep employees at your side, every penny counts. 1
Let’s take a look at the logistics shipping companies and fleet managers need to succeed moving forward.
Shipping and Logistics: What's the Connection?
First things first: shipping logistics…or shipping and logistics? You’ve probably seen these terms both separately and together, but they’re not interchangeable concepts.
- Shipping refers to the transportation process required to move items from one location to another.
- Logistics is a broader term that covers multiple mobile or changeable variables within a complex system. In relation to shipping, it encompasses all the moving parts of supply chain management that come into play before, during, and after the transportation process(es). These could include:
- Procurement of raw materials
- Consumer purchasing
- Packaging and consolidation
- Shipping scheduling, services, and management
- Freight planning and forwarding
- Storage and warehousing of items
Used together, shipping logistics refers to the process of managing shipments from point A to point B (and C, D, or Z) with agility, accuracy, and timeliness. The bare necessities of fleet logistics are:
- Maintaining active vehicles and drivers for your range of services and customer volume
- Effectively scheduling the right vehicle and driver for the job to help prevent shipping delays)
- Picking up and delivering shipments on schedule
- Monitoring delivery times
- Managing the movement of sensitive or potentially dangerous goods
- Making delivery without loss or damage to goods
- Balancing load weight, refueling, tolls, and other costs to minimize total shipping cost
- Managing solutions and communication for unforeseen hazards, accidents, delays, and other supply chain challenges
Optimized shipping logistics means having an understanding of the needs and deadlines of all ports and parties involved in each of these procedures.
Ways to Approach Shipping Logistics
Depending on your business, you can approach shipping logistics operations via one or two (or both) of the following categories.
Method of Transportation
Four types of transportation may be used to ship goods or materials:
- Maritime – These days, container shipping by sea is generally the most cost-effective way to move goods at scale or between non-adjacent countries and destinations.
- Road – Trucking and ground transportation across road and highway systems is common for large and small shipments.
- Rail – Shipments by train are useful for transporting freight, but they can be limiting depending on the availability of routes and timing.
- Air – Air transport or air freight covers both domestic and international shipping via planes or other air charter methods. This method is often employed when speed is a top priority.
If freight is shipped using multiple methods—such as cargo ships, semi-trailer trucks, and trains—while in the same container, it’s referred to as intermodal freight transport.
Stages of Shipping Logistics Operations
Your fleet may be involved in one or more shipment stages within a supply chain. The three stages are:
- Inbound – Materials or goods moving from a supplier, manufacturer, or point of origin to a business.
- Outbound – Delivering goods from the business to the customer or other final destination.
- Reverse – Handling goods that are returned for exchange or refund from the customer.
5 Ways to Reach Next-Level Shipping Logistics Optimization
In theory, what shipping logistics needs to accomplish is simple: assigning the job, getting it done right, getting it done on time, and keeping costs down. In practice, each arm of this process is incredibly complex, with countless ways to incur inefficiencies.
The flip side? There are just as many opportunities to improve them—and, by extension, your client retention.
Since there’s no ceiling to your fleet’s logistical optimization, start by laying a solid foundation with these 5 strategies.
#1 Begin With Detailed On-Boarding
When you take on a new client, identify a process of sharing information and learning about their objectives to ensure you can position your business to best meet their needs. You’ll want to investigate:
- Their facility, including docking or pick-up areas and packaging processes
- How their team members manage both general orders and critical issues
- Their communication preferences, including method, frequency, and with whom
- Their shipment wins, challenges, and issues to date
#2 Become a Partner, Not a Vendor
Reports vary, but studies show that attracting a new client can cost anywhere from five to 25 times more than retaining a current client. Moreover, research by Frederick Reichheld of Bain & Company found that increasing customer retention by 5% increases profits by anywhere from 25% to a whopping 95%. 2
The best way to retain your customers is to partner with them rather than provide a standard service that they can easily shop around for. Sure, keeping your prices low compared to competitors helps cement your value—but if clients can rely on you as a problem-solver who helps build their business, it’s not as tempting to scope out alternatives the next time they need to cut spending.
- Consulting proactively to identify savings opportunities for individual clients
- Developing relationships with key contacts in procurement and customer service
- Utilizing data and providing data analysis to identify trends and opportunities
- Keeping them informed on regulatory or technology changes they should be aware of
- Providing seasonal reports of your business activities to enhance performance and reduce costs
Not only will partnering help with client retention, but it will also ensure you have the information you need to anticipate and optimize your shipping logistics wholesale.
#3 Conduct Error Audits
What happens when a shipment delay or failure occurs? Beyond an apology to your customer and scrambling to correct what you can, use it as an opportunity to identify weaknesses and opportunities.
Have a review process in place to track down the issue. Was it a lack of preparation, a technical issue, or human error? What could have changed this outcome?
Take responsibility, understand the total cost to your client, and be transparent with them about the audit process and results, particularly how you’ll avoid repeating the error in the future.
#4 Prioritize Systems Integration
Can data movement be sent between your customer’s commerce or order system and your fleet management software while maintaining information security? Look for opportunities on your platform and data streaming abilities to speed the process, from a consumer placing an order to your activities as a shipper.
Moreover, fleet management software and/or truck routing software can considerably improve tracking time, weight, vehicles, drivers, fuel stations, and all of the moving pieces that go into performing with maximal effectiveness and efficiency.
Start by understanding the reach of your systems (both client-facing and internal), then request input from your tech and customer support team to see how you can streamline and harmonize their operations. By doing so, you can enjoy the benefits of fleet management.
#5 Hire A Logistics Manager
Many businesses employ dedicated logistics companies or consultants to improve efficiency and reduce costs. Logistics planners can:
- Research freight and other shipping vendors
- Negotiate shipping, warehousing, and short-term storage costs
- Help mitigate delays and find solutions for supply chain interruptions
- Identify local providers for help with loading, unloading, and interim goods movement
If your fleet spans the planet, working with a logistics expert may be particularly critical when trying to reduce fleet expenses. Many are trained to assist with:
- Import/export paperwork and packaging
- Customs brokerage and tariff calculation
- Ocean freight management including breakbulk
- Air freight tracking
Why Is Optimizing Shipping Logistics Important?
It’s estimated that some 90% of consumer goods arrive from afar, whether by land, sea, air, or otherwise. 3
Shipping expenses are one of the biggest factors teething at businesses’ bottom lines. Most of them need to move tangible products and move them quickly to meet demand. This is also true of service-based brands, where saving on shipping costs for contracts, files, and promotional packages can be a priority.
Aside from providing compliant, safe, and cost-effective shipping, you can go above and beyond to surpass client and consumer expectations by:
- Forecasting seasonal or cyclical shipping demand to anticipate and meet customer needs
- Providing aid in meeting government regulations for shipping across jurisdictions
- Increasing the range of delivery services (i.e., refrigerated shipping, item and order sizes)
- Adding packaging services to reduce shipment damage and grow your business offerings
- Identifying opportunities to reduce waste or improve sustainability
- Increasing safety and reducing risk and severity of accidents
- Providing useful quarterly or annual summary reports
- Offering consultative services to help streamline shipping from your customer’s side
Can Your Fuel Card Program Help Optimize Shipping Logistics?
Keeping your drivers safely on the road while moving to their next destination takes coordination and skill. and one thing that helps is a flexible, fully trackable fuel card program.
The AtoB fuel card offers savings up to 25¢ per gallon, but it doesn’t just cover fuel costs—AtoB can be used for road tolls, insurance, repairs and parts, and other costs your drivers run into.
Rather than traditional fuel cards that limit you to certain chains and locations, our cards are accepted nationwide by any vendor who takes Visa. Your drivers will be able to stop where and when they need to and opt for potentially lower costs (even if it’s at a local mom-and-pop fuel station or repair shop).
We provide our valued customers, from OTR trucking companies to single-owner LLCs, with one of the most adaptable and simple-to-start fuel card program on the market. Find out more about the AtoB fuel card and get started with your AtoB fuel card application today.
1 Statistica. Daily average regular gas and diesel prices in the United States throughout the war in Ukraine. https://www.statista.com/statistics/1293019/us-daily-average-gas-prices/
2 Harvard Business Review. The Value of Keeping the Right Customers. https://hbr.org/2014/10/the-value-of-keeping-the-right-customers
3 The Atlantic. Ten Legitimately Fascinating Facts About the Shipping Industry. https://www.theatlantic.com/international/archive/2013/08/shipping-industry-bigger-you-can-imagine/312253/