BUSINESS PRODUCTIVITYLogistics Cost Optimization
In certain businesses, logistics costs are significant component of the product costs. A cent saved per unit in shipping, handling and storage costs directly contributes to the bottom line. Think steel. cement, corn, petrochemicals. How do you know who in the market has the capacity to carry your cargo for cheap? Did you explore multi-modal Transporation options? Did you explore alternative transshipment routes? Did you explore another freight forwarder associated with another shipping liner company? Did you explore the option of directly buying space in a vessel from the vessel owning company?
No one pays a premium for carriage and storage of goods.
Whatever be the mode and means of transport. Howsoever five star the warehouse is.
People pay more for Business Class travel in select Airlines.
But not a cent more for shipping and storage of goods. Even on a brand-new Volvo FH16.
The only thing that matters to shippers is cost per unit per ton mile and transit time. Former can have more than one levers of improvising (e.g. load building, long term contracts, payment delays)
Logistics companies, with or without their own fleet, app based or offline, have to match the cargo (type, value) in the market with available capacity. To recover their investments in fleet and carriage costs. It is important to know the levers of freight pricing. The mode, the distance, the cargo, the expected delivery times, payment terms, the built in freight costs, the INCOTERMS, risk of carriage and who is paying for that risk.
Lydian’s consultants understand Logistics Cost deep enough to understand what it takes to bring down the costs of shipping and storage substantially. Incl by use of intelligent contracts, load building tricks, INCOTERMS and the very modus of buying transportation services.
