Delivery costs can be a silent killer. If you don’t control your expenses, the costs will bring your business to the ground faster than you can even imagine.
Just consider, according to a report, logistics expenses in the US went up to a whopping $1.63 trillion last year. The transportation costs alone amounted to $1.06 trillion, almost two-thirds of the total logistics costs, according to Statista.
But, how can you reduce the costs? We share several tips that should give you a head start.
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#1 Adopt a Route Planner
Last-mile delivery costs make up two-fifths of the overall logistics costs. And, the recent spike in online shopping amid the pandemic and demand for products delivered to customers’ doorsteps will only increase the costs further.
Buying more vehicles and hiring additional drivers may sound like a solution, but it’ll make your business bleed over time. Your profit margins will be thin and sometimes you may need to settle with breaking even or even losing.
Luckily, there’s a way to keep your costs down, without spending more on your delivery operations. You can use a last-mile delivery software.
With a route planner, you’ll be able to plan well-optimized and fuel-efficient routes with turn-by-turn directions for your drivers.
The software also factors in traffic congestion; one-ways; left-turns; weather conditions; sunrise and sunset times; load, weight, and height capacities; and more, while optimizing a route. In this way, you need not worry about anything.
Also, a delivery route planner comes with geocoding technology that flags and automatically rectifies any wrong customer addresses entered into the system.
Ultimately, your drivers will never get stuck on the road, will always show up on time, and can make timely deliveries without burning excess fuel. That’s exactly what you need to keep your costs down and improve your profits, isn’t it?
The best route planners even come with a reporting and analytics feature that helps you track fuel expenses and many other crucial data so that you know where you need to tighten your costs.
#2 Monitor, Train, and Reward Your Drivers
You may plan fuel-efficient routes, but it will not make sense if your drivers don’t follow the routes as instructed. If they deviate from the plan and take longer routes instead, it will make your fuel costs go up and will increase your payroll expenses due to overtime.
But, that’s just one part of it.
Your drivers could even run errands, make personal stops, or slack off during work hours and then speed up to cover up and still show up on time. Such speeding will increase your fuel expenses and make your drivers vulnerable to road accidents. Your business may also need to pay for damages, legal costs, and medical treatment associated with any accidents.
Other bad driving behaviors, such as sudden braking, harsh acceleration, and idling, could make things even worse for your business and your pocket.
You could use a commercial GPS tracker to monitor your vehicles and drivers in real-time to ensure they do what you have asked them to do.
Some GPS trackers even come with speed alerts that automatically notify you when your drivers cross the speed limit so that you can take the necessary actions before it becomes too late.
You can also adopt a driver training solution to identify your drivers’ bad driving behaviors and automatically assign the relevant training program to them so that they don’t make the same mistakes again.
You can even reward the drivers who don’t engage in bad driving behavior to encourage them to continue the best practices to save fuel and other transportation costs.
#3 Take Steps to Reduce Failed Deliveries
Planning the perfect route and ensuring your drivers follow them are still not enough to reduce the delivery cost. The customers must also be available at the right time to receive their packages. Even a slight delay at one-stop may cause the other scheduled deliveries to fall behind schedule.
Also, a delivery could fail if the customers are not around to sign for it which will mean wasted time, increasing the cost of delivering the package.
So, try giving your customers an accurate estimated time of arrival (ETA) which is pretty easy to do with a route planner app. This will save you costs as the chance of failed deliveries will decrease when customers know when precisely to expect their packages.
The best route planners even go one step further by offering customers an alerting and notification feature to automatically alert them, through email or text message, when their delivery is nearby or out for delivery so that they can make themselves available.
Route4Me even offers a customer portal that helps your customers track package status on their own.
Although we only discussed the three primary ways to reduce costs, there are many other ways as well.
For example, use preventive maintenance to make sure your vehicles are always in top shape and don’t suffer breakdowns. One vehicle breakdown can jeopardize your entire plan and the downtime costs can vary from $448 to $760 per vehicle per day.
You should also set up multiple warehouses to reduce shipping zones which will help reduce your delivery costs since you’ll be able to fulfill all your orders from the warehousing locations closest to your customers.
Also, focus on reducing overloading your vehicles. The heavier your vehicles are, the more fuel they will use to move. You don’t need to worry about this though when you adopt a route optimization software.
Long story short, you cannot win just by offering free shipping. You also need to control the costs of shipping, else you’ll find it difficult to survive.
Logistics solutions like final-mile delivery software help small businesses like yours improve profit margins by reducing costs to reap long-term rewards.
So, what are you waiting for? Don’t you want to match up to Amazon’s last-mile delivery standards?
Do you have any tips to share to reduce delivery costs and save money? How do you boost deliverables while cutting costs?
Please feel free to leave your comments below.