Fleet managers and transportation service providers understand that reducing freight cost per mile rate can translate into a mountain of savings throughout the supply chain network, even by a single penny. Considering the number of miles a fleet drives each year, saving just a penny per mile can quickly translate into thousands of dollars saved per truck for the year. But there are much bigger factors at play. According to TCI Business Capital, spot market loads have increased 48.6% over August 2020, and flatbed rates have risen 33.8%. Meanwhile, fuel prices are 35+% higher, and the highest average van rates sit right at $2.99 per mile. These per mile values are indications of overarching demand in the industry, and since it all goes back to the total number of miles driven, improvements in freight routing and capacity procurement based on the least number of miles driven will help shippers keep costs in check. Of course, it isn't easy to measure and monitor what is not counted. This remains a primary motivation for onboard computing and other technologies, which prove instrumental in lowering costs per mile for truckers. Let’s dig into freight cost per mile rates and how technology can help them stay under your control.
Understanding the Freight Cost Per Mile Impact Remains Key for Supply Chain Management
Rising freight costs per mile are nothing new within the transportation and shipping industry as it has hounded companies year after year. According to Business Insider, many factors have led to the industry's current point, including fuel costs, driver shortages, and growing customer demands. Added to this, inventory shortages and capacity bottlenecks also impact fright fees and expenses. Working to improve truckload service and price options remains critical for continued growth and success. Keeping track of freight cost rates can bring many great benefits by providing clear communications, on-demand response, and data-backed decisions and directions.
The Impact Technology and Innovation Have on Freight Costs and Expenses
Many companies used to the old way of managing freight might be reluctant to embrace technology as a way to keep costs under control. However, managing freight costs per mile, shipping expenses, and other accessorial fees within the modern shipping market relies heavily on proper onboarding and technological tools and programs. This also includes diversifying the carrier base and pulling data from a larger pool of possible capacity solutions. Clearly, technology is critical for gathering and interpreting vital data within the trucking network and makes it easier to identify and address problem areas that cause disruptions within the network.
Tips for Lowering Freight Costs Even During Market Volatility
Keeping an eye on freight cost per mile areas of unchecked growth and managing budgets to keep them as profitable as possible while not pricing out the customer and client base can be a delicate line to walk. The following tips can help lower brokers and carriers total cost to serve while shippers can reduce freight costs, even with the volatile markets and economies of today.
Reduce fuel consumption and profit losses by reducing empty miles
Whenever possible, avoid empty space in return trips. Empty space amounts to lost profitability, and while also harmful for the environment, wasted space means drivers make less per mile driven. Yet, driver costs remain the same. As ar result, it’s important to avoid empty backhauls wherever possible.
Reduce out-of-route miles and travel
Management must determine if a few drop-offs outside their usual route are worth the price compared to potential losses of extra miles paid to drivers or couriers. Ultimately, out-of-route miles and travel lessen total profitability, resulting in higher overall freight costs per mile due to carrier profit margin minimums.
Develop a comprehensive, adaptable dock management program.
Keeping drivers safe on the road can be a great way to improve freight costs as it establishes a reputation for safety, and safety inherently includes effective dock scheduling and management. By building a comprehensive and flexible solution among shippers, carriers will naturally have more flexibility and be able to accommodate changes more easily. Ease of delivery, including loading or unloading, amounts to better rates.
Improve truck tracking and monitoring
Knowing the location of trucks and having accurate and reliable ETAs for customers make transportation management faster, more accessible, and more affordable for everyone.
Embrace the Full Potential of the Modern Supply Chain Network With a Clear Focus on Managing Freight Cost Per Mile and Transportation Expenses
In each area of the modern supply chain network, technology continues to improve profits. Many factors can come together to affect supply chain management's attempt to control freight cost per mile fees, and while cost increases are more likely than not, it’s better to start putting the technologies into place now to safeguard against whatever future rates may hold. Also, the current freight rate predictions are changing wildly in response to the unprecedented demand on the industry. Realizing the full potential of the modern supply chain network is possible with the right approach to capacity procurement, shipment planning and freight execution strategy. Request a newtrul demo to learn more about how your company can leverage technology and data to keep freight cost per mile under control without sacrificing your procurement strategy.