8 top factors that will affect your logistics budget
Logistics expense always take a big part in the whole budget of a company. Allocating funds to each of the individual functions is not an easy task. If the company is just established recently, setting a budget is easier. However, new start-ups may face a bigger challenge as they begin to grow their company.
Fluctuation in freight charges and surcharges is one of the hardest factors to reconcile. Commodities such as fuel and currency are usually revised on a quarterly basis and can work in your favor or against. On some trade lanes, peak-season and other surcharges apply that make predicting your future freight costs a guessing game.
Here are the 8 top factors that will affect your logistics budget:
Base Freight Rates –Knowing what your rates will be for an entire year allow you to include these costs to determine your sales price. Your base rates usually make up the bulk of the budget. If you have a significant transportation spend, it may be wise to negotiate base rates that are valid for 12 months.
Surcharges – All modes of transport apply surcharges for fuel, currency and some for peak-season shipments. Fuel and currency surcharges fluctuate often so it is difficult to predict over the course of a year.
Local / Domestic Freight Rates – Aligning with a few local and nationwide carriers can secure the best rates based on your volume. If you maintain one or more in-house trucks and drivers, weighing the cost of employee wages and vehicle maintenance / insurance against a 3PL delivery company could produce significant savings.
Import / Export Customs Brokerage – Fixed fees are usually offered by customs brokers to perform all declarations which will vary based on various factors such as the number of products / HS Codes in your shipment, additional reporting requirements, value of your shipments.
IT Investments – Supply chain software changes frequently however most shippers exercise due diligence before purchasing in order to make sure that the programs are useful over an extended period of time.
Cargo Insurance – This is a proportionately minor cost in comparison to the overall value of the shipments but depending on the sales volume, can accumulate quickly for a thriving business.
Warehousing – Any time a company chooses to warehouse their inventory in- house, expenses can escalate. The cost of real-estate alone can be a deterrent and when you factor in warehouse staff, material handling equipment and insurance costs, considering a 3PL warehouse may see substantial cost savings in the annual budget.
In-House Employees – Aside from base freight rates, employee wages, benefits and training, the cost of retaining staff is an expensive investment.
In order to limit the elusiveness of freight rates, BY56 smart logistics platform gathers many logistics platform, which allows users to search and compare shipping rate online. BY56 logistics mall is designed to make booking shipment as easy as booking a plane ticket for your trip. You can do ebooking for your shipment in the price-transparent logistics platform. No more hidden charge!
BY56 ensures you better manage your annual logistics budget and provide insight that will help to simplify the process!