Fighting inflation by looking at delivery transport costs


Inflation is on the rampage, squeezing margins for small business, but inflation also provides an opportunity for business to analyse areas of major expenditure – and one area which often needs bringing under control is the delivery transport function.

Delivery transport is a top-five cost of doing business for many companies which rely on deliveries for their existence. Transport has remained a top-five cost even with the many efficiency improvements which have been delivered over recent decades. For small businesses which don’t analyse transport fleets, there is potential for transport to become a top three or four business cost.

Not every small business can pass inflation increases on to their customers, so it makes sense to be smart about outgoings.

Some common cost areas for delivery transport, which demand vigilance and control include:

In-house delivery fleets

There has been a trend toward in-house fleets as companies become fed-up with the major postal services. But in-house fleets entail many large fixed costs, which can easily balloon out. A big problem are all the hidden costs that mount up – things like unexpected repairs or breakdowns, increases in insurance premiums, and vehicles that aren’t being used to their optimum. Finding and controlling these hidden costs is essential to keeping a lid on things.

Responsiveness and flexibility

High performing delivery fleets have great control over their resources, which means they can scale up to meet peak demands without having to break the bank. Likewise, they can scale down and reduce costs when business demand drops off. Flexibility can be particularly challenging for in-house fleets, but can also be a challenge for those who don’t have the right structure for their delivery transport.

Fuel costs

High fuel costs are putting pressure on delivery prices everywhere. Yet while we cannot control the price at the pump, delivery fleets can strive to cut fuel costs by using technology to become more efficient. Telematics tracking technology rewards the time put in by helping to find the most efficient routes for delivery fleets. Benefits include cutting down on vehicles doubling up on delivery routes. Telematics can also reduce missed deliveries and assist with proof-of-delivery, increasing accuracy and reducing wasted time. Many systems can also track the use of the vehicle, helping cut down on excessive idling and so on.

Quick fixes

It’s easy to get into the habit of using couriers and other relatively more expensive options for those peak times. When analysed on a cost-per-delivery basis there are usually better approaches. If you’re using couriers or other services regularly, it’s a sign your delivery fleet is not as responsive as it could be.

The headline inflation rate, at just over five per cent, tells only part of the story – many small businesses have had to negotiate much steeper rises in costs due to supply chain disruptions, labour shortages and surges in materials costs. By keeping hard-to-pin-down areas such as delivery transport under control, businesses give themselves a better chance of surviving the inflation surge.

Written by Walter Scremin, Ontime Delivery Solutions CEO.

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