What is the most appropriate transport strategy?

Costs related to transport activities are very relevant, as they represent 54% of logistics costs, according to studies carried out by ILOS in 2016. Therefore, choosing the transport strategy that is most in line with the operational characteristics of your activities is a fundamental task for any business, in order to obtain the lowest costs, meeting the desired level of service.

The first fundamental step in defining or revising a transport strategy is to understand the company's flows, whether inbound (from suppliers to the company), transfer (between the links of the company itself, whether factories, DCs, warehouses, among others) and outbound (from the company to its customers). It is necessary to understand what are the volumes to be transported, what are the routes, how is the dispersion of customers and suppliers, among others. The determination of the transportation costs for each case and the definition of the service levels to be offered to each client are done in this stage.

In addition to looking inside the company, it is essential to look outside, analyze the market to find out about the practices of other companies and understand which of these are more common among competitors. At this specific point, the ILOS has the Freight Panel  which compares road freight prices and identifies possibilities for cost reduction. Secondary sources can also be important sources of information for this step.

Figure 1 – The ILOS Freight Panel is a good source of information for comparing road tariffs.

Next, a more detailed analysis of the routes carried out by the company should be carried out, which are the volumes, regions and regularity of flows for the possible establishment of circuits or groupings, so that the contracting strategies are the most appropriate for each grouping carried out.

Based on these data, the decision on which transport strategy can be taken, in order to answer questions such as: which modal is most appropriate? In the case of road transport, will your own or third-party fleet be used? If you decide on your own fleet, you should dimension it and analyze the necessary investments versus the level of service you want to offer. If it is decided by a third-party fleet, a decision must be made between a dedicated fleet or not, whether independent contractors or carriers will be hired, how many carriers will be hired, among other issues.

Finally, it is necessary to establish its control mechanisms, that is, the indicators that will measure the performance of the selected strategy in terms of the operation, the costs involved and the quality and level of the service provided.

Whether defining a transport strategy for a new operation or reviewing an already established operation, it is essential that companies are always aware of these points in order to offer a quality service without burdening their competitiveness in terms of costs.