The cost of fuel is hitting record-breaking numbers. The average American is paying more every time they go to the pump, and the transportation industry has also been massively impacted. Carriers are paying more to fill up their trucks and this is reflected in the fuel surcharges being applied by major freight carriers to cool record-high levels of demand. These surcharges are additional fees charged by carriers when the cost of fuel exceeds a certain threshold. This can make it incredibly difficult for shippers to execute shipping strategies and meet customer expectations — but there are ways to mitigate these added costs. Here, we detail five steps shippers can take — with the help of their 3PL — to navigate the effects of rising fuel surcharges.
1. Optimize mode selection and consolidate shipments
Shippers can alleviate some of the impacts of high fuel costs by taking a look at their current transportation strategies and finding areas for optimization. With higher fuel surcharges, consolidating your freight should be a top consideration. Shippers — especially those who primarily use less-than-truckload (LTL) — should look into delaying less time-sensitive shipments and consolidating freight into either larger LTL shipments or even full truckload shipments where possible.
This is where the reporting capabilities of your transportation management system are critical. By tapping into GlobalTranz’s TMS technology, you get a control tower view of your shipments across all modes of transportation. The insights you receive from our transportation management system paired with the insights from our expert teams can provide opportunities to optimize your processes, consolidate shipments and save money.
2. Work with carriers to plan efficient routes
When fuel costs are high, the route a carrier chooses to take is especially important. Work with your carriers to optimize routes — planning for the shortest mileage, avoiding common rush hour times and minimizing fuel usage. A 3PL, like GlobalTranz, can help with this, ensuring that your carriers are planning the most efficient route without negatively impacting on-time deliveries.
3. Work with a 3PL who prioritizes sustainability
Providers who already prioritize sustainability have experience optimizing fuel efficiency and limiting empty miles as part of their daily business practices. Reducing deadhead miles — when a truck is driving empty after delivering cargo — can be beneficial to shippers as carriers often pass on some of the costs of the empty miles to shippers. A 3PL can help you look for backhaul opportunities within your own network to avoid unnecessary costs for moving empty trucks.
GlobalTranz is a SmartWay Transport Partner, which allows us to partner with the EPA to measure, benchmark and improve our operations in order to reduce our environmental footprint. We were also recognized by Inbound Logistics as a Green Supply Chain Partner for 2021. GlobalTranz is committed to supply chain sustainability, and we work with carriers to prioritize environmental efficiency — leading to benefits for shippers especially given recent fuel costs.
4. Become a shipper of choice to limit fuel surcharges
Becoming a shipper of choice for carriers will go a long way in attracting quality transportation providers and keeping costs low. Taking care of drivers, helping shipments run smoothly and reducing loading and unloading times are all strategies to become a shipper of choice.
Additionally, when drivers must wait for long periods of time at the shipper or consignee, they will wait with their truck’s engine running. This adds to their fuel usage and can impact the rates paid by shippers. GlobalTranz can help you make adjustments to your operations so that you can become a shipper of choice for quality carriers by evaluating things like loading and unloading times to identify areas for improvement.
5. Consider onshoring or nearshoring
Rising labor and transportation costs as well as fuel surcharges have led many shippers to lose the savings that were typically associated with offshoring. While updating your warehousing and distribution strategy to utilize onshoring or nearshoring may not be a quick change you can make today, it is a long-term strategy to consider. Shortening the overall supply chain can help mitigate rising transportation costs, especially the recent fluctuations in fuel costs.
GlobalTranz offers a solution to manage your fulfillment, warehousing and distribution needs. We can work with you to create a strategy that takes into account the volatile market and recent trends stemming from rising fuel costs.
Source: https://www.globaltranz.com/resource-hub/mitigate-high-fuel-surcharges/