Whenever we make use of a certain service or company for the first time, we aren’t always aware of the cost factors that influence the amount we are quoted for. This could cause us to make decisions for our business that we otherwise wouldn’t have made if we were more informed on the matter.
Here are a few factors to keep in mind when looking at the cost of transporting your goods:
1 – Fuel costs
Maritime and land transport costs are naturally related to the fuel price. As fuel prices decrease, container ships and trucks become cheaper to operate and transport prices fall – and vice versa.
Fuel prices are mainly influenced by the price of oil, and the value of the Rand next to the U.S. Dollar. With these two factors fluctuating, the price of fuel is unstable and is therefore easily changed.
2 – Insurance
Insurance is one of the biggest necessities when it comes to transportation and the handling of goods. If a company doesn’t have insurance on the goods they are transporting, their quote might be cheaper than their competitors. However, the loss you may experience if something had to happen to your products could be devastating.
Be sure to look at the insurance that is provided along with your quotation. Making use of a company that has the insurance you find necessary for your product would be the best solution for your business.
3 – The labour market for commercial drivers
Increasing wages and competition among carriers can have an upward impact on the cost of transport. With older drivers retiring, carriers can struggle to find new operators for their vehicles.
Recruiting new drivers is difficult. Finding people who are capable and willing to drive for hours at a time is one thing. The other is whether these people have the required driver licence for the position. Courses to certify new commercial drivers can take weeks or even months to complete, adding strain to logistics companies and their customers.
Furthermore, many logistics companies are struggling to compete with ‘in-house’ truck driving positions which tend to pay more and are less stressful.
4 – Demand for freight
Pricing depends on the volume of product being shipped by operators just as much as it depends on the actual, underlying costs.
If capacity is limited, businesses may be inclined to sell limited space at a higher cost. On the other hand, if business is slow, a carrier may offer a lower rate than usual, even if it’s short-term.
The above factors are definitely not the only influences on transport costs, but keeping these in mind when enquiring transport costs will ensure that you make the most informed decision for your business.