In the last few years, we have witnessed many fluctuations in pricing regardless of the modes of domestic transportation. As a result of the COVID pandemic and its negative impact on the economy, shippers have been focusing on managing transportation costs and preparing for the future. While it’s unlikely that we will return to the way things were before, we do expect transportation prices to increase. The industry has seen numerous bankruptcies and acquisitions, along with rising insurance costs and uncertainty surrounding fuel and additional charges. This has led to larger companies dominating the market and setting prices, which was predicted by experts after deregulation.

Given the many changes happening in the transportation industry, BCOs are taking a closer look at their cost-reduction strategies. To achieve this, they need to understand industry dynamics, such as rate hikes, fuel surcharges, and accessorials. This approach is known as Cost Containment, which helps BCOs minimize expenses while still maximizing profits.

Cost Containment

Effective cost management involves analyzing a company’s spending as a whole rather than siloing individual departments like customer service, accounting, or IT. This requires each department to have a clear understanding of all costs associated with transportation expenses. Salespeople, for instance, need to be aware of the impact of selling products in different zones and how changes in GRI perspective may affect costs. To achieve an integrated business plan, companies must take a holistic approach to cost containment and transportation planning. This means considering all aspects of spending and adapting to changes that may arise in the future.


Keeping Cost Containment Efficient

When incorporating Cost Containment into your company’s business strategy, it’s crucial to prioritize efficiency. Here’s a quick rundown of the top three areas where you can improve efficiency through Cost Containment.

  • Operating Efficiencies – Establish internal processes to streamline communication between departments holistically.
  • Operations Expertise- QBRs (Quarterly Business Reviews) with business intelligence on savings and performance.
  • Operations Economies of Scale – Increased company productivity to focus on core competencies in the manufacturing or distribution business.

Scarbrough Supply Chain Services has introduced the Cost Containment product to assist in managing your transportation expenses and increasing productivity. This product is also designed to align with analytics and offer strategies to elevate your existing North American trade. It is intended to improve solutions and ensure success in the future, while providing valuable insight and assistance for your company. Contact us to meet with our consulting team who can help get you on the right path to Cost Containment.

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