Transportation cost control comes under pressure

Robert Spiegel -- Supply Chain Management Review, 3/22/2007

With rising fuel costs and increases in the speed and frequency of deliveries, companies are seeking ways to drive down transportation costs. A report from Aberdeen Group shows that 70 percent of respondents say their baseline freight spend (spend adjusted for sales volume change) has increased since 2004. Only 8 percent of respondents report a significant decrease in freight expenditures. As companies review procurement and freight payment practices, they believe they can save an average of 8.8 percent on their overall freight budget by using more sophisticated procurement and payment systems.

The "Transportation Procurement and Payment Report" finds that 90 percent of respondents are focusing on improving their transportation procurement practices, and 78 percent are concentrating on improving freight audit and payment processes. The main reasons for this recent focus on transportation costs center on cost control (see chart). There are other reasons, however, such as the need to develop more sophisticated transportation processes as the supply chain becomes more complex. Companies also want to use more sophisticated systems to improve transportation flexibility and reliability.