Which Factor Affects the Transportation Cost?
#Fuel Prices, #Labor Cost and Wages, #Taxes, #Truck Damage, #Idle-time Cost, #Contracts and Insurance, #Geographical Factors, #Calculate the Cost
Wondering what affects the goods transportation cost? This guide is for you. Here, we are going to see which factors affect the transportation cost and why you are spending more money than you thought.
Some of these are pretty obvious. To make it more interesting, we will also see how you can save some money on these costs. So, if we talk about wages, we will also see how you can decrease the amount of costs here without changing the wages.
The freight cost will directly impact the company’s profitability. If the expenses are more, the company might also get in loss. So, it’s important to keep in mind all these expenses.
So, without wasting more time. Let’s start with the first factor.
Fuel Prices
The first factor you need to consider for the transportation cost is the fuel prices. Today, fuel prices are increasing not only in India but in the entire world. Therefore, it has become the major cost of the business. If you are doing the full truckload business, the overall truck mileage will decrease significantly. So, the fuel prices will affect the goods movement cost.
To decrease these costs, you will have to develop a proper fuel management strategy. In this way, you can save a few costs here. Route planning will help you a lot in decreasing the cost of fuel.
When you maintain your vehicle properly, it uses less amount of fuel than usual. So, it’s important to have the trucks maintained properly. You should always change and replace your trucks with new ones when they get old.
Labor Cost and Wages
Labor cost is yet another major cost. You will need laborers to remove the goods from the tricks as well as to load the trucks.
Many people make the mistake of decreasing the salary of the laborers or they cust the overall expense, you should never do that. Neither you should make them overtime.
Instead, the best way to save money in labor costs is to manage the business efficiently. You might have noticed that sometimes the truck takes significantly more time to arrive at the location. In that case, the workers are simply idly sitting at the destination location.
So, if you can give proper timing to the workers as well, you will save a lot of time and money. Even the workers will love working with you.
You can also have the same workers for the same type of goods. In this way, they can have experience in handling the goods and you will get the best output in less amount of time.
Taxes
The first thing we will discuss here is the toll taxes. On the highways, the toll taxes can add up to a lot more than you think.
The fasttag will help you in managing all these things. So, you can always check the reports for the details.
This will give you a rough idea about all these toll taxes you will have to pay.
There is also a direct tax you will have to pay on the profits you make.
Taxes are yet another hidden concern that people face. When you make a good profit, you will have to pay taxes on it.
Now, it may depend on the business you are running and the amount of profit you are making from it. There isn’t much you can do here.
So, you can always have a CA and ask them to have a look at the profit and help you manage the taxes accordingly.
Truck Damage
One of the lesser-known factors is the truck damage. If you don’t have a properly maintained truck, you might see this. If the truck is damaged, you will end up wasting more time and resources there. So, it’s important to have properly maintained trucks.
Due to bad roads, there might be some damage to your truck. For that reason, the truck maintenance is very important. It will be a small expense that you will have to pay. However, it will waste a lot of your time. So, the cost is indirect.
Even a small tire puncture will delay the timing of your destination. So, you will incur some indirect costs here. It’s worth keeping in mind all these things.
Idle-time Cost
There are many times when the truck as well as the drivers are sitting idle. For instance, if the destination is inside the city where trucks are not allowed inside, there are good chance that the truck reaches the destination early. So, the truck will have to wait till the night to enter the city.
If the workers are given the time of 6:00 to reach the destination for goods unloading, and the truck reaches there at 8:00. In this case, the workers will have to wait for 2 hours.
Proper management will help you in managing these timings.
Usually, people in this industry use business software to manage all these operations. The software will help you in managing all these things.
These tools will help you in doing all the things starting from taxes to operations. You can do all these things from the software.
Contracts and Insurance
There are some other costs also involved over here. To begin with, the first thing that you will face is the contracts. The contracts are done between the two parties. The contract has certain charges involved.
In the same way, you will have to pay for the insurance as well.
So, these are some of the things where you will have to pay a small cost. However, you shouldn’t ignore them.
It’s also important to have insurance for the goods you have. This will help you if something goes wrong and some of the goods are damaged. You can have the insurance company pay for the damage and it won’t make any significant impact on your business. So, it’s important to have the insurance.
Geographical Factors
The geographical factors also affect the goods transportation costs of your trucks. For example, if you have a location in a hill station or there are rough roads, you will spend more money here. The truck requires more amount of fuel to reach such a destination.
Along with fuel, there could also be other permit charges involved here. So, the overall cost will increase. Therefore, it’s important to note all the geographical factors of the goods as well. This will tell you a lot about the small expenses.
However, for beginners who are running a transport business, this will rarely be an issue. So, you can ignore this and focus on other factors that affect the transportation cost of the truck.
Calculate the Cost
Now, if you are wondering how you can keep track of all the transportation costs of your truck and transport business, you are at the right place. In this section, we will see how you can do it.
The best way is to keep the data for all the things. It’s not practically possible to collect this data and keep it. So, you can use software that collects all this data and keeps it safe. You can use transport management software for the same.
Final Thoughts
Now that you know all about the transport costs and the factors affecting the transportation cost, it’s time to decrease all these costs wherever you can. Please note that it’s not possible to decrease all these costs. Even if you try your best, you will still have to spend the same amount of money there. So, you can leave such factors and focus on other factors where you can decrease the costs.
The best way to get rid of the maximum of these charges is to plan the route properly. If you have the route planned, it will save you a lot of money in many of these places. To begin with, you will spend less on fuel and your workers will not have to wait. In the same way, you can get an IT tool to manage all these operations and calculate the cost.
Rishit Bhatt is a content strategist and a professional writer with a keen interest in technology and tech-enabled businesses. He aims to help businesses integrate tech into their on-premises infrastructure with technical documentation and helpful articles.