Costs for everything in the shipping industry, from big rig haulers to air freight to parcels, have been going up by a wide margin this year. That trend is showing no signs of stopping anytime soon according to the Council of Supply Chain Management Professionals. If you are in the logistics industry, you might have grown used to the softer market with lower rates in the last few years before this change, but here’s what you need to know about these costs:
Spending is an Upward Trend
Back in 2008, the total cost that companies were spending was about $250 billion lower. With 2017 ushering in a $1.7 trillion number, 6.2% higher than the previous year, the trend is clear: prices will continue to rise as demand goes up.
The Cause of the Rising Costs
In order to understand how to keep your own costs down, you need to understand what has been leading to them. The first thing that is crucial to every logistics or e-commerce company, is fuel. The costs for fuel have gone up, which floats all prices higher. In addition to that, banks are increasing the interest rates on loans and there are tariffs that will likely lift prices even higher this year.
The hurricanes on the Gulf Coast and in Puerto Rico took away key ports for transportation of goods across international waters. This means that there are simply fewer places that your cargo can pass through before arriving at its destination, tipping the scales of supply and demand to the favor of the suppliers.
How Much Rates Per Mile Rates are Increasing
In the late summer, which is, of course, peak shipping season, rates per mile are expected to go up 20 to 30% this year and the next. This means that whether you are shipping 10 miles or 1,000 miles you need to factor in these costs so you can maintain profits throughout your organization.
When it comes to shipping and logistics, costs are a key factor to consider. When running your company, every penny can cost. This is especially true when you take the volume of transactions and shipments into account. So make sure that you are preparing your company for success by understanding the demand for shipping and how to mitigate costs while ensuring that you met strategic goals.