As fuel prices and other related cost concerns make truck-based freight shipments an increasingly expensive option in certain instances, companies can use automated data collection software and other supply chain optimization strategies to streamline shipments and reduce expenditure.
In the United States, a quality interstate highway infrastructure and affordable fuel prices have long made tractor trailers the go-to domestic shipping option for many firms. According to the American Truckings Association, close to 70 percent of all goods shipped in the country were transported by truck. In comparison to other transportation modes such as barge, air and railroad, trucking is a more versatile, affordable and dependable option in many instances.
However, that paradigm may be changing. Due in part to rising fuel and tax costs, trucking is no longer the default shipping option it once was. According to the U.S. Energy Information Administration, a gallon of diesel fuel now is worth approximately $3.87, with prices topping $4 in some parts of the country. In comparison, diesel fuel prices averaged $1.42 in June 2003.
Although this price rise may not seem like much when average inflation rates are taken into account, the ATA reported that the average long-haul truck driver traverses 500 miles in a given day and log between 100,000 and 110,000 miles on the road each year. Furthermore, Supply Chain Digital reported that the average large shipping truck gets around seven miles per gallon. With prices hovering around $4 per gallon in many parts of the United States, the typical truck driver can expect to spend approximately $1,200 to travel 1,500 miles.
"Rising gas prices are unwelcome news for every vehicle owner, but they are especially a cause for concern for businesses that use trucks to transport goods," Supply Chain Digital said. "The trucking industry has always been competitive and saturated, and the increase in gas prices is suffocating many trucking companies, forcing some of them to close down."
Increasing tax costs also serve to make trucking a less cost effective shipping option in certain instances. The EIA noted that for every dollar spent on diesel fuel in the country, approximately 12 cents goes toward taxes. The ATA noted that big rigs pay approximately $18,000 annually in related taxes. As governments around the country further look toward increasing fuel taxes as a way to replenish public coffers, the costs associated with sending goods via truck becomes even greater.
Using Automated Data Collection Software to Get the Whole Picture
Although a number of factors are making truck-based shipping less cost efficient than ever, companies should not automatically assume that tractor trailers should play no part in their supply chain optimization strategy. Rather, businesses just need to become smarter about their shipment decisions and use automated data collection software more intelligently.
As Supply Chain Digital noted, the dollar figures associated with trucking are largely reliant on distance. While a truck may not be the most budget-friendly option for sending a shipment of goods from New York City to Los Angeles, it could still be the best way to transport that same shipment from New York City to Boston, for example. Unless the business utilized automated data collection software or other supply chain optimization strategies to take into account all of the variables that affect related costs, decision makers have no way of quantifiably knowing if a shipping option is the most prudent one available.
In addition, companies should also use data collection software to compare different supply chain partners. While issues such as rising fuel costs affect every trucker, the weight of its effect varies by supplier. For instance, Supply Chain Digital reported that some trucking companies have attempted to invest in more fuel efficient vehicles as diesel prices rise. As a result, doing business with these companies would not cost the same as would partnering with industry standard firms, yet again illustrating the benefits of a data collection system that lets organizations look at every variable affecting corporate decision-making policies.
Yet another key variable affecting shipment decisions is the type of good being transported, the news source stated. For example, while perishable food items may be best suited for air shipments because those parcels need to quickly go from farm to market, goods like aerosol cans are not suited for plans due to explosion worries. With an automated data collection system in place, though, a company could quickly and easily determine if a particular shipping method is ill suited for a specific item and then make an alternative decision in real time.