18 Apr 2017

Cutting Transportations Costs with Backhauls

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This is a sample short blog article

Keeping transportation costs low is always a high priority, as this is an expense that directly increases the price of the product that is being sold. There are many ways to cut these costs, including using cheaper labor and hiring less expensive trucking companies. For long hauls, larger trucks can carry more product, and thus reduce the price of labor, although this has to be balanced with higher fuel costs and the necessity for filling up those larger spaces.

Monetizing the Return Trip

For those firms that own or lease their own trucks, longer hauls introduce the problem of handling the return trip. The trucks have already dropped off their products and must now be driven back to their warehouses to pick up their next deliveries.

One solution is to completely outsource trucking, which. in theory, places the problem on the shoulders of someone else. You would think you’d only be charged for the labor and costs for the one-way trip. However, in practice you may find your costs are higher than you’d think because the return trip may be factored into the final totals. This can be very difficult to spot as these may not appear as separate charges.

A better solution is to use the return trip to carry product back to the home warehouse. The trucks are not empty and thus the return trip is put to good use. This is called backhauling and it is a common practice in the trucking industry.

However, this may be difficult in some situations. Let’s take the example of a grocery chain that ships products to stores all over the country from central warehouses. Obviously, the warehouses ship the products to the stores and not back to the warehouse, so there is nothing to return. How do you resolve this situation?

This is done by changing your mindset and considering the space on each truck as a commodity which can be sold. Thus, you can find other companies that need to move their goods to your home location, or somewhere along the same route. In fact, the same concept could apply towards filling empty space on the truck on the trip out as well.

How does this work? One model is to find strategic partners who can take advantage of your backhaul “service” and keep those returning trucks filled on a regular basis. A grocery retailer shipping from California to Texas might partner up with another retailer who needs to ship from their warehouses in Texas back to California.

Another solution is to create a position, or team, in your company who activity looks for those who need to take advantage of the route back to  your warehouse. These work as brokerages, and often advertise for clients for those empty trucks.

There are many other ways to reduce the costs of shipping. Take a look at the options and choose those that are best for your situation. Backhauls are especially useful on longer runs and have less value on short trips where it might make more sense just to get the trucks back to the warehouse to do more deliveries in a day.

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