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Transport managers predict increasing fuel prices will escalate logistics costs

A survey on future transport cost trends revealed that two thirds of respondents believe that increasing fuel prices will be the main cause of rising logistics costs. However, 54% of companies also believe that this expense can be offset by the introduction of cost reduction initiatives. The survey, which was sent to over 700 transport managers across a range of industries, was devised by independent transport management firm 3t Logistics (www.3t-europe.com).

Statistics show that transport costs have risen at inflation busting levels over the past year. The Freight Transport Association (FTA) estimates that vehicle operating costs for rigid, articulated and drawbar vehicles have risen by 6.2% in the 12 month period from October 2010. However, the costs passed on have only risen by an average of 2.8%. According to the 3t survey, companies believe that this trend is set to continue and responses confirm the FTA’s assertion that the escalating price of diesel has been a major contributory factor in increased logistics costs.

"Transport expenses have risen substantially. Whether companies use their own fleet of vehicles or external haulage, they need to look for smarter ways to tackle that cost rise," comments Steve Twydell, Managing Director of 3t Logistics. "As fuel costs escalate and margins get tighter, businesses should now be looking at how they can use technology to reduce the number of journeys they make to save money – without compromising on service."

The survey found that virtually all respondents thought that they would be affected by continued pressure on costs, including fuel, driver and delivery profile. However, companies were reluctant to reduce quality of service in order to maintain margins, with just over 10% prepared to cut customer service levels to sustain profit.

Remarkably, only 30% of companies believe that continued price rises will result in a net increase in their transport costs. Many companies cited cost reduction initiatives as a way of countering increases, with over half still believing that renegotiating rates with their suppliers is the answer. Although 69% believe that better vehicle utilisation is the best way to reduce costs, most opt for supplier renegotiation as an effective strategy. This suggests that this is seen an easier and more tangible way of lowering outlay than trying to improve their own efficiency through other means.

"3t’s transport management systems are designed to enable customers to realise the next level of savings that can be achieved once supplier negotiations have been exhausted," explains Steve. "Most companies simply can’t reduce their prices any more without severely impacting on service. That’s where an independent consultancy such as 3t can help by using our state of the art software to substantially reduce empty running and improve vehicle load fill."

The 3t transport management survey was sent out in December 2011 to 703 transport managers across the UK and Europe.

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