January 18, 2024

Six Ways to Control Logistics Costs in 2024

If you’re like most BCOs and shippers, you’ve set your goals for 2024. And in many cases, one of your goals may be to control logistics costs for transporting and warehousing your shipping containers.

In a world where global events, pandemics, and consumer trends dictate changes in the marketplace, it is easy for BCOs and shippers to feel helpless in controlling logistics costs. For example, when the best-laid plans go awry due to unavoidable circumstances such as a weather event, shipping containers may be assessed late fees that push the overall transportation cost for each container over budget. However, there are six specific ways BCOs and shippers can better control logistics costs by reducing unnecessary late fees and transportation costs.

Drayage Management

Drayage is an essential part of controlling logistics costs. In 2022, trucks transported 11.46 billion tons of freight, representing 72.6% of total domestic tonnage. If you are responsible for the drayage of shipping containers from the port to points beyond, a drayage management program can increase supply chain visibility and help control logistics costs. A drayage management program will ensure your containers move from the port to an off-site container yard, railyard, or distribution center before their last free day (LFD), thus reducing or eliminating port storage fees.

Drayage management also helps you secure the capacity needed for efficient intermodal transport of your shipping containers.

Chassis Management

Managing the chassis fleet can be challenging. Finding the right chassis, at the right cost with required availability may seem like finding a needle in a haystack. There is no “one size fits all” solution when it comes to chassis capacity. A solid chassis management program will model different options to weigh the costs and benefits of each one and identify the right-sized program for you. Such a solution can include purchasing, leasing, or drawing from a chassis pool to fulfill your drayage needs. The goal is always to provide the most cost-effective chassis possible to control logistics costs.

Per Diem Management

The Federal Maritime Commission (FMC) reports that per diem charges in shipping amount to billions of dollars annually. Per diem is a charge that containers may receive if they fail to return their empty container to a depot, rail terminal, or other location by the contracted period. Surprisingly, per diem container charges accrue quickly and often go unnoticed. If you are a shipper or freight owner experiencing rising per diem, a dedicated per diem management program can greatly reduce unnecessary charges.

AV Logistics recently launched a “per diem reconciliation tool” that automates the review of per diem invoices from the shipping lines, validates the charges, accepts or declines them, and submits payment, if required. It even identifies invoice problems, such as incorrect dates and rates, that can help shippers and BCOs defray per diem costs. Per diem management is a smart way to control logistics costs.

Demurrage Management

Weather, port congestion, labor issues, and other factors can inevitably delay the departure of your cargo from the port and drive up your logistics cost with demurrage charges. Demurrage is assessed when shipping containers exceed their last free day at the port. A demurrage management program will monitor your cargo and ensure your containers are moved in time to prevent or reduce demurrage charges. It begins with identifying at-risk containers and arranging cost-effective solutions (like transporting the containers to a yard with lower storage fees) for considerable savings in logistics costs. Your demurrage management program should also include tracking of each container and prioritizing the relocation of containers that are at risk for accruing demurrage.

Logistics Data Management

Controlling your logistics costs begins with the accuracy of your supply chain data. Your logistics data management should include the most up-to-date, real-time data available. Your sources should be reliable and all data should be verified for accuracy before it is used to calculate your ETAs and anticipated milestones. Only accurate data will render your supply chain visibility proactive rather than reactive and provide real-time insight.
Also, look for helpful features in your logistics data management, like user-friendly dashboards, on-demand reporting, milestone metrics, and real-time updates to container locations.

The easier it is to track and trace the movement of your containers, the easier it will be to identify when your containers are in danger of accruing unnecessary fees. For container logistics, knowledge is not only power; it is a powerful way to control logistics costs!

Container Storage

Finding economical storage for your shipping container is another important way to control logistics costs. When drayage is delayed, finding the best container storage solution becomes critical and may not be a clear-cut choice. Look for a logistics firm with connections to storage facilities that can suit your needs and offer competitive rates and efficiency. Location matters and can help you control logistics costs when you are choosing a storage facility and a good logistics firm will help you make the best decision.

AV Logistics is proactive in helping customers control logistics costs in all six ways. If you’re looking to control your costs better in 2024, let’s talk. Contact AV Logistics at 888-206-3524.