Why transport costs have risen and what we can do to mitigate their impact
Transport is a fundamental pillar of the global economy. It is responsible for moving goods and people around the world, and its smooth functioning is essential for business development. However, in recent years, the transport sector has been affected by a number of factors that have led to a significant increase in costs, which is having a negative impact on businesses, including SMEs.
Some causes for the increase:
Among the possible causes of rising costs in the transport sector there are a number of factors, the most important of which are as follows:
- The increase in fuel prices: Fuel is one of the main costs of transport, and its increase has had a direct impact on the prices of transport services. According to the EU oil bulletin, in Spain, the price of oil has increased by 30% in the last two years.
- Labour shortages: Based on the National Institute of Statistics (INE), in Spain, the average salary of a truck driver has increased by 15% in the last two years. This has led to a shortage of labour, making it more difficult for companies to maintain high wages. Despite this increase in wages, there is also a lack of generational turnover, where many experienced drivers are retiring, but there are no young people willing to work as truck drivers.
- Global supply chains have become increasingly complex, which has led to increased coordination and management costs. In Spain, the average cost of managing a supply chain has increased by 20% in the last two years.
- In Spain, the new regulations on road freight transport, which came into force in March 2023, have led to an additional increase in costs for companies in the sector. The regulation, which establishes new safety and worker protection requirements, has led to an increase in vehicle maintenance costs and drivers’ salaries. According to a study by the Spanish Transport Business Association (AET), the new regulations have increased transport costs by 20%.
What is causing this increase?
Rising costs in the transport sector are having a negative impact on SMEs in Spain, which tend to have less room for manoeuvre than large companies.
- An increase in production costs: Increased transport costs are passed on to the prices of products and services, which can affect the competitiveness of SMEs. In Spain, SMEs in the industrial sector have had to increase the price of their products by 10% to compensate for the increase in transport costs.
- A decrease in profit margins: Rising costs can reduce the profit margins of SMEs, which can hinder their growth and expansion. In Spain, SMEs in the industrial sector have seen their profit margins decrease by 5% in the last two years.
- Increased difficulty in accessing international markets: Rising transport costs may make it more difficult for SMEs to access international markets, which may limit their growth. In Spain, SME exports have declined by 10% in the last two years.
5 steps you can take to mitigate the impact of rising transport costs on your business:
1. Optimise transport routes and processes:
It is essential to make strategic changes within your shipping processes and one of the things that can help you to reduce high costs is to optimise transport routes and processes. One way is to work with local carriers. Local carriers often have lower rates than international carriers. Another way to optimise routes is to bundle shipments. By bundling shipments, you can take advantage of economies of scale and get lower rates. On a multi-carrier shipping platform, you can find different shipping options and choose the one that best suits your specific need and specific timing.
2. Look for more efficient transport alternatives:
Another option is to look for more efficient transport alternatives, such as sea or rail transport. Sea transport is generally cheaper than road transport, especially for heavy or bulky goods. Rail transport can also be a more efficient option than road transport, especially for long distances. On a multi-carrier platform you can find several options with various means of transport.
3. Renegotiate transport contracts:
To get better conditions you can negotiate volume or permanence discounts with carriers. Although this can be useful, we recommend using shipping platforms to avoid dealing with direct contracts. As you often need to diversify the way you ship, having contracts can often be more expensive. This is why multi-carrier platforms, such as LetMeShip, are very useful because you can access many carriers and services without having to negotiate with them.
4. Adopt new technologies:
Technology is your best ally. The world of logistics is constantly changing and by adapting new technologies to improve transport efficiency, you can improve your fleet management system, optimise your routes, reduce fuel consumption and improve safety, linking directly to recommendation 1. Multi-carrier platforms allow you to manage your shipments from anywhere, as they are accessed through a website, and make it possible to track shipments to avoid incidents.
5. Start by analyzing your transport costs:
Before taking any steps to reduce transport costs, it is important that you understand what your current costs are. To do this, we recommend that you collect data on the following costs:
- Shipping costs
- Fuel surcharges
- Other supplements associated with shipments
- Shipment preparation costs
- Insurance costs
- Incident management or shipment tracking costs
Our multi-carrier web platform
Rising costs in the transport sector is an issue that is affecting businesses around the world, including SMEs. SMEs can take a number of steps to mitigate the impact of this increase, but it is important that they are prepared to meet this challenge.
With our multi-carrier web platform, we can help you find more efficient shipping alternatives, giving you the opportunity to compare prices and carriers in one place, saving you a lot of time, effort and stress. In this way we contribute to improve the quality of service of your shipments.
What are you waiting for to register on our platform and start comparing services and prices for free?
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