How Fuel Costs Are Affecting 3rd Party Logistics Companies

By Author: Lori Martinez
Total Articles: 4
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As an industry, 3rd party logistics companies specialize in integrated operation, warehousing and transportation services for their customers. Because these services require large amounts of money spent on gasoline, diesel and other fuels, the companies must find innovative ways to keep customer prices level and still maintain an efficient operation.

Both businesses and consumers have begun seriously to watch their cash resources and pay attention to where their money is being spent. Every business in the supply chain – manufacturers, distributors, 3rd party logistics providers, wholesalers and retailers – is being affected by the high cost of fuel.

Whenever costs rise in any sector, the consumer ultimately pays for it. The concern of 3rd party logistics companies and others in the chain is that consumers may avoid the products whose price has risen as a result of businesses being unable to sustain normal operations without compensating for what they have to pay for fuel.

The way many 3rd party logistics providers have initiated to compensate is to find new ...
... ways to cut expenses. Management of these companies do have options here, even though some may feel as if they’ve already reduced every expense possible. Some options include:

Avoiding investments in equipment, facilities and other resources that aren’t absolutely necessary
Reducing select employee benefits
Being more diligent in maintaining current equipment to avoid having to replace it for a longer space of time
Paying attention to how much time employees are on the clock vs. how much time they’re actually working
Investing in certain technologies that will reduce the number of paid employees who need to be hired

As to reducing fuel expenses, 3rd party logistics companies are focusing on having full loads on their transport vehicles and vessels rather than partial loads. More trips mean more money spent on fuel, so the goal here is to make sure that as much cubic space as possible is filled every time a carrier sets off for delivery.

A 3rd party logistics provider will also benefit by keeping ships, trucks and planes in excellent working order, which will cause them to use less fuel. It’s the same as with an individual’s private car – when it’s tuned up and serviced regularly, it uses less gas.

There are other innovative ways 3rd party logistics companies are discovering to cut back to compensate for rising fuel costs and to actually use less of the fuel in their transport fleet. It used to be payroll that companies kept a keen eye on, and most still do, but fuel has become the giant that many firms are most focused on.

All companies in the consumer supply chain have challenges, because their businesses have everything to do with moving products, and that means buying fuel. But with good planning, diligence and leadership from management, 3rd party logistics providers can meet and overcome this current fuel challenge.

Lori Martinez is a freelance writer for Spectrum Logistics, a 3rd party logistics provider in Jacksonville, Florida. Interested in finding out more 3rd party logistics companies in Florida? Visit our website today for more information.