Did you know that transport and logistics costs account for 35-50% of total supply chain expenses? They say that all bad habits lead us to the same place: affecting our wallet (and of course, also our mental health).
Here are some bad practices that you may be doing if you are part of the supply chain and you may not realise it, but your wallet does!
Top 10 most common mistakes in logistics and freight forwarding
1. Lack of coordination between customers and carriers
The worst thing that can happen in the distribution of goods is non-integrated logistics, which results in miscommunication, missed deliveries, wrong appointments and missing data.
Carriers require a good understanding with their supplier so that cargo details are efficiently and clearly conveyed at all levels of the logistics chain (e.g. to avoid last minute changes in the delivery of goods).
Under a fully coordinated and automated logistics policy, time loss is zero, and financial benefits increase by 70% for all actors in the supply chain.
2. Misallocation of resources
The optimisation of resources is fundamental for any company to be guided in the right direction, and if process efficiency is not sought through technology, then human resources are often misused.
Nowadays, technological platforms automate tasks such as input management and tracking; this allows for optimisation of tasks and better distribution of human tasks into activities that provide value to the company.
3. Failure to collect and concentrate correctly the information that is needed
Another aspect that few take into account is the profitability of the company, which is directly affected by the lack of information to make decisions based on hard data, thus avoiding improvisations and failures in the operation.
4. Lack of tracking of goods (traceability)
Incredible as it may seem, many companies (mainly micro and small ones) are blind as to where their cargo is. An intelligent logistics system provides the tools to track the movement of goods in real time.
5. Miscalculation of tariffs
The customer sets his tariff and the conditions of the service. On more than one occasion, the carrier accepts in order to win the service, without examining whether the fare is below its operating costs.
"Normally the financial statements of transport companies do not have information to update the fare and include indirect costs. Knowing these expenses allows us to allocate how much will go to each trip, as well as depreciation issues, financing, etc.," says Elías Jiménez, ITM specialist.
6. Long waiting times for loading and unloading
Waiting for truck drivers at unloading centres is a common practice. This causes serious financial impacts, as the operator is dropping services and losing money (as fewer trips are accumulated per year, high fixed costs are generated as monthly revenues).
7. Over-reliance on traditional intermediaries
Generally, shippers use the services of traditional brokers (called 3PLs) to find qualified carriers to move their goods.
The business model of the human brokers is to charge the sender a
average profit margin of 10%-30% in addition to the cost paid to the
The new digital platforms are breaking down traditional brokers who do not add value, as the use of technology not only lowers costs but also streamlines the logistics process.
8. Delays in payments to hauliers
Days to pay carriers can vary from next day to over 90 days, with an average payment time of 37 days.
Carriers are often paid by physical brokers, which in turn must be paid by shippers along with the flow of paperwork such as invoices, bills of lading, purchase orders, proof of delivery, etc., which delays payments too much.
9. Lack of liquidity
Due to slow collection of receivables (payments), there is an excessive amount of capital tied up in the industry. Capital is also locked up in expensive underutilised assets such as semi-trailers, trailers, warehouses, etc.
All of the above results in a high cost of working capital across the board, which is transferred to the cost of goods. Quite a problem, don't you think?
10. Refusal to use new technologies
"They are too difficult to use" or "I won't understand them" are some of the expressions we often hear. If there is one industry that is reluctant to use new technologies, it is the road haulage industry.
New platforms streamline operations and make their work more efficient, so adapting new methods will be beneficial in economic and operational terms.
Join TrackChain now, improve your company's operation and finances, and achieve all your goals in the logistics chain.