​What Goes Into Pricing a Shipment?

Image credit to Transport Executive

By John Cox

National Accounts

Technical Transportation, Inc

For many manufacturers and shippers, the expense of shipping large, complex technology and equipment can seem like a daunting task.

There are multiple factors and variables involved, and while it may be confusing comparing quotes to get the best available value for each delivery, there are ways to make your pricing more consistent and predictable.

Accurately Understand What’s Involved

The first step is specifically outlining what’s involved in the process before it can be accurately priced out. It’s critical for you and your logistics partner to understand and communicate your transportation requirements in terms of days/hours of service, lead times expected, type of equipment, special delivery/install requirements, delivery facility conditions and accessibility, and factors know or unknown for consideration.

If the expected deliverables and compliances are not carefully vetted on the front end, you will predictably end up with additional accessorial costs on the backend. Example: your logistics provider claims, “I didn’t know we had to do this. It wasn’t communicated in the delivery instructions”. More often than not, as a manufacturer or shipper you’ll end up approving added costs to fix or mask problems to avoid a poor customer experience that could have been avoided if defined properly from the beginning.

It’s also important for you to consider current issues and trends in the transportation industry. One prime example is the ongoing driver shortage. Every logistics provider has a “we’re hiring” sign up right now, and transporting goods comes at a premium.

Add to the fact that many deliveries of high-valued, sensitive equipment such as medical imaging instruments and the like require coordinated, scheduled appointments versus “we’ll deliver it sometime before 8 p.m.”, and this means prices can potentially be affected even further.

Efficiencies in Single-Source Provider

Manufacturers should also consider single-source logistics providers, or those that can manage the entire supply chain for you – from initial site assessment and product pickup, to final mile delivery, install and making the equipment operational. Doing so can make your transportation and delivery costs more predictable.

Such a scenario eliminates the need to hire the 4-5 vendors required to get your product from point A to point B.

The ideal single-source partner would first assess your needs for transportation, for delivery to your end-customer, and for any on-site activities such as pre-delivery site surveys to final unpacking and setup, making sure the program can be delivered successfully and meets everyone’s expectations.

That partner would package those services into a repeatable, hassle-free process that can range from shipment activity of “normal business operations,” all the way through to an entirely customized logistics solution based on your unique requirements. From there, you as the customer would only have to manage exceptions and leave the rest up to your partner.

Appropriate Skill Sets for Delivery Team

It’s also important to evaluate the skill sets of your logistics partner’s logistics teams. Do they intimately know and understand your product? Can they deliver and install it in an efficient and expert manner at a high rate of success?

You also want a provider that specializes in your industry. Unless they have experience with products or equipment similar to what you need to transport, it is unlikely they will have the processes and knowledge base already in place to successfully deliver your products. This can ultimately mean greater costs for you, if they are having to learn by trial and error about your product, processes, and expected deliverables, and how to effectively perform to your and your customers’ expectations.

Opportunity Cost of Not Getting it Right

Finally, you need to consider the potential cost of not getting it right the first time. Sure, a smorgasbord of in-house personnel and a multitude of vendors might be a little cheaper than a specialized provider, but if you don’t have the proper skill effectively defined, and you roll the dice, what will it cost your organization for a high-profile failure?

Ultimately, most manufacturers or shippers don’t factor in the cost it takes to manage all those internal and external resources that come at a “cheaper price.” When you look at the value of your time in having to manage so many moving parts, you ultimately are spending more resources and effort on coordination when you could be spending it in value-added functions.

So make sure you do your homework, and if you need any help understanding the logistics landscape, we’re happy to help answer any questions with no strings attached. Feel free to reach out to us today!