Strategies for Reducing Logistics Costs During the COVID-19 Era

By Sean Horner,

VP Operations

Technical Transportation, Inc

The quarantines and stay-at-home mandates precipitating from the COVID-19 pandemic are causing hardships for many companies around the world. And the logistics industry is certainly not immune.

While providers that serve the food and medical sectors, as well as other essential industries, remain relatively active, other sectors have seen their supply chain operations grind to a near standstill.

So as companies are looking for ways to trim logistics costs, at least temporarily, we’d like to share some ideas that might help.

Stock up on fuel while prices are low

The reduced demand for fuel is a byproduct of the stay-at-home mandates, and combined with international oil price disputes, has led to some of the lowest gas and diesel prices in years.

For those logistics providers that keep a fuel supply at their terminals, now may be the time to look for deals to replenish your stocks while prices remain low.

There’s no set timetable for a return to higher prices, but as of this writing, WTI crude is already trending higher off of its lows in April, which means fuel prices may increase more as well.

Use this time to plan for the long term

While activity is lower for many logistics companies, it’s expected that things will bounce back later in the year. The main question is, how quickly it will happen.

What you don’t want is to be caught off guard by sudden, dramatic increases in demand as the economy normalizes, which often results in higher operational expenditures. For this reason, now is the time to begin thinking about what you can do to prepare yourself to meet customer expectations, and perhaps create a competitive advantage.

Take advantage and pre-position products now

Part of that long-term planning could be pre-positioning products in strategic locations that are near your customer base. This will help you respond quickly to new orders as demand begins to ramp up again, and it will help improve customer satisfaction through faster delivery when that time comes.

As you pre-position, consider using cheaper transportation methods to move items. For example, if you traditionally use air freight, consider ground or rail transportation in the interim. The current downtime may give you the lead time needed to use these less expensive transportation methods, thus saving you money in the long run.

And if you don’t have warehouse space in a targeted area, consider temporary, flexible warehousing options offered by some providers. You’ll only need to purchase the amount of space you require, and then scale up or down as needed. This could give you a tactical advantage over the competition as the economy bounces back.

This is a tough time for many, but if you take some prudent steps now, you can come out ahead on the other side.