How transporters can increase their turnover
24 Sep 2018
4 min read
Is your transport company growing tremendously? Have you invested in new staff and other resources? Will the demand continue to increase? Then watch out. You are not there yet.
Reports about the logistics sector have only been positive since the ending of the financial crisis. Almost every market segment is growing and the number of customers and assignments is increasing. Distribution centers and transporters are getting drowned in work and jobs within the industry are up for grabs. Finally, turnover is constantly rising. These are generally signs of a healthy situation. Nothing to worry about. At least, you would think so.
Turnover is decreasing and continues to decrease
Yet separate statistics often do not say a lot. For example, when someone tells you that he recently drove 200 kilometers per hour, this might seem dangerously fast. But when it turns out that he reached this speed during take-off in an airplane, it is not that fast at all (average is around 250 km/h). Being skeptical when it comes to numbers is therefore always recommended. This also applies to the reports about the sector in which you are active.
An extensive study by Panteia commissioned by the Dutch National and International Road transport Organisation (NIWO) showed that the return did not improve in 2017 compared to 2016. In addition, the expectation is that the profitability in 2018 will barely change. Where income and, consequently revenue experienced a substantial growth, the expenses increased even faster.
In particular, the increase in wage costs and the substantial increase in the diesel price depressed the growth in yield. The higher costs can also be attributed to the growing economy. The growth has led to more staff being needed and a lot of investments has been made in fleets. This is where consistent costs also arise. Think about wage and rent costs. Compensation in the long term is therefore desirable, or even necessary. But how?
Insight into KPIs
In order to know where you can improve your efficiency, you first need to create insight into your work processes. Your answer is within reach, but do you have the right tools to get it? Analyzing the right Key Performance Indicators (KPIs) shows where process successes are achieved and where bottlenecks lie. By using Power BI, for example, you can view these (pre-programmed) KPIs at a glance. This way you can immediately see the yields, where any financial bleeders might be located and which process flows (or customer agreements) require extra attention. Here too, knowledge is power.
With a TMS you control the entire process
Knowledge is power and increase of return come together with a well-functioning Transport Management System. Because there is a lot more to it than just the transport from A to B. think of the office staff that organizes orders in an efficient manner, manages the fleet, but also communicates with customs. By bringing all transport processes together in one system, double manual entry is no longer necessary and data is available everywhere. All data comes from the same source, after all. You understand that this is a huge efficiency win and it limits error margins.
Combine your TMS and WMS and book success
Jonker & Schut also understood the importance of the before mentioned. They have already poured all their processes into the same system. Warehouse management is now closely connected to transport services and all processes are clearly visible. Now, switching between different systems is not needed anymore and thus customers can be served optimally. Moreover, thanks to Big Data, they know which activities they can expect in the coming period. But also what the best loading grade is, the margin per type of transport and the revenue per period per tractor. Getting a grip on the return has become a lot easier for them.
Do you also want to receive return again?
The Panteia study makes clear that traditional transport is no longer profitable. A growing market demands larger fleets and more employees and therefore more costs. Unfortunately, these are not compensated by growing income. So, it is high time to work more efficiently through automation. Curious how all your processes can be automated, integrated and become more insightful? Please contact us and make sure that your organization does not succumb to a growing economy.