John Clark, technical director with The Nelson Company, sounded the alarm that freight costs will likely increase through the end of 2014, thanks in part to rising fuel costs, but also because of a shortage of 110,000 drivers per year, starting in 2014.
Clark’s June 2013 article, “Other Voices: Your Freight Costs will increase through 2014. A review of your pallets could help”, discusses how re-engineering of pallet specs and unit load designs can help companies better optimize their shipping loads, which can reduce their shipping costs.
While pallets are typically a commodity item, Clark advises against being penny wise and pound foolish in an attempt to combat rising costs. Instead, look for ways to spend a few dollars to save several.
“A customer was using a unit load design that would not allow them to double stack inside an overseas shipping container. We were able to come up with a new crate design that accommodated the product and allowed the customer to double stack inside the container. Once again, the packaging cost was greater than the original design, but the customer was able to ship twice the amount of product in each container, dramatically lowering the cost per unit shipped.”
The hurdle that freight and logistics companies sometimes have to overcome is penny pinching that customers want to do, switching between pallets for the sake of a couple cents here and a few cents there. For Clark, a newly-designed pallet or unit load design may cost more, but the savings will more than offset the costs. Anything beyond the break-even point just becomes pure profit at that point. And as freight costs go up, the fact that they’ll go up slower for these customers means it’s something worth exploring.
This is why it’s important to look at old practices and even vendors every so often, to see if they’re still providing the best value. Packaging, stretch wrapping, and loading practices that were created five or ten years ago may be wasting money for your company. The systems you have in place now may need to be scrutinized and revamped, especially in the face of rising freight costs.
One of the goals of Lean Manufacturing is to find the waste whenever and wherever possible. That means even looking at old processes that were created under the Lean principles. There are always new technologies, new processes, and even new ideas to help you reduce costs and waste. Clark’s article is a reminder to us that we need to continue looking, even in the areas where we think we’ve pinched all the pennies we can.
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Click here to read related blog: Use a PDCA Loop for Accomplishing Goals
This post was published on November 20, 2013 and updated on November 28, 2018.
November 20, 2013
