In times of difficult-to-predict market developments, calculating and optimising one’s own profitability is becoming increasingly important. This is especially true for the road transport market. In this article, you will learn about the most important digital tools that can be used to optimise costs in transport logistics. We will also help you to calculate your ROI from the use of digital solutions in order to discover cost-saving potential.
Achieving cost savings in transport logistics with digital tools
The transport industry is characterised by strong competition. For transport companies, this means that even the smallest cost savings in the forwarding business enable decisive advantages over the competition. With advanced tools, important procedures along the transport process can be digitalised. This enables forwarding companies to massively reduce the amount of work and personnel required and to speed up the allocation of transport, which in turn can lead to cost savings.
(Bitkom survey of logistics companies, Statista, 2022)
In order to be able to guarantee the cost-effectiveness of digital tools at all times, forwarder’s investments must be regularly reviewed. For this purpose, the return on investment (ROI) is often determined. This is a key figure that shows the profitability of the entire capital investment.
How freight forwarders can calculate their ROI – the most important factors
The ROI calculation is an important basis for making reliable strategic decisions. The ROI supports forwarders in numerous considerations:
- Selection of transport partners
- Strategic freight purchasing
- Route network and route planning
- Expansion and cooperation
- Make-or-buy decisions
As helpful as ROI is for the analysis of a company, the calculation of ROI is often difficult in practice. Everyday work in transport companies is notoriously stressful. Scheduling faces the challenge of allocating available transport capacities and transport orders as quickly as possible and thus bundles capacities. In addition, process landscapes that are not fully digitalised lead to a confusing, incomplete or even incorrect data basis.
But it is precisely this data basis that is indispensable for calculating the ROI and thus the profitability of individual business processes or even the entire company. The following key figures, among others, are needed to calculate the ROI:
- Freight prices and order volume
- Number of dispatchers
- Orders processed per dispatcher
- Working hours
- Number of salespersons
- Sales performance
- Operational expenditure and income
Cost savings in transport management through digital platforms
A large part of the cost savings is achieved through time savings. Digital tools can take over important processes in transport allocation and thus complete them with significantly less personnel and time:
Carrier Administration & Compliance
- Time saved by eliminating manual review of individual contractors. The checking of documents for compliance is automated as far as possible. Carrier information, ratings and references are immediately available on the platform.
- A comprehensive carrier database provides quick access to more freight capacity. This may help to better manage order volumes and save time in the search for suitable carriers.
- The risk of fraud and financial damage is minimised as transport can be allocated to known and reliable partners.
Transport Management System (TMS)
- Digital system integration enables time savings in the transmission of freight orders. Freight requests can be sent to a large number of carriers at the same time.
- Freight forwarders receive a detailed overview of all current freight. In the hectic daily work routine, this saves important minutes that would otherwise be lost searching for shipment data and allows for a quicker reaction to any complication.
- Time-consuming price comparison by Excel of a large number of carriers is not necessary. Market prices can be compared immediately and thus more freight orders can be carried out and paid for in a short time.
- Long waiting times for estimates are eliminated. Average market prices can be determined more quickly.
- Automated rules for placing transport orders increase the number of freight orders that can be placed on the day, allowing the business to scale quickly.
- Increased fuel efficiency through route optimisation.
- Avoidance of fines for late deliveries.
- Picking up additional freight along the route to avoid empty runs.
- Sound data basis that provides information on optimisation potential and can be analysed quickly (e.g. freight rate benchmarking or company performance).
- Provides an indication for the development of margins and service levels.
Request free consultation for ROI calculation now
Do you want to calculate your ROI and optimise the profitability of your forwarding business? Then book an appointment for the free ROI calculation consultation. We will go through the practical steps for ROI calculation with you using your real business data – adapted to the individual situation of your company. We will then give you a realistic forecast of the cost and time savings you can make with our solution and how much more profit you can make from your freight business.
Contact us now for your ROI calculation!