Whether you are selling or buying transport services, there is a need to understand the actual cost of transport, it reduces transport contract risk.
- Sales teams bidding for contracts need to know the cost in order to determine the profitability.
- Buyers need to know the costs in order to determine if they are receiving a fair deal and if the supplier is financially viable.
Supply or logistic chain agility requires transport services contracts that are flexible. But such flexibility changes transport fleet making costing and hence pricing decisions difficult.
Latus has Australia’s most extensive library of transport costing models, used by some of Australia’s largest transport providers and transport service buyers.
Logistic Chain Agility – Transport Costs
Transport costs include both fixed (capital outlay) and variable (operating), the recovery of the fixed costs dependent upon the forecast life of and utilisation during the contracted period.
The reality is that in todays changing consumer demands the follow through effect is changes in logistics chain demand, hence transport services. Therefore it is imperative to understand the true cost drivers and the sensitivity of viability of the contract to changes in those cost drivers. Such changes may include:
- Variations in delivery sizes that change the vehicle fleet utilisation
- Variations in traffic patterns, this is particularly important in areas of rapid development such as South East Asia and Western Melbourne. Where customer warehouses are opening in new industrial areas whose growth creates traffic issues two and three years later.
- Changes in Local or Government transport regulations or bylaws that impact proposed delivery times, routes or compliance requirements.
- Wages and fuel price change over the period of contracts, these changes need to be modeled and the impacts considered.
Reducing Transport Costs
Furthermore, as has been found by some customers using our cost models, certain cost areas can be addressed through joint action with customers. For example time on site delays loading or unloading at customer sites. Such delays impose a cost on the transport provider who in turn passes the cost on to the customers in some form. Elimination of such delays benefits both the provider and the customer.
Our cost models enable the impact of such delays and the benefits to be gained to be demonstrated in an objective form.
What are Transport Models?
The Latus Transport cost models considered all aspects of transport operations, enabling both suppliers and customers to model and run cost change scenarios.
The models enable fleets, including hybrid fleets of vehicles to be considered, making the Latus models the most highly regarded transport risk tool in South East Asia and Australia.
How You Can Use our Transport Costing Models?
We can work with you to use our Transport Costing Models for your project, bid or review Or we can teach you how to use them.
To find out more please contact us
Mike Wood
Mike Wood, Managing Director – LATUS: Logistic Risk Specialists Mike Wood is the recognised Australian Specialist on Chain of Responsibility Legislation and its Impacts upon the Logistic Industry. Since 2003, Mike has been heavily involved in Chain of Responsibility (known as Compliance and Enforcement in Western Australia). Mike is frequently interviewed or comment sort by Australian Media outlets, as well as providing expert witness testimony in legal proceedings. Most recently engaged by the Western Australian Government to help educate WA businesses on the new Compliance and Enforcement legislation and its impacts on them. Mike regularly advises Governments and Business across South East Asia and Australia on Logistic Issues, and was particularly involved in the Chain of Responsibility legislation, and codes of practice. Mike’s expertise extends to multiple facets of the Supply Chain, having undertaken projects such as, Integrated Logistic Chain Design, Australian Disaster Management Response Logistics, Coal Chain designs, Port operation & infrastructure, Logging Operation design, Sugar production, livestock movements, logging etc.
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