All businesses reach a point where the decision needs to be made whether to outsource transportation or keep it in-house. Most businesses choose to use specialist third-party logistics (3PL) to manage their transportation.
One clear benefit of keeping your transport in-house is the added control it provides your business. By having complete oversight you’re able to monitor service levels more effectively and ensure that your deliveries are completed efficiently. However, using a 3PL carrier does not mean that service levels or efficiency will necessarily be negatively impacted.
Although control is important, the cost of maintaining in-house transport operations is considerable and the costs will increase as the business scales. Here are just some of the costs you’ll need to consider when thinking of keeping transport in-house:
- Owning or leasing a fleet
- Maintaining the fleet
- Recruiting, training, replacing and managing staff
- Maintaining accreditations, licensing, and insurance
- Loading/warehousing facilities
- Productivity – understanding & achieving what are acceptable benchmarks
Additionally, you’re now fully responsible and liable for any errors or accidents that occur. With 70% of customers saying they’ll look elsewhere following a bad experience, having to be fully accountable may ultimately lose you, customers. Losing customers isn’t your only worry, now your business must maintain Chain of Responsibility compliance, ensuring all staff are continuously trained and that if an incident occurs you’re covered.
It’s extremely hard to master any field, so when your business is not predicated around transport the likelihood of you creating a function that is both as cost-effective and operates at a comparable level to that of specialist carriers, is slim.
Choosing to outsource will remove many of the costs associated with an in-house fleet, instead the carrier/s you partner with will incur those costs and you’ll pay a fixed rate. The rates will vary depending on your relationship with the carrier and the type and frequency of transport you require.
An in-house fleet is likely to be much smaller and less flexible than that of a carrier who has hundreds of vehicles on the road each day. As your business grows so do your transport needs, by using a 3PL carrier you’re able to flex up or down depending on your customers’ demands.
Your business might be a manufacturer, a retailer or a wholesaler and you’re likely very good within that specific field. However, it isn’t easy to build or upskill a workforce to complete an entirely new and different set of work, additionally implementing new technologies to help run your transport function will definitely create more headaches. 3PL carriers are experts at receiving and delivering goods, many of these companies will also specialise in other areas such cross-docking, warehouse relocations, event logistics or managing your retail store delivery network.
Bring it in-house by outsourcing
Spurred on by the pandemic, online retailers have seen soaring demand, forcing many executives to weigh up whether insourcing is a viable option. The biggest concern holding them back is the additional investment into developing logistics infrastructure.
However, using outside hire does not mean that you’re unable to insource, you can still reap the benefits of insourcing and outsourcing simultaneously, without the added costs of building your own fleet.
Carriers such as Yellow Express can provide permanent fleet replacement services, meaning we’ll supply a fleet of experienced drivers and vehicles that suit your needs whilst also adjusting to meet seasonal fluctuations. The drivers can wear your uniforms and the option to have vehicles branded your way is available.
Yellow Express has spent over 25 years delivering goods, along with a multitude of other freight/logistics projects across Victoria. We’re the experts in providing a safe, reliable and efficient service at a cost that won’t be matched by hosting your own in-house fleet.
To learn how we might be able to help cut your costs, speak to us today.