U.S. Logistics Cost Up 6.2% in 2017: Dealers – Don’t Get Caught Flat-footed!

With record-high costs, logistics prices continue to increase. Dealers must adjust and better serve their customers.

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    The Wall Street Journal reported on a new logistics report which states that U.S. Businesses spent a record $1.5 Trillion on shipping costs in 2017, and it appears that this all-time high is not likely to change any time soon. What does this mean for heavy equipment and truck dealers? As logistics prices increase, dealers must adjust and better serve their customers with an online Dealer Management System (DMS) which increases agility, turns service work around more quickly, and finds the right truck for the right buyer.

    The reason for the 6.2% increase in shipping costs over 2016? A year ago, the freight market was just showing signs of picking up after nearly two years of excess capacity, said Sean Monahan, a consultant with A.T. Kearney and one of the authors of the annual report. “Many shippers had been lulled into a very soft market, costs were coming down and it was a beneficial fuel market,” Mr. Monahan said. “That’s when things started to go crazy,” he said. “I think many organizations were caught a bit flat-footed.”

    Why Businesses Spent $1.5 Trillion on Logistics

    • Demand and prices for logistics services are increasing
    • Costs for everything–from big-rig haulers and rail transportation to airfreight, parcel carriers and storage–have risen steeply since the middle of last year
    • Rising interest rates
    • Higher priced fuel and impending tariffs on imports
    • Freight rates jumped during and after the hurricanes in U.S. Gulf Coast states and Puerto Rico
    • Federal mandate went into effect requiring that electronic devices be installed in trucks to log driver hours, intensifying capacity constraints by limiting drivers’ time behind the wheel
    • Average rate per mile rose between 20%-30%

    Excerpt from the WSJ: By the end of 2017, U.S. business logistics costs accounted for 7.7% of GDP for the year—a slight increase from the previous year’s 7.6% though still below the previous five years when it topped 7.9% of GDP. The cost to ship goods and products will likely grow faster than GDP this year, Mr. Monahan said, driving that percentage higher.

    Large retailers and manufacturers will need to develop broader contracts with their carriers to guarantee capacity, said Lisa Harrington, president of supply chain consultancy The Lharrington Group LLC. “If I don’t have those relationships in place, it’s going to be fire drills to get my freight to market,” she said.

    Supporting your Customers with Advanced DMS

    The Velosio Dealer Management Solution is what’s next for construction, engineering, earth moving and power sports heavy equipment dealers.

    The world’s first online dealer management system, our advanced DMS is built on NetSuite’s state-of-the-art ERP platform and leverages the deep industry-specific functionality of Advectus, based on the experience of working with hundreds of clients around the world.

    The Velosio dealer management solution provides you the ability to:

    • Automate and streamline business processes across the enterprise, including Sales, Service, Parts, Financial Management, Reporting, CRM, and Distribution.
    • Build stronger, more profitable relationships with your clients by improving the customer experience.
    • Have access to business-critical information at any time, from any place, on any device.

    Unlike traditional, outdated DMS platforms built on closed, proprietary software, our modern, simple and flexible technology used by over 40,000 businesses enables you to:

    • Adapt your system to your best practice business processes vs. changing your processes to fit the DMS.
    • Leverage the advantages of best-in-class third party solutions through seamless integration to an open system.
    • Rapidly train new and existing staff with a modern, easy to use, interface, simple system navigation and powerful, customizable dashboards.

    The bottom line – better support for your customers’ heavy equipment needs with a streamlined, online dealer management system – they will thank you for it as logistics prices continue to rise. For more information about Velosio’s cloud-based DMS solution, check out our webcast here. For more about Velosio’s Dealer Management solution, click here.

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