Shipping Air is Costly

CUBE UTILIZATION

Freight rates are affected by many factors - locally, nationally and globally. Companies should always make sure they are shipping efficiently regardless of the prevailing rates.

CHALLENGE

A visitor at a consumer electronics company who was paying for the freight asked a simple question: "Why are the pallets so low?" The company - who shipped thousands of trailers each year from their two facilities - did not have an adequate answer as they did not have processes in place to measure the loading efficiency at their distribution centers.

SOLUTION

An analysis of the prior year's shipments revealed that trailers were averaging more than 25% "air." Procedural changes were made to ensure that pallets averaged about 84 inches in height and truckload costs were reduced by over 15%. Pallet cost was reduced similarly.

THINGS TO CONSIDER

1. Do you have a good auditing process to ensure the loading efficiencies at your distribution facilities?

2. Do you know what your current ratio is for product vs. "air" in the containers, trailers, or cartons you are paying for?

3. In addition to the cost implications, could this type of efficiency help you reach your environmental goals?

KEY TAKEAWAY

Empty space is costly and interferes with companies' abilities to meet their profitability and environmental goals. Fortunately, tools and processes are readily available to understand and optimize space utilization.

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