Rising Freight Costs Obliterating Supply-Chain Savings of CPG Companies, Report Finds

Rising Freight Costs Obliterating Supply-Chain Savings of CPG Companies, Report Finds

By Lisa Henthorn, V.P., Corporate Communications

A dramatic increase in freight costs over the past year wiped out the savings that many consumer packaged goods (CPG) companies worked hard to gain in other areas of their supply chains.

That’s among the sobering conclusions of a new report from The Boston Consulting Group and the Grocery Manufacturers Association, which found that freight costs skyrocketed by as much as 14 percent for CPG companies since 2014.

What’s behind the rapid rise in freight costs? As the report describes at length – and as SupplyChain247 summarizes here quite well – the causes are many and complex. Among the top are capacity constraints, the ongoing driver shortage and a horde of last-mile transportation issues.

These types of challenges are especially tough on smaller companies, whose attempts to control freight costs have been thwarted by old-school communications technologies, a lack of automation in routing and load consolidation and other transportation inefficiencies.

Fortunately, relief is at hand. Solutions like Eyefreight’s cloud-based transportation management system (TMS) enable companies to focus on their cost-of-distribution (CoD) and slash their net landed cost of goods by as much as 30 percent with cloud-based technologies that automate communications and logistics.

In addition to helping companies optimize inventory allocation and distribution planning, cloud-based TMS provides a way to reduce costs and increase margins without renegotiating shipping rates.

While freight costs appear to be headed upward for the foreseeable future, by finding more efficient ways to distribute, savings can be found in nearly every area of the supply chain.