Ending the first quarter of 2018, most of us are happy that the economy has rebounded and our stocks and investments are now stronger than years past. It’s great to see more people working in new jobs that have been created. However when times are good, it is common to see the malicious face of inflation rising up to undermine the value of our money.
Across the board prices are rising. Transportation costs are at all time highs. According to trucking companies, their demand is higher than their supply. They say there are more loads to carry than there are trucks to carry them. Now thanks to new government regulations, drivers are limited to the hours they can drive and their speeds are measured by satellite systems. As usual, the increased regulation drives prices higher.
Meanwhile back at the store, retailers are passing on the higher costs for goods to customers. There was a time when buying cheaper loads of merchandise made since. With the lower freight costs our smaller dealers could sell the goods and still make a nice profit margin. Now those margins are being squeezed. Today it makes greater since to raise the initial investment of a truckload of merchandise. With transportation cost being equal from point A to point B (regardless of what is inside the trailer), shipping more merchandise value inside, is the thing to do.
Merchandise Cost Freight Cost Added to Cost of Goods
$ 5,000 $ 2,000 40%
$ 15,000 $ 2,000 14%
Are you paying to ship air?
Through the years past we have seen many many truckloads sell at $5,000 and below. There is nothing wrong with buying a load with smaller content value if you can afford the higher cost of goods. The merchandise on smaller loads could be excellent. Looking at it from this angle, if the air inside the trailer were filled with merchandise it is almost like “Free Freight” for those goods.
AML is working with our vendors to make available larger blocks of merchandise for concerned customers who want to maximize the value received from each freight dollar spent. Larger initial costs could result in greater bottom lines and more competitive pricing. It just makes sense to ship less air on the truck.