Record inflation in 2022 and how to stay competitive with ever-increasing logistics costs?

Record inflation in 2022 and logistics

Inflation in the EU, UK and US in 2022 is breaking records every month. In June, inflation in the EU was 9.6%. Just for reference, during the global economic crisis of 2008, the average annual inflation rate was 4.5%.  In the UK, inflation for May reached a shocking 14% – an absolute record for the last quarter of a century. In the US, inflation is at its highest level in 40 years! In June, inflation reached a staggering 9.1%!

Fuel prices have skyrocketed. Raw material prices followed suit. These are the reasons that have led to the surge in the prices of absolutely all goods and services.

The logistics costs of companies have increased enormously, which is significantly undermining their competitiveness. Is there a way out of the difficult situation? The solution is an alphabet truth for any economic crisis: cost cutting. But how exactly to achieve it without laying people off and without shrinking production?

In search of a solution – guidelines

Start by analysing your logistics costs. Take a look at every factor that could affect your logistics costs. Focus on cost-effective practices. Constantly buying disposable logistics packaging – and then transporting it for recycling – is costly. Single-use pallet boxes are only an acceptable solution for sending goods over very long distances. For all other cases – for small and medium distances – use reusable pallet boxes (foldable, preferably).

Transport costs from point A to point B

Optimizing all transporting practices is a priority. Currently over 50% of the price of a product is formed by the transport costs associated with its movement along the supply chain from the manufacturer to the end consumer. High fuel prices and dramatically increased prices over the last 4 years for sea freight all contribute to this. Supply chains, especially in recent years, have been burdened with large additional costs for companies. This is a consequence of the disruptions caused by Covid-19 pandemic and the fall of the new Iron Curtain east of Russia. And fuel prices have not stopped rising. You just CAN’T afford “EMPTY” courses anymore. You can’t deliver goods to the final destination and then return empty truck on the way back.

Sustainable supply chain

Companies should be aiming to eliminate “empty” courses and that type of cost. This can be achieved with pooling optimization and the use of returnable carriers built for long life and max durable. Reusing them (up to 500 courses or up to 20 years) will save you a lot of money on buying new disposable carriers, recycling them and fuel costs.  A good solution is also to have bases (offices, warehouses) in as many countries in Europe as possible. This will reduce transport distances and save on fuel costs.

Reduce costs associated with damaged goods during transportation

Choosing the right pallet boxes for your goods and products is vital. If your packaging is not good, you risk a serous amount of waste during transportation and therefore large additional costs. This will be repeated over and over again with each subsequent shipment. So take the time and resources to make the optimal choice of pallet boxes for your product. Choose pallet boxes that are sturdy and secure. Folding plastic pallet boxes are the optimum choice .Their long life, as well as taking up less space in return transport and in the warehouse, will save you a lot of money. Zamko can offer you something even better: quality and exceptionally well-preserved second-hand folding pallet boxes at a 50% discount.  

Well-chosen pallet boxes, crates and logistics carriers will reduce your transport costs. Zamko also has pallet boxes that are specialized for more sensitive goods. We are talking about reusable cold-chain containers. These are pallet boxes that can maintain a certain temperature during the transportation.

Zamko has carriers that are suitable for any mode of transport: rail, sea, air or road. Depending on your needs, our specialists will recommend the best solution.

Reusable logistics carriers save money

In our blog, we have already addressed the topic of the ever-increasing prices of raw materials, such as steel and wood, responsible for the rising prices of logistics packaging. The logic is straightforward: when the end user throws away a one-time logistics packaging, you need carriers for the next shipment. This is the algorithm if you bet on disposable packaging.

Instead, opt for reusable logistics carriers that are built for durability and longevity. Not only will you save money by continually purchasing disposable carriers, you’ll also be doing your part to protect the environment. Green logistics is a winning strategy (read our article „Why is Green Logistics a profitable marketing strategy?“).

Reorganise your warehousing spaces

Good warehousing practices (GWP) means having quick and safe access to the goods that will be transported first. At the same time, losses due to product damage are unacceptable. The safety of the team and the products comes first. Use warehouse work practices that are as efficient as possible. Such as FIFO – “First-In, First-Out”. Secure your most efficient equipment, such as foldable racks and collapsible pallet boxes. They will save you space and money. Read more about this in the article: „How to most effectively manage your warehouse space in a growing e-commerce environment“.

Safety stock – your insurance in a record inflation 2022

In a global economic crisis, when supply chain disruptions are no longer the exception but rather a common occurrence, maintaining safety stock (buffer stock) is a good solution. You can find out why you should use this option and how to calculate how much safety stock you need in our article: What are the TOP-3 Reasons Companies Hold Buffer (Safety) Stock?