Why do we need to model transportation costs?

In industries where transportation accounts for a significant portion of the budget (automotive, energy, e-commerce, 3PL, etc.), it is often useful to estimate the cost of a route in various contexts:

  • for pre-invoicing to challenge the current cost of a route (and avoid being overcharged by a carrier!),
  • as part of a transport tender analysis, to estimate benchmark costs and negotiate more effectively with carriers,
  • as part of a study (network design, transport plan optimization, entering a new market, etc.), to estimate the cost of new routes without going through the often lengthy and resource-intensive transport quoting process.

Unfortunately, estimating the cost of a route that has never existed before is not straightforward. A per-kilometer approach is often used but frequently far from actual costs… Fortunately, proven transportation cost modeling methods already exist!

 

What are the most effective transportation cost modeling methods?

Several transportation cost modeling techniques coexist:

  • benchmarking: by comparing historical quotes from different providers for similar routes (and under comparable transport conditions), it is possible to estimate market prices,
  • using artificial intelligence: with a database of existing quotes and appropriate algorithms, it is possible to estimate the cost of new routes.

Benchmarking and artificial intelligence approaches can be used together for even better results. They can be applied to various types of transport flows: FTL (direct or looped), LTL, milk run, parcel, express, etc.

For more details, please contact us
Name
First Name
Company
Email *
Phone number
Your request *

* Mandatory fields

What factors influence transportation costs?

Many variables affect transportation costs. Here are some key factors:

  • distance traveled and driving time
  • pickup and delivery locations
  • loading and unloading times
  • transport volume and frequency
  • total business allocated to the carrier
  • the carrier’s ability to minimize empty return trips
  • the nature of the goods transported
  • the type of transport method used.

Carriers/Service Providers: Same Needs, Even Higher Stakes!

For carriers and service providers, every new client requires the ability to quote a route. This means estimating both competitor pricing and internal actual (full) costs to maximize profit margins—placing cost modeling at the heart of transportation pricing.

 

For over 30 years, through numerous transport optimization projects (transport planning, network design, tender analysis) and pricing expertise, EURODECISION has developed specialized knowledge in transportation cost modeling.