The Beacon Group utilizes real load cost data and the 4SYTE ™ Centroid Transportation Modelling tool to meticulously track transportation costs. The analysis focuses exclusively on transportation expenditure, excluding additional supply chain costs like real estate, taxes, and utilities. It is essential to consider all factors, including these overheads, when making well-informed decisions on site selection.
This week let us delve into full truckload shipping from every Southwestern US state to every other Southwestern state. If your company shipped a full truckload from a Southwest-based distribution center to all other states within the Southwestern region, which state would result in the lowest cost to serve?
The answer is COLORADO! Did you know that the average full truckload cost from Colorado to all other Southwestern states is about $1,551.90? Oklahoma comes in at a very close second lowest cost state at $1554.01, approximately 0.1% higher than Colorado. Colorado also comes in at the lowest cost mile at $1.71 while New Mexico’s cost per mile jumps to $2.20 or approximately 22.3% higher than Colorado. For our study this region included just four states. Texas, by far, has a larger population than the other states in the region and therefore our study heavily weighted more shipments into service Texas vs. the other three states. However, the real shocker here is, it is very expensive to ship full truck loads from Texas to other cities within Texas and to larger population centers in Oklahoma, New Mexico and Colorado. Texas ranked dead last in intra-regional full truckload service cost at 44.9% higher than Colorado.
It is understandable that Texas would have a higher cost per mile as many of the shipments would be shorter in distance (minimum charges) to other major population centers in Texas. But for Texas to be 44% higher on a cost per load is an unexpected data point in our study. Texas has other business advantages, such as lower cost industrial real estate costs, a good labor force, and enjoys a favorable tax environment. However, shippers that are moving larger truckload shipments to and from Texas should seriously evaluate their total cost service to include these higher full truckload costs within the region.
Colorado and New Mexico enjoy low total cost per load as well as lower cost per mile as compared to Texas when shipping within the Southwest region. And in many ways, this is understandable. There is a very low supply of outbound freight from Colorado and New Mexico. There is not a lot produced there. Everything is shipped in and very little moves out. So, it is highly likely that many trucks will leave those states empty. So, if a load can be located you can bet those rates will be very favorable. Again the rules of supply and demand are on full display within the Southwest. region of the US.
Keep in mind this analysis is focused on full truckload costs only and assumes intra-regional service locations and no volumes shipping outside of the four state Southwestern region. Obviously, if your service region is different, then this analysis would have to be re-computed to determine your ultimate low-cost solution.
And yes, once again, this scenario challenges traditional logistics analysis and highlights the importance of a data-driven approach in designing distribution networks. Our 4SYTE ™ analyses and AI algorithms reveal unique distribution regions, emphasizing the need to consider various factors like customer locations, inventory carrying costs, supplier and sourcing locations, transit times, taxes, real estate costs and many more factors. Taking a holistic and analytical approach can lead to surprising results and significant savings! Without exception, every region of the US so far has resulted in unexpected surprises. Given the unlimited possibilities shippers must consider, just imagine how many surprises can be found in your network!
So, here are the results of the Southwestern Region Full Truckload Cost Analysis. Enjoy these stunning results!
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