6 Ways to Reduce Costs in Logistics

The development of infrastructure and logistics requires companies to improve the solutions offered to customers constantly. First, the principles of ensuring efficiency and safety are taken as a basis. Door-to-door service is ideal for these purposes. The essence of the service is that the carrier company assumes all responsibility for the preparation, shipment, and transportation of the cargo, which allows you to save time and control each stage of the process.

Advantages of door-to-door service

1. At all stages of transportation - from the moment the cargo is received to its delivery to the destination, it saves the time and effort of the customer, who entrusts the control to the carrier. It also saves the customer from unnecessary formalities.

2. Maximum protection of cargo against the risk of damage is ensured.

3. After loading, the goods are sent to any part of the world without intermediate storage and handling.

4. It is recommended when sending bulk cargo.

Disadvantages of door-to-door service

1. Sometimes, depending on the type of cargo, the use of this service is not possible. Door-to-door delivery is not applicable, for example, to liquid and bulk cargo in large volumes, and dangerous goods (additional verification is required).

2. Higher cost compared to other modes of transportation.

3. Without stable sales, this scheme is unprofitable for the client.

Service Features

The carrier company prepares all the necessary accompanying documents within the door-to-door service, carries out direct transportation, forwarding, customs clearance, and unloading operations upon arrival at the destination, and assumes all duties and responsibilities related to cargo delivery. During cargo transportation, the company provides a comprehensive approach, involving several types of transport, as well as intermediaries with whom it negotiates directly.

Cost Calculation

To determine the final cost of door-to-door service, it is important to consider several important points:

- cargo volume/weight;

- the length of the transportation distance;

- time required for delivery;

- transport costs;

• cargo insurance.

Taking into account the results of the case and guided by Articles 3 and 17 of the Law of the Azerbaijan Republic “On Antimonopoly Activities” and the “Rules for the consideration of cases of violation of antimonopoly legislation,” approved by Resolution of the Cabinet of Ministers No. 10.120 dated May 29, 1998, the Commission

DECIDED:

1. In connection with the monopolization of the industry by Azerbaijan Railways CJSC and the unreasonable restriction of the independence of business entities (limitation of competition by refusal to agree on the “mesplans” of Alliance Logistics LLC in November 2023), which violates paragraph 4 of Article 6 of the Law of the Republic of Azerbaijan “On Antimonopoly Activities,” illegally acquired income in the amount of XXXXX is subject to payment to the state budget in accordance with paragraph 2 of part 1 of Article 17 of the same law.

2. The creation by Azerbaijan Railways CJSC of conditions for dumping in relation to its subordinate economic entities in order to limit or eliminate competition by establishing an industry monopoly (limitation of competition in the transportation of uranium concentrate by ADY Container LLC in November-December 2023) is a violation of the requirements of paragraph 11 of Article 6 of the Law of the Azerbaijan Republic “On Antimonopoly Activities,” as a result of which, in accordance with paragraph 2 of part 1 of Article 17 of the Law of the Azerbaijan Republic “On Antimonopoly Activities,” XXXXXX income must be paid to the state budget as illegally obtained profit.

3. Creation by Azerbaijan Railways CJSC of conditions for dumping in relation to its subordinate economic entities to limit or eliminate competition by establishing an industry monopoly (order No. 5-10275/2023 dated May 19, 2023, related to the provision of special benefits to LLC "ADY Konteyner" and led to a restriction of competition concerning prices for services provided at the Hovsan station) contradicts the requirements of paragraph 6 of Article 11 of the Law of the Azerbaijan Republic "On Antimonopoly Activities". Income received in violation of this law is subject to payment to the state budget as illegally obtained profit in accordance with paragraph 2 of part 1 of Article 17 of the Law of the Azerbaijan Republic “On Antimonopoly Activities.”

Based on the results of the consideration of the case against Azerbaijan Railways CJSC, to eliminate violations of paragraphs 4 and 11 of Article 6 of the Law of the Republic of Azerbaijan “On Antimonopoly Activities,” the following instructions were issued:

- Payment of illegally obtained profits to the state budget, termination of refusals for subjective reasons when approving “mesplans” with orders from forwarders working in this area, with a clear indication of the reasons for refusal to approve “mesplans”;

- Payment of illegally obtained profits to the state budget, provision of benefits not to entities but to transported goods, and ensuring that benefits apply to all business entities while observing the principles of competition between freight forwarders operating in this area, as well as timely notification of all freight forwarders;

- Payment of illegally obtained profits in the amount of XXXXXX to the state budget, ensuring the formation of equal, transparent, and fair conditions for competition between forwarders operating in this area, as well as preventing bias in relations between the subsidiaries of Azerbaijan Railways CJSC and private forwarders.

On June 24, 2024, the State Service for Antimonopoly Control and Supervision over the Consumer Market imposed a financial sanction in the amount of 246,241 manats on Azerbaijan Railways CJSC for violating the Law of the Republic of Azerbaijan “On Antimonopoly Activities.” To eliminate instances of industry monopoly in the relevant market, a number of mandatory instructions were issued.

* As you can see, there is no court decision that would refute or exclude the above, and the indicated violations are not similar to previously adopted decisions. For these reasons, all measures provided for by law are taken in relation to Azerbaijan Railways CJSC to ensure the economic and legal interests of business entities. Instead of evading responsibility, ADY CJSC is recommended to bring its activities into compliance with legal requirements.

Transporting goods across borders involves global competition and multiple levels of requirements. Optimal solutions, staying up to date with strategies and rules, and using the latest technology are essential for international market success.

According to analysts and experts in this field, the most important points are the following:

Requirements and procedures in this area are constantly changing, and it is necessary to know about changes in international norms and rules firsthand in order to avoid delays in both production and sale of goods. Regular review of these rules will reduce their impact on exports to zero.

Don't forget that all documents must be in order, always! Echoing the previous principle, the paperwork required for global delivery can become an obstacle if you do not have up-to-date knowledge of international legal norms. Incorrect or incomplete documents tend to delay shipment and implementation, creating the risk of cancellation and damage to the company's reputation.

Using free trade zones while adhering to the standards and guidelines of international trade agreements, both in the production and distribution of goods, helps to achieve a regional advantage for your business.

In the international trade system, innovative technologies open up new opportunities, and this is an indisputable fact. Through the use of technology, some costs are reduced, which, in turn, stimulates the growth of commercial activity. Here we are talking about transport costs, logistics costs, costs for port services and customs clearance, for obtaining the necessary information, and transaction costs. A striking example is artificial intelligence and self-driving cars, which help reduce transportation costs.

Of course, the important point is not so much the choice of the market for offering products, as the adaptation to it. You will need to analyze it, make sure it fits your business, determine how easy it is to reach it and determine whether it is worth it.

International trade is a complex activity, so it is important for exporting companies to keep these best practices in mind as well as take advantage of reduced logistics costs to increase market share and succeed in new ones.