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Three Hidden Costs Of Cargo Loss

8 April 2015 by Elliot Simpson

Each day, trucking companies ship goods via highway throughout the country. While many of these shipments arrive without issue, some experience problems that result in cargo loss. In the last quarter of 2014 alone, cargo theft cost shipping companies a total of $321,521. When determining how cargo loss will affect your trucking company, it is important to factor in more than just the value of the load alone.

Here are three of the hidden costs of cargo loss that you should be aware of.

1. Supply Chain Interruptions

Many trucking companies operate on very tight deadlines, and cargo theft can seriously disrupt these timelines. In order to fully prepare for the potential costs associated with the supply chain interruptions caused by cargo theft, you must carefully evaluate your time to recovery (TTR).

Being able to estimate your TTR by converting each step of your supply chain to a mathematical quantifiable model, you will be able to determine just how much time is required to recover a lost load or send a new load out to your customers. These setbacks can be quantified to a dollar amount, allowing you to adjust your pricing structure to off-set potential losses.

2. Increased Cargo Insurance Costs

When a load is stolen from one of your trucks, your insurance company is generally responsible for footing the bill to replace the load. If your company has several loads stolen over the course of a year, you insurance company could view you as a risk.

Many trucking company managers fail to realize that an increase in cargo insurance premiums is a potential cost associated with cargo loss. Be sure that you take the time to ask your insurance carrier how cargo loss could affect your rates in the future.

3. Loss Of Customers

When cargo loss prohibits you from delivering your loads as scheduled, you might find yourself losing business. Customers need to be able to count on the receipt of their goods, and cargo theft could drive some of your valued customers to seek transportation through a rival company.

Marketing experts estimate that acquiring a new customer costs seven times more than retaining an existing customer. When you think about the cost of cargo theft, be sure that you take the time to consider how much it will cost you to replace any customers you lose as a result of lost loads.

Although cargo theft can be unavoidable at times, it is important to think about the financial impact cargo loss can have on your trucking company. In addition to the costs associated with the lost goods, cargo theft can cause costly delays within your supply chain, increase your insurance rates, and force you to seek out new customers. Understanding these costs will help you budget to off-set the costs of cargo theft more effectively in the future. For more information, contact a business such as Bobby Hoelscher Trucking Inc.

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