An Introduction to Cost Modeling

What is Transport Cost Modeling?

Many businesses with larger fleets are likely to have financial control systems, rate structures and systems for costing jobs. While this may be a common practice for larger operations, this is by no means the industry standard. Many trucking firms still rely upon inaccurate or incomplete data to make critical business decisions. Such businesses often find it difficult for managers and customers to identify where improvements and savings can be made. The goal of cost models is to make it easier to identify where these improvements and savings can be made.

Simply put, a cost model for trucking seeks to identify and document all of the costs associated with any specific trucking transaction, and is one of the keys to a profitable operation. Using a cost model will help you to do a few things:

  • Improve your operational effectiveness and thus the performance and profitability of your business
  • Develop a robust pricing structure that all stakeholders (customers, employees, shareholders, etc.) will understand

Transport Cost Modeling Benefits

A transport costing model allows you to provide a price for a job that bears a direct relationship to the costs involved. It uses current costs rather than historic ones and enables you to understand the true cost of your operation down to individual vehicles in the fleet.

  • Pricing structures based on true costs
  • Tighter control of operating costs
  • Informed business decisions
  • Improved business performance
  • Better utilization of resources
  • Increased professionalism
  • Competitive advantage

Our White paper, An Introduction to Cost Modeling: Why it Matters to Your Business goes into great detail on the benefits of using transport costing models, and also breaks down how to price a job using a cost mode. Download the white paper, and start improving your operational effectiveness FREE today!

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