Freight tracking cost analysis to improve logistics management operations

Abstract

The cross-border freight industry suffers from inefficiencies that can be addressed by implementing technology based systems. Inefficiencies cause time delays at amongst others border posts and weigh stations that in turn increase turnaround times. Higher turnaround times affect the business bottom line as it reduces the turnover generated on capital assets and therefore decrease profit levels. Efficient logistics management will also ensure increased trade in Sub Saharan Africa which will ensure economic growth in the region. GPS tracking systems deployed on fleets of freight vehicles are currently focused on vehicle theft recovery and communication with the units is typically suspended once a national border is crossed to avoid roaming costs. This article proposes a mind shift towards the increased use of crossborder communication with freight vehicles in order to use GPS tracking and other telemetry data available from vehicles to enable improved logistics management. The article will analyse GSM and satellite communication costs and compare these costs with the potential financial benefits to be gained from the use of more frequent communications. Our analysis has shown that the use of telemetry data for logistics management offers the potential to increase profits by up to R400,000 per vehicle over its lifetime. Careful selection of the most suitable networks is however essential to achieve a positive cost-benefit ratio