Beverage Company Transportation Spend

Beverages loading on dock

The overall transportation spend for U.S. beverage companies (alcohol and non-alcohol) should grow from $25 billion in 2019 to over $30 billion by 2023. FreightWaves research indicates that beverage companies spend (on average) about 5.5% of total revenue on transportation costs. 

Beverage companies can save at least 1% of their transportation spend by becoming FreightWaves SONAR clients. This equates to an industry-wide potential annual savings of $250 million to $300 million on transportation costs. 

If the top 10 alcohol and non-alcohol beverage companies in the U.S. were SONAR subscribers, they could potentially save nearly $120 million annually on a cumulative basis on their transportation spend (assuming 1% transportation savings from using SONAR on their $12 billion in annual transportation spend).

Beverage freight has two primary characteristics. First, beverage demand tends to be relatively predictable due to its recurring replacement demand – after consumers buy beverages, grocery stores, package stores, restaurants and bars must restock at regular intervals. This predictable demand pattern and regular transportation lanes make beverage freight conducive to contract carriers (or dedicated and private fleets) rather than the spot market. Second, most beverage demand tends to be seasonal, with peak demand in the hot summer months. Because of this, trucking capacity for beverages tends to get tight in the summer months.

Traditionally, beverage companies bid out their freight to contract carriers and brokers using 12-month contract rates. These rates tend to be honored as long as the spot market does not deviate too far from contract rates.

However, given the seasonal characteristics of beverages, the traditional, legacy annual bidding process for contract freight may not make the most sense for beverage companies going forward. Rather than using annual contracts for freight,  FreightWaves SONAR could help beverage companies save money on their transportation costs through the newly popular strategy of mini-bids.

SONAR freight data and analytical insights (as well as FreightWaves market experts) can not only help beverage companies save on transportation costs, but can also help them utilize internal and external capacity and buy transportation more efficiently and intelligently. Further, for large beverage companies, SONAR can help drive higher asset utilization of their private fleets and reduce deadhead miles.

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What's the SONAR ROI?

By increasing the number of loaded miles per day your drivers drive by 1% and your rate per mile by $0.03 you will make more per week #WithSONAR.

#WithSONAR you can save up to per week through better bid negotiations and more effective management of your routing guide.

#WithSonar you can add 1 more load per person each day and increase $5 margin per load, earning your company an extra per week.

Disclaimer: Every company’s circumstances are unique. Fixed and variable expenses, market conditions and operational factors vary. Unforeseen events may also affect results. Calculated potential results reflect the consensus expectation of FreightWaves’ experts. Actual results may vary.

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