6 Hidden Costs Eating Into Your Logistics Budget (And How to Eliminate Them)

In today’s competitive South African market, logistics can either be a silent profit driver — or a hidden cost sinkhole. Many businesses believe they have a handle on logistics spend, only to discover they're losing hundreds of thousands of rands annually through inefficiencies and overlooked expenses.

At Sengers LCA, we help companies audit, streamline, and optimise their logistics operations. In this post, we reveal 6 hidden costs that could be quietly eroding your bottom line — and how to fix them.

1. Poor Route Planning and Empty Runs

The cost: Unused truck space and inefficient routes can increase fuel, labour, and time costs by 15–30%.

What to look for:

• Vehicles returning empty after delivery
• High fuel usage per delivery
• Drivers relying on manual route decisions

The fix:
Use route optimisation tools or outsource to a 3PL provider with dynamic routing. A logistics audit can also uncover delivery patterns that need restructuring.

2. Inadequate Inventory Management

The cost: Overstocking or understocking leads to excessive storage costs, write-offs, and missed sales. Many South African SMEs are spending 20–40% more than necessary on warehousing.

What to look for:

• Frequent emergency restocking
• Stock sitting idle for 90+ days
• High shrinkage or spoilage rates

The fix:
Implement demand forecasting and just-in-time (JIT) inventory principles. Our consultants help align inventory strategy with logistics capabilities.

3. Labour Inefficiencies

The cost: Overstaffing, manual processes, and misallocated responsibilities can balloon logistics labour costs — especially when seasonal demand isn’t properly accounted for.

What to look for:

• High overtime costs
• Low pick-and-pack productivity
• Reliance on manual stocktake or dispatching

The fix:
Conduct a workforce audit and identify automation opportunities (e.g. barcode scanning, WMS integration). Outsourcing peak-period operations can also offer flexibility.

4. Unused or Overpriced Technology Platforms

The cost: Many businesses are locked into logistics software that’s outdated, underutilised, or overbuilt for their needs — costing R50,000+ annually with little ROI.

What to look for:

• Paying for features your team doesn’t use
• Complex interfaces creating friction
• No clear reporting or dashboards

The fix:
We audit your logistics tech stack and either optimise or recommend smarter, cost-effective alternatives — often built into 3PL partnerships.

5. Vendor & Carrier Rate Creep

The cost: Without regular reviews, transportation and warehousing vendors may gradually increase rates — often 5–10% annually — without delivering added value.

What to look for:

• Lack of service-level agreements (SLAs)
• No benchmarking of current rates
• Long-standing relationships without renegotiation

The fix:
We negotiate on your behalf or conduct a vendor re-bidding process to ensure you're getting market-competitive rates. Our outsourced logistics team is already benchmarked and optimised.

6. Hidden Compliance & Risk Costs

The cost: Delays at customs, fines for non-compliance, and inadequate insurance coverage can suddenly spike costs — or damage your reputation.

What to look for:

• Frequent border delays or customs issues
• Vague responsibilities between departments
• No clear logistics risk policy

The fix:
Outsource customs management and implement a compliance checklist. Sengers LCA provides end-to-end visibility and accountability.

Logistics Isn’t Just a Cost Centre — It’s a Profit Opportunity

By identifying and eliminating these hidden logistics costs, South African businesses can save hundreds of thousands of rands each year while improving delivery speed, customer satisfaction, and team productivity.

🔧 Ready to Uncover Savings in Your Logistics?

At Sengers LCA, we specialise in:

✅ End-to-end logistics audits
✅ Process improvement and strategic consulting
✅ Fully managed outsourced logistics services
✅ Benchmarking and cost analysis

📞 Book a free logistics efficiency assessment today and let us show you exactly where you're overspending — and how we can fix it. Contact Us to learn more.