Most buyers know what a part costs and have no idea what the truck that brought it cost. When the supplier delivers, the freight is already inside the price. This article is about what a buyer can see once it asks for the two apart, what three Thai studies found when buyers collected, and what the Civil and Commercial Code says about who pays when the contract is silent.
The short answer
- A delivered price hides the truck. In one Thai parts plant, nine suppliers priced delivery into the part at 1.0% to 1.5%, which came to about 1.19 million baht a month with nobody able to see it as a line.
- Collecting is not the saving. Filling the truck is. A plant that already collected, with 17 hired trucks at a 57% average fill, still cut its freight bill by about 42% to 45% by re-planning the loops.
- The Code does not say who pays for the truck. It points to the place of performance, and that place depends on the goods. The purchase terms decide, so write them down.
- Collecting moves things to you: the loading window, the damage after pick-up, the dock slot, and the supplier's waiting time.
- Start with a two-price quote. One price delivered, one price at the supplier's gate. The gap is the supplier's own freight number.
Where the truck bill hides
Under delivered terms the supplier buys the freight and puts it into the part price. You cannot negotiate a number you cannot see, and you cannot tell whether the supplier's truck is full, half full or going the long way round.
The textbook calls the alternative factory gate pricing. You buy at the supplier's gate with no freight in the price, and then decide whether to ask the supplier to deliver with transport shown separately, or to collect with a vehicle you control. Its argument is that a delivered price disguises the real transport cost.
Two Thai studies show how that looks in a real purchase ledger.
| Plant | What the price carried | What it came to |
|---|---|---|
| Control equipment parts maker, 9 suppliers, 47 to 68 km away | Freight inside the part price at 1.0% to 1.5% | About 1,191,582 baht a month, 14.3 million baht a year |
| Motorcycle parts maker, 28 suppliers, 687 part numbers | A 3% add-on split in thirds: box, packing labour, freight | The author notes the true figure is under 1% of goods value |
The second row is a small share of the part price. That is the point. A percentage that small is easy to leave alone, which is how a freight line goes years without anyone pricing it.
What the Code says, and what it leaves to you
Buyers sometimes assume the law settles it. It points, then hands the question back.
- Section 324 says that with no stated place of performance, a specific thing is delivered where it was when the obligation arose. Any other performance happens at the creditor's present domicile.
- Section 325 says the debtor bears the costs of performance unless the parties said otherwise. A cost increase the creditor caused falls on the creditor.
- Section 463 says where the contract has goods sent from one place to another, delivery is complete when they are handed to the carrier.
- Section 464 says transport of sold goods to a place other than the place of performance is the buyer's cost.
Read together, there is no single default. On a plain reading, goods picked out as a specific lot at the supplier's yard and then carried to you lean towards the buyer paying, and generic parts ordered by type lean towards the supplier delivering to your place. A court could read a particular order differently. Which one you are in is a question about the goods and the order, and it is the sort of question that ends up in an argument after a damaged load. The same sections also fix when risk passes, which is covered in who pays when goods arrive damaged.
Treat it this way: put in the purchase order which of the two it is, in plain words, with the place and the time. The thesis behind one of the studies used the labels DDP and EXW for domestic buying. Those labels come from international trade. Between two Thai companies the words "supplier delivers to our gate" or "buyer collects at the supplier's gate" carry the same meaning and leave nothing to interpret.
What three Thai plants found when the buyer collected
| Plant | Before | After | What caused it |
|---|---|---|---|
| Car assembly plant, 35 suppliers, 941.12 m³ a day | 17 hired trucks, 49 trips, 1.82 million baht a month, average load 57.22% | 10 trucks and 37 trips by one method, 11 and 35 by the other | Re-planning the loops, not a change of who collected |
| Parts maker, 9 suppliers, 53.54 m³ a day | Direct from each supplier, freight inside the price | Two loops of 298.8 km in total | Collecting, then routing the loop with an exact method |
| Motorcycle parts maker, 28 suppliers | Supplier delivers, freight inside the price | 3 loops, 3 four-wheel trucks, 356,000 baht a month | Standard packs, collecting and a long-term agreement |
Three things stand out.
- The biggest saving came from a plant that was already collecting. Its baseline was a collected service at 57.22% fill. Moving to 10 trucks lifted the average load to 25.43 cubic metres a trip, which the paper puts at 80.9% of capacity, and the freight bill fell by about 9.1 to 9.9 million baht a year. Collecting did not do that. Planning the loop did.
- Routing method still mattered, a little. In the nine-supplier case, an exact method took the cost per trip from 1,582 to 1,321 baht, 16.5% lower than the saving method on the same suppliers. Both were already loops.
- Collecting only works when there is enough to collect. The motorcycle parts maker's imported volume was too small to run a loop. It moved more buying to domestic suppliers so that loops had enough volume.
One figure needs care. The English abstract of the car plant study says the better method "can save 11,962,011 baht a year". The Thai body shows that is the cost after re-routing. The saving is 9,897,072 baht. Add the two and you get a base of about 21.86 million baht, which matches 1.82 million a month. Whenever a Thai abstract gives you a saving, divide it back against the stated base.
What you take on when you collect
A loop is not free. It moves work from the supplier to you.
- The pick-up window. Each supplier now has a time at which the truck must be there, and every minute lost at one stop is lost at all the rest. The nine-supplier study named the limit directly: more stops on a loop means a longer pick-up time.
- Damage after pick-up. Under Section 463 delivery is complete once the carrier has the goods, and what follows from that is set out in the damaged goods article linked above. Standard boxes help. The motorcycle plant required suppliers to check everything before handover to the loop truck.
- The dock at your end. The car plant's trucks arrived within the same hour and jammed its forklifts, so the study re-spaced arrival slots against the plant's operating hours and forklift availability. Cutting trucks from 17 to 10 and then bunching them at the gate throws away the saving in queue time. See trucks waiting at your loading dock.
- Suppliers' own contracts. In the nine-supplier case, several suppliers did not run their own trucks and used outside carriers with rental terms, so their routes could not change straight away.
- Demand that moves. A loop designed for one month's volumes can fail when volume rises. Leave room, or know which stop gets dropped.
A test before you change anything
Do this on paper, with your own numbers.
- Ask each supplier for two prices: delivered to your gate, and collected at theirs. The gap is their freight number. If a supplier will not split it, you do not know whether a loop can beat it.
- List suppliers by area and by how often you order from them. Only places you visit regularly belong in a loop. Treat the rest as direct deliveries. Matching a loop to a stable set of stops is the same test used in fixed routes or daily planning.
- Add up the loop's real cost: vehicle-days at the rate a quote would show, plus extra handling at your dock, plus the time your people spend planning it.
- Compare the two sums, the freight you stop paying inside the price against the cost of the loop. A supplier that offers a 1% price cut on a 20 million baht a month purchase is offering 200,000 baht. If the loop's vehicle-days, extra handling and planning time add up to more than 200,000 baht a month, collecting loses. The figures here are for illustration. Replace them with your own quotes. The shape of the sum is what matters.
- Set the pack standard first. One box size per part, one count per box. A loop that has to sort and recount at every stop is slower than the truck it replaced.
What to put in writing
- The place and time of hand-over, per supplier, in plain words.
- The price at that place, with delivery shown separately or not at all.
- Who loads and counts at the supplier's gate, and whether the loop driver signs.
- Where delivery is complete. Under Section 463 that is at the carrier. State it so nobody reads it as the receiving gate.
- What happens when the supplier is not ready. A waiting rule for the loop truck, as in truck waiting time charges.
- How the forecast reaches the supplier. A long-term agreement or a rolling forecast lets suppliers accept smaller, more frequent orders, which is what a loop needs.
A supplier delivering is the same truck bill, hidden. Asking for two prices is how you find out if you should keep paying it.