Last year, US businesses spent $1.49 trillion on shipping.
Shipping is one of the most significant business costs for SME businesses. Unless you run your own logistics company, you may feel like there is nothing you can do to reduce your shipping costs. Thankfully, that isn’t the case!
Read on for some innovative ways to reduce your shipping costs.
1. Factor in All Fees
Shipping costs can get complex. Fuel Surcharges and AM delivery fees are just a few of the charges that add up. Make sure that when you are quoting your clients you know exactly what you will be paying, so you can bill them. After a customer has agreed to a price, you can’t increase it if you find you have made a mistake.
To make this easier, make sure to set a “standard” delivery option. Whether this is paid by you or the customer, this will allow you to avoid any unexpected fees. This standard option means that you and your staff will be aware of any extras that you are adding and can check the costs.
2. Increase Lead Times
Giving notice allows your carrier to plan ahead and utilize their logistics assets to their full. This lets them reduce the time and resources they expend on your order and save money. Savings they can then pass on to you.
Consider increasing the default lead times on your orders slightly. Not only will this allow you to increase the notice you provide your carrier, but it also gives you the option to charge extra for expedited delivery.
3. Ship on Quiet Days
There are only a finite number of vehicles available to a carrier, so prices increase when demand is highest. If you are able to schedule your delivery on days when freight is underused, or even just away from days when it is busy, you could make some real savings.
This isn’t for everyone. If you ship perishables, you don’t have the option to delay a shipment without impacting your product. But if you can, it is worth it.
4. Load Quickly
Carriers look at several factors when calculating your prices. One factor is the amount of time they expect to be loading a shipment.
If you can consistently bring down your load times, your carrier can factor this in. They will see reduced costs and an increase in the amount of loads they can collect in a day. You can use this to negotiate reducing costs.
5. Ship More, Less Often
It is cheaper to ship 10 pallets all together than it is to ship the order in parts. However, customers often prefer the frequent smaller deliveries, so they don’t have to deal with as much inventory.
This means you need ways to encourage your customers to order large shipments. Sharing freight savings is great way to do this. Work out what you will save and arrange to share the savings with the customer.
6. Reuse Packaging…
If you’re selling fragile products, it’s likely that you’re spending a lot on packaging. From bubble wrap and peanuts to paper and tissue, the costs add up. Reducing shipping costs isn’t only about postal rates. It’s also about materials you need to mail orders.
Luckily, not only are you sending packages but you’re receiving them too. Don’t throw it away, why not reuse packaging from your supply and inventory orders? You can use packing supplies like peanuts and boxes that are in good condition again which will reduce costs and be better for the environment.
7. …& Dunnage
There is nothing worse than your products arriving at their destination damaged. Proper packing is essential to making sure your shipment arrives unharmed, but it is easy to go overboard.
If you are erring on the side of caution, work with your carrier to reduce your dunnage. Pricing is based on size and weight, so using the perfect sized packaging and dunnage will see cost savings immediately.
It might seem simple but minimizing the amount of space you use in shipping is always a good thing, especially in LTL shipments.
Optimization is important. The more you can fit onto a pallet, the cheaper your shipping will be. Standardized, square boxes can be efficiently stacked with minimal wastage.
9. Know When to Consolidate
Although it can cause its own headaches, you have probably noticed that shipping seems to get more economical the more you ship. By working with a freight consolidation service, you can make the most of this, even on small shipments.
Freight consolidation services combine your shipments with those of others, to create a full truckload.
In fact, this doesn’t only reduce costs, it can even speed up delivery. Small shipments need to be delivered to a depot where your carrier can organize forward shipment. With consolidated shipments, your footprint on a truck is allocated and ready as soon as it arrives.
10. Involve Logistics in Planning
Shipping costs don’t just involve the act of shipping. Packaging and warehousing are just as important. Your logistics team are the best people in your organization to work on efficient packaging for your products, but they are normally not involved in the design process at all.
Getting them involved early will allow you to inform your product design with freight in mind. This will help to make sure you don’t end up with inefficient packages that are costly to ship.
Saving on Shipping Costs
While it may initially seem daunting, there are plenty of ways you can reduce your shipping costs.
With just a little bit of planning you will notice reductions in your shipping costs pretty quickly. Reducing the amount of packaging and dunnage will save you money and manpower, and working with your carrier to set the most cost effective delivery times and processes will benefit you both.
Now that you know some of the ways you can reduce your shipping costs, check out the 8 signs you need a new shipping partner to make sure that you are receiving the quality of service you deserve.