How much does your business spend on shipping each year? How about each month? If you aren’t sure, then it’s probably time to find out.
If you find your shipping budget increasing year after year, it’s time to make changes and look for the cheapest shipping method. We have 6 tips to help you lower your freight shipping costs.
Things You Need to Think About
When you want to save costs with your shipping, there are a few areas that you can look at. The first step though is to figure out how much your shipping costs are.
Look at the delivery times you offer. Are you spending a lot on expedited fees that you don’t need to be?
Where are you shipping in the country? Are most of your shipments local, countrywide, or international? Do you ship in major lanes or require trucks to make a special out-of-their-way trip.
What are the weight and dimensions of your packages? This will be important when we talk about negotiating rates later.
Finally, are you paying for any extra services? This could include handling, warehousing, or packaging.
1. Negotiate Your Rates
If you have not negotiated rates with your freight carrier, you are paying too much. Like any business, carriers will charge you as much as they think they can get away with.
Start by looking at your shipping volume as a whole. Then look at your freight shipping volume.
Then look at your volume with each individual carrier. You can use these numbers to leverage a lower rate with a preferred carrier.
Be careful though, if you promise a certain volume for the coming year, and don’t meet that volume, the carrier will be less likely to give you a break when it comes time to negotiate again.
You also don’t want to be known as the company that jumps from carrier to carrier looking for the cheapest rates. Try to develop a relationship with the carrier. The deeper relationship you develop with your partner carrier/broker, the longer your rate will stay consistent.
2. Reduce Your Lead Time
Expedited freight shipping is expensive, and with a little planning, totally unnecessary. Look at your supply chain and see where you can build more time into the process.
Work with your carrier to give them advance notice on shipments. This lets them allocate resources, so they are ready when you need them.
This also helps reduce the cost of having a trailer sitting idle somewhere. Carriers do not like it when you make them sit and wait for you.
Make them sit too long and they will start charging you. Plan for this and you can reduce shipping costs just be having your shipment ready when the carrier arrives to pick it up.
3. Weigh Everything
One of the biggest mistakes smaller businesses make when freight shipping is, they don’t weight their shipment correctly. Carriers will charge based on the weight of the entire shipment.
This includes the packing material and the pallet. If you don’t include this weight in when getting your quote, you won’t get an accurate price.
What happens is then is the carrier will weigh your shipment, find out it is over, and charge you the difference. This means a nasty surprise for you after the shipment is completed. Some carriers will even charge you a penalty fee on top of the weight charge, making the mistake even more expensive for you.
To prevent this from happening, weigh your shipment once it is fully packaged. Now you have an accurate weight for quoting. If you continuously ship identical pallet sizes and weights, build a spec sheet so you don’t need to repetitively reweigh your material. This will save time for your logistics staff when disputing discrepancies in billing!
If you can’t do this, you can always guesstimate. A standard wood pallet in the US is going to weigh anywhere from 30 to 70 pounds. So, if you add an extra 50 pounds to your product weight, you should be pretty safe.
4. Consolidate Your Shipments
It is much cheaper to ship 4 pallets at once than to ship 2 pallets every week. Your customers may like the smaller shipments, but you could be saving money by doing the larger shipments.
Carriers like it when you fill more of the LTL truck because it means less driving to the shipper’s locations on the pick up and drop off. You save them transit expenses, so they offer you cheaper shipping rates.
If you’re shipping or receiving in daily shipments to or from the same vendor, look at consolidating them to one or two days a week at a higher pallet count – possibly even truckload volume. This will all be based on available warehouse space at each location but could dramatically reduce cost and warehouse operations.
Look at ways to incentivize your customers into agreeing to accept the larger shipments. One way to do this is to share the shipping savings with the customer. Another way is to agree to not charge for the product until it’s on the shelf.
5. Get a Shipping Partner
These days you can find shipping services that offer businesses discounted shipping rates.
These partners are called a freight broker. The way this works is the broker negotiates rates with the carriers based on their overall volume.
This shipment volume is much larger than your business alone. So, when you book through the broker, you leverage their negotiating power to have a lower rate than if you went to the carrier directly.
By going this route, you can also utilize their other services that most asset-based carriers don’t offer. Freight brokers are a jack of all trades, asset-based carriers are usually only specialized in one field. By having all modes of logistics (LTL, TL, Expedite, Air, Intl, Rail, and Warehousing) available with one partner, you’ll significantly reduce your time spent requesting quotes from multiple vendors. Most importantly, by consolidating your business with one provider, you’ll dramatically reduce your freight discounts.
6. Train Your Employees
One of the easiest ways to save money on shipping is to train your employees. Teach them about how freight companies work.
Show them how to properly stack product on a pallet. Then show them how to secure that product to the pallet. If your product is many boxes stacked on the pallet, then you’ll want to show them how to use poly wrap to secure all of the boxes. If your product is one large item, then you’ll want to show them how to properly tie down the item. Then develop a timeline, so they know when to ship. They can avoid having to pay for expedited services. It can also help them manage customer expectations as freight shipping times can be quite unpredictable.
Cheapest Shipping Method vs The Right Shipping Method
The first step in saving money with shipping is to evaluate your current processes, define your weaknesses, identify areas in which you believe there is room for improvement, and search for cost saving partners. If you find that your logistics efforts are taking over the entire company, it’s time to partner with a company that can ease your operations. This will enhance your internal productivity and also deliver cheaper shipping methods that will be able to scale with you as business improves.
LTL shipping has many carrier options ranging from low cost and long transit times to high cost and short transit times. Why limit yourself to one of them? This is where a logistics broker is your biggest asset. ATS Logistics typically provides a minimum of 8 carriers choices, rates, and transits on every single LTL shipment throughout North America. Your chosen carrier will be based upon the needs of that particular shipment. If you’re ahead of schedule and have a few days to spare, we can utilize a reliable lower cost option. If you’re cutting the PO due date close, we have that quicker option as well.
By trusting a broker with expansive options and modes, you will streamline efficiency within your own business and find many cost savings along the way. Contact us today to begin your logistics consultation.