As one of the most crucial aspects of small businesses, shipping merchandise can be a daunting task. Doing it without proper planning and preparation can lead to excess costs and even lost sales if the company is unable to provide cost-efficient and consistent delivery service to its customers
Most businesses make it a priority to reduce the cost of logistics while maintaining the quality of service. To do this, small- and medium-sized companies turn to third-party carriers and freight service providers while more prominent firms establish their own logistics team.
If your company is among the former, you can choose to reduce shipping costs by improving your firm’s relationship with carriers and establishing a better process. Aside from that, you can also try these six ideas for reducing freight costs that many shipping experts swear by:
Reduce or Remove Excess Space inside the Package.
One neat trick that can help reduce the price of shipping packages is to keep the excess space inside the parcel container to a minimum, or eliminate it altogether. This will help lower the cost in shipping via less than truckload (LTL) and full truckload (FTL) shipments. It also helps lower the risk of goods getting damaged by removing any space for movement during transit.
Consolidate Packages into a Single Shipment.
Most freight and logistics companies offer shippers discounted rates for shipping in bulk, which is why you should try to consolidate packages and schedule them into a single shipment.
Remember that small parcels that go to different places are shipped via LTL and tend to be brought to a terminal where the logistics personnel consolidate them into full truckload shipments. If you do the consolidation yourself, the courier will be able to reduce the time of transit and, in effect, lessen transport costs.
You can also choose to work with a freight consolidation service which would combine your packages with other companies’ shipments to complete a full truckload shipment. This can be done for shipments with weights ranging from 150 to roughly 20,000 pounds.
Don’t forgo the Postage Meter.
If the goal is to save on shipping costs, then you would surely need to use a postage meter to ensure the accuracy of your shipping cost calculations. This nifty portable machine is capable of assessing the exact postage charge for a parcel, determining the exact weight of the package, and printing out the shipping labels to be used for it.
Think about Rounding up costs.
Shipping prices often come at a per-pound rate. This means that the rate for a parcel may cost much higher than what you calculated if you don’t consider added cost when the weight is rounded up.
Most carriers charge shipping fees rounded up to the next pound or kilogram. This is why, if you have a parcel that weighs 1.2 pounds, you will have to pay the rate for a two-pound package. If this is often the case for the items you ship, you might want to reconsider your shipping partner.
Monitor your past freight invoices.
While shipping companies try their best to ensure quality service for their clients, shipping systems can sometimes cause over billing or failure in completing refunds. If you truly want to save on costs, monitor all your freight invoices to ensure that no errors were made and look for patterns that can help lower the chances of inaccuracies.
Keep a scorecard for your carrier and use it to negotiate shipping rates.
Another way you can ensure that you are getting the most out of what you paid for is by keeping a “scorecard” for your carrier. Factor in cost and service quality in this file to determine whether your shipping partner is the best option for your business.
Among the factors you should include under cost are the baseline distance or weight of shipments, service level (e.g., standard, expedited, or premium overnight), and non-essential fees (e.g., special handling). For service quality, you can factor in the delivery, pickup, and customer service responses as well as the accuracy of this information and how well they are maintained.
Also, you can use this to negotiate the rate for your shipments. However, you must remember that carriers are more inclined to engage in negotiations if you have a long-standing relationship with them.
Take the Time to Know Your Shipping Costs
Shipping costs account for up to 25 percent of a company’s overall expenses, but not many take the time to try and reduce these. If you truly want your business to thrive, you should make sure to invest time and effort in checking and rechecking your carrier services and how you can lower costs of shipping for the benefit of your customers and your business as a whole.