Tips on How to Lower Shipping Costs
Whether you’re shipping freight or direct to the customer, lower shipping costs increase margins.
The unexpected and frequently ignored costs of shipping are one of the largest obstacles for beginning business owners. Shipping costs directly impact the price of getting supplies to you as well as the retail price to your customers. It quickly becomes very clear that understanding how to get lower shipping costs is essential in determining whether your product price structure is going to be viable or not.
Of course, there are many tasks that require the attention of new entrepreneurs while beginning a business, and any number of ways to lower expenses in other elements of the business.
But given that shipping can add up to 25% of your entire expenditures, why don’t more business owners invest in managing it?
Many business owners are unaware that a small time commitment can lead to significant savings and even make running your company easier. Here are seven strategies business owners can implement right away to reduce their freight shipping costs.
1. Meet your representative and get to know them.
Even in outlying and rural locations, every major carrier, including FedEx and UPS, has representatives. These representatives’ duties include looking over prices, responding to inquiries, and making shipment as easy as possible for business owners.
Reps are marketers, therefore it goes without saying that their objective is to get you to ship as much as possible. They gain additional benefits as you send more. Having said that, our FedEx representatives were essential to the development and success of our initial business because we relied on them for advice, resources, and assistance.
2. Boost the use of flat-rate shipping.
Flat rate alternatives are available from all major shipping firms, which are fantastic for standardizing the process and reducing the fluctuation typically connected with shipping prices. Flat rate boxes are offered gratis by USPS, FedEx, and UPS; this alone represents a considerable discount.
By zones or the distances the package goes, shipping providers determine flat rates. Before deciding to use them, compare and understand the cost with your representative if you find the information for the various delivery zones to be unclear.
3. Discuss shipping costs.
Carriers are aware that once you begin using a certain shipping provider, the hassle and expense of switching will retain you as a customer for a considerable amount of time. Because of this, businesses will offer fantastic incentives to keep you as a customer if you only ask. If you already use another provider, they will assist you with the transition and even pay some of the costs.
It is usually a good idea to price compare occasionally to see what the competition is offering, even if you have no plans to switch providers. If you and your current rep have a solid working relationship, you should be able to renegotiate any new perks into your existing agreement. Rates, benefits, and even technologies change.
Finally, when your firm grows, be careful to convey these changes to obtain better pricing since FedEx and UPS both give volume discounts. Again, asking is all it takes.
4. Utilize their apparatus.
The majority of significant carriers, including FedEx and UPS, can and will offer your business software and equipment, including computers, printers, and scales. Many will offer it at free cost or find grants to assist cover the costs, depending on your volume and what you negotiate.
5. Preserve openness
Be as direct and open as you can when speaking with your 3PL about a shipment. By being open and honest about your needs, you can get the most accurate quote upfront and avoid any unpleasant surprises.
You run the danger of incurring unforeseen costs if you ignore important aspects like insurance requirements, loading and unloading procedures, or other delivery rules.
6. Pack sensibly
If you can incorporate logistics into early packaging and product design decisions, it will matter. Shipping costs may be significantly impacted by packaging optimization, either favorably or unfavorably.
To make sure no valuable space is being lost, you might also evaluate your current packing techniques. Can your cargo be nested, stacked or consolidated in any way?
You’ll also save money by enabling stackable freight because you won’t have to pay for truck space up to the roof.
7. Organize your resources.
For business owners, packing supplies is one of those dreary truths, along with things like death and taxes. There are significant and remarkably efficient businesses that just deal with shipping goods, like ULINE, which can frequently ship the same day, offers individualized bulk savings, and even offers incentives for large orders.
However, with a little effort and investigation, you can find tiny businesses that will go above and beyond to win your business.
“Our research shows that the majority of business owners rely on ULINE instead of learning that they may get general goods for far less money. They are appalled by the amount of money they have squandered when we tell them that we can offer identical products to them at a 25% reduction.”
Finally, shipping costs for packing materials like bubble wrap can be high (you are, after all, sending air) and they can occupy a disproportionate amount of space compared to their usefulness. Because of this, seek out partners who can offer the machinery needed to produce packing supplies right at your plant. As long as you agree to buy the supplies from them, the majority will even pay for the price and installation.
8. Minimize Shipping Distance
Many firms pay hefty delivery fees when sending packages to far-flung areas. Shipping zones for domestic shipments within the United States range from Zone 1 to Zone 8. The origin zone is Zone 1, and zones are used to compute the distance traveled by a cargo.
Shipping becomes more expensive and time-consuming the further away the shipment destination is from the origin. You can save a lot of money over time and take advantage of more economical shipping options if you can avoid delivering to higher zones.
9. Reduce the size of the package
Keep your shipments as little as you can because the size of your item affects the amount that shipping companies and carriers charge you for shipping.
There are numerous ways to make your package smaller, including the following:
- Use of more compact packaging.
- Boxes that fit tightly don’t need extra filler.
- Put a lot of items in one box.
- Merge all of your accounts.
You should send as much merchandise to your account as you can because shipping charges are frequently dependent on volume. Incoming shipments of supplies and raw materials are included in this. Ask your suppliers to send goods on your behalf whenever it’s possible; many wills. Additionally, you will no longer be paying any markup on that expense.
A lot of transportation providers, however, demand payment within 15 days, but your merchants might offer longer and more flexible terms.
10. The Best Transportation Method should be chosen.
Before sending out freight, it’s a good idea to weigh your transportation choices. The cost of each kind of transportation varies, with some being significantly more expensive than others.
Due to the high cost of air freight, it is uncommon to ship anything other than small, highly valuable objects or cargo with strict arrival deadlines by plane. For localized freight and the transportation of big goods, railroads are excellent. Typically, train shipping is less expensive than trucking. The most affordable and slowest form of shipment is by sea.
11. Grow Your Fast Loader Credibility
Typically, carriers base their charges on a two-hour loading window. But if a business proves to be a quick loader who can finish duties in half the time, carriers will probably factor that time difference into their pricing.
If your loading performance is reliable enough, you can even receive a rate reduction. You’ll save money for your business and draw in additional carriers if you’re a productive loader.
12. When there is a lot of demand for shipment, avoid doing it.
Understanding the transportation market is crucial for lowering freight costs. Be proactive and plan your transportation in advance to avoid incurring additional expenses. Even though every product and industry differs slightly, managing the following can help you save a lot of money:
- Don’t plan any essential transportation for the last week of the year.
Due to holidays, delivery times are typically substantially longer near the end of the year.
Shipping during off-peak hours can save you a lot of money. Backhaul shipping can further cut expenses by trying to fill empty vehicles when carriers return to their base.
13. Request reimbursements for delivery.
The on-time shipment guarantees offered by major carriers like FedEx and UPS are another option to save some money. Even though shippers are quite efficient, between 2 and 10% of the time, depending on the shipment method and the season, FedEx and UPS do not live up to their promises, and you are entitled to a refund.
These refunds are frequently not requested. Package auditing businesses, like Refund Tiger, can take care of your account and issue refunds in return for a cut of the money that is recovered.
“We do all the work involved in screening your packages and requesting refunds. Setting up an account only takes a few minutes, and you only pay a fee if we save you money. If no refunds are made, there is no price. Entrepreneurs will always benefit from it.
14. Consult Experts About Assistance
You could think that handling your fulfillment is more economical while looking for strategies to save shipping costs. However, a lot of online businesses find that outsourcing fulfillment allows them to cut costs.
The following are a few ways that using third-party logistics might help you cut costs on shipping and fulfillment:
- Flexible Warehouse Space: Red Stag won’t obligate you to a long-term lease (or even a contract!) for warehouse space. You can modify the amount of shelf space you purchase based on your demands.
- Packaging Advantages: Thanks to the expertise of the packers at your fulfillment center, your things are less likely to arrive damaged. For returns and reshipping, you pay less. Additionally, their packing expertise may help you avoid or lower DIM weight charges.
- Discounts: As previously mentioned, 3PL service providers could offer reduced shipping costs. In some cases, they might be able to pass these savings through to you. Additionally, facilities that fulfill orders buy a lot of boxes and other packing supplies. Using a third-party logistics provider’s services could help you save money on packing.
- Utilize the management of your fulfillment center’s skills when managing your inventory. They can help you develop replenishment levels and get your inventory levels closer to ideal levels. By following professional inventory management guidance, you can make sure that you have enough stock to fulfill all demands without investing an excessive amount of money in inventory.
15. Negotiate with Several Carriers
Too many businesses still utilize the first shipping company they come across. It is obviously a terrible concept. Almost all freight companies change their prices based on volume. The price of the product decreases with volume.
Unfortunately, a lot of small businesses are not aware that they can influence price negotiations. Call a couple regional airlines or stop by their headquarters. Learn the size and weight of your package, as well as its origin and destination, and use this information to your advantage when haggling.
You might want to look into organizations that include e-commerce payment processing as part of their offering.
How to cut shipping costs confounds many business owners. We have discussed a number of tactics in this article that will enable you to focus on business expansion while significantly lowering your shipping costs. In the end, you need to strike a balance and determine what’s best for your company. More importantly, you should be aware that shipping prices are variable and that you will occasionally need to update your projections.