How to Reduce Shipping Costs: Are You Sabotaging Your Freight Spend?
09/27/2018 — Jen Deming
Shipping expenses are one of the top expenditures for most businesses, which comes as no surprise because it can be extremely challenging to determine how to reduce shipping costs. So far in 2018, US companies spent 6.2% more than they did year-over-year, totaling a record $1.49 trillion in shipping- related expenses. Many common shipping practices sabotage a business's ability to get ahead by protecting their bottom line. What are some important mistakes to avoid when figuring out how to reduce your shipping costs?
It's not always what's inside that counts.
Proper packaging is critical in helping to reduce shipping costs. We are all familiar with the risk of damages - used boxes that have holes or older labels still attached are asking for trouble. Make sure you are using the correct type of packaging materials for the product that you are moving. If you have more than a few boxes, it's a good idea to palletize all of them together, and wrap with shrink wrap. Freight shipments are loaded and unloaded at several terminal stations in route, and palletizing can keep them from being separated or lost along the way. It's also critical to use the right size packaging to help shippers reduce shipping costs. Make sure you are packaging your product with enough space inside to include proper cushioning, but not so much as to allow room for shifting or that make it difficult to handle - a carrier will charge for that too.
You are clueless about your customer's location.
Are you aware whether your receiver has a dock? How about a forklift? Are you delivering to a school, church, or another hard-to-reach area or location that risks being designated as "limited access" by the carrier? Will a 53' dry van be able to maneuver around that location? In addition to that, are hours of operation restricted for pick-ups or delivery? Every one of these variables can make a delivery potentially more difficult and more damaging to your bottom line due to costly accessorial charges. Keep in mind, the more difficult it is to get the delivery completed, the more you need to be prepared for additional fees. Planning ahead and knowing exactly what your carrier will charge for any additional services will help keep your shipping costs where they need to be.
Assuming that delivery estimate is a guarantee.
Shippers have to keep in mind that the estimated delivery day is just that - an estimate. Just as with your everyday postal service provider, business days are those included in a work week - weekends and holidays are not included. A more reliable measure to figure out shipment delivery is to take a look at transit times. When scheduling with a carrier, be sure to ask for this rather than relying on the estimated delivery date. That way, you know if your 5 day freight transit picks up on Monday, and an unexpected storm kicks up along the way, a 1 day transit delay actually results in a Monday delivery. Keep things safe by factoring in a couple extra buffer days when communicating to your customer. If you are truly in a crunch, shop the different expedited service options among different carriers, but be aware anything last minute will cost you, especially as weather worsens as we head into winter and the holiday crunch. Avoiding last minute rush shipments is always the quickest way to reduce shipping costs.
It's about 500lbs...ish?
The old adage, "measure twice, cut once" isn't just a cute lesson in being diligent - it's a very important rule for shippers to live by. Guessing just doesn't work in an industry where being a few pounds or inches off can potentially double your freight bill. Carriers check weight and dimensions once, twice, and once more just for fun with calibrated scales every time your pallet is picked up by a forklift at a terminal. If the weight of your shipment doesn't add up to what's on the BOL, you can pretty much rest assured you will be billed for the difference. If you've already quoted your customer and billed them on shipping you estimated based on inaccurate measurements, you're playing a risky game. Be sure your warehouse scale is calibrated and reset often. If you don't have a large enough commercial scale at your place of business, measure each component of your load (including pallets) and add them up. Be as thorough and as accurate as possible to avoid any surprises.
Handing the reins to your vendor.
You may love your vendors, but lots of businesses take for granted the cost- cutting potential that's available by managing their own shipping. If you are able to do so, it pays to take a look at what carrier and service your vendor is using to deliver your freight and take control of your inbound options. Some carriers have more competitive lanes in certain regions, while others may offer additional options and less expensive fees for extra services your business may require. If you are responsible for your inbound freight costs, it's worth it to put in the time to measure which carrier and service really work best for you. The additional responsibility doesn't have to be a headache, either. By working with a quality 3PL, you can make sure you are using the correct carrier, correct service level, at the most competitive price. It's a surefire way to be sure you are reducing your shipping costs where you need to.
Figuring out how to reduce shipping costs starts with some simple best practices. Double checking your specs, being knowledgeable about your transit and locations, and researching carrier options help keep you prepared and proactive about avoiding higher freight costs. When you are stuck or simply need some experts on your side, PartnerShip can help make sure you are setting yourself up for success. To speak with a specialist to learn more about where you can cut your shipping costs, call 800-599-2902 or email sales@PartnerShip.com.
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