Shipping & Transportation News

Small Businesses Cope With Rising Shipping Costs

With ever-soaring fuel costs and rising shipping rates, many businesses may find their profit margins shrinking, even as production increases. Many small businesses use e-commerce as a sales channel in the start-up stages, but with the recent rise in shipping rates, owners are looking for ways to reduce shipping costs and increase profits.

In-House Strategies

• Compare services and pricing for each carrier on common shipping requirements. Factor in delivery time as well as shipping costs; customer satisfaction is higher when delivery times are shorter. Eventually you’ll gain a picture of what shipping criteria is best serviced by which carrier and service level. For example, FedEx^® Express has overnight and 2-day delivery options for small packages, but if your shipment is heavier (more than 10 pounds) and isn’t under strict time constraints, it might be more cost-effective to use FedEx^® Ground service.
  
  
• Postage meters are an inexpensive way to save time and money for companies that either ship very small lightweight products or for which shipping is a smaller portion of their overall product delivery. A postage meter will weigh packages accurately, assess precise postage charges and print the shipping label. By taking the guessing out of shipping estimates, both your company and your customer will be satisfied, and shipping overages will be eliminated. However, it’s important to keep in the mind that while this method can lower costs, you may be sacrificing other benefits. By using FedEx, services such as tracking, delivery confirmation, delivery signature, and liability are included in the price. USPS charges extra for these services and it can end up costing you more.

Outbound Shipping Solutions for Larger Volumes

• Consolidating your outbound orders into less-than-truckload (LTL) freight shipments (more than 200 pounds) could save you significantly on shipping. If your company has multiple products delivering to the same customer, it might make sense to consolidate them into one shipment and use an LTL freight carrier like UPS Freight or YRC Freight. You’ll pay quite a bit less than parcel or express service, and your liability coverage will be much better as well should there be any loss or damage in transit.
  
  
• Work with a third party logistics (3PL) company. If you don’t have the time or resources to figure out which carriers and services are best for your shipping volumes, a company like PartnerShip can handle the logistics for you and often negotiate a better overall shipping rate for you.

Inbound Shipping Costs

• Small business owners may lump their inbound freight costs into the cost of goods, but poor inbound freight management can severely impact your gross profit margin. Review every vendor invoice for hidden fees. For example, some vendors inflate their “Shipping and Handling” fees to compensate for lower priced items.
  
  
• Send routing instructions to your vendors specifying which carriers you want them to use when shipping your products. When you determine how your goods are shipped instead of allowing your vendors to make that choice, you have a greater opportunity to lower your shipping costs. For extra tips on controlling your inbound costs click here.

Small businesses must continually adjust their practices to survive and grow in today’s tough economic climate. Adapting to rising shipping costs and implementing strategies to keep your costs in line are things your company can’t afford not to do.