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How Do I Reduce My Shipping Costs?

Posted by Doug Popejoy on Oct 27, 2016 5:30:00 AM

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Shipping is an ongoing headache when you're trying to reduce costs and run your operation more efficiently. Here are some effective ways to reduce shipping costs and improve your delivery systems.

Automate as Much as Possible

Automated shipping can reduce labor costs, improve efficiency and increase accuracy. You don't have to automate everything, but you'll get the best return on investment when you automate as much as possible.

For example, instead of having workers at both packing and shipping stations, you can automate your packing station to handle both steps. You save money and reduce errors by eliminating the shipping station.

Negotiate With Carriers

If you're only using one carrier, you may get a competitive discount for a short period of time, but eventually rates change, and your provider may no longer be as aggressive in the discounts offered. It's a good idea to work with at least two carriers, giving some shipments to one and the rest to the other.

Ongoing competition for your business puts you in a better position to negotiate rates.

Examine Packaging Acquisition

Another way to reduce shipping costs is to look at how you're acquiring your packaging. Many customers use their own packaging, buying corrugated cardboard boxes from vendors. However, there may be a better way. For instance, if you do business with the United States Postal Service (USPS), it will give you boxes for free.

Use the US Postal Service

In general, most companies that ship to residential addresses should check into using the USPS because it keeps the commercial carriers honest. You may also want to consider using a services offered by FedEx and UPS that use USPS for the Last Mile Delivery.

With this method, the carrier transports the package close to its destination and then hands it off to USPS for delivery.

Consider InfoShip

Another way to save money is through a service we provide called InfoShip. This is an application that integrates with your Enterprise Resource Planning (ERP) or Warehouse Management System (WMS) to make sure custom shipping criteria are met.

It automatically shops rates between every carrier, compares services, and reveals which one is the best choice to meet your customer’s specific needs.

Avoid High Dimensional Weight Charges

You can also reduce shipping costs by properly sizing boxes for the products you're shipping using boxes larger than you need can cost you money. Major carriers now rate the dimensions of every package.

They take its actual weight, calculate the dimensions, and divide that by a set value to determine the dimensional weight. Then, they charge you the actual weight rate or the dimensional weight rate, whichever is higher.

Address Packages Properly

A simple way to keep costs low is to ensure packages are addressed properly. Carriers charge very high fees to correct an address, and they typically charge you after trying to deliver the package. Best practices include validating addresses when customers are ordering online or on the phone, and confirming whether a destination is commercial or residential.

Each of these steps will prevent extra shipping charges due to products going to the wrong address.

Consider a Partner

The variety of services and products offered by major carriers is extensive and confusing. It helps to bring in a partner who can look at your entire operation and shed new light on different ways to save money.

Automation is the way forward if your company is looking to save money on shipping costs. It reduces labor, improves efficiency and makes your customers happy.

Topics: Insider