If you ship freight in 2021, then you know that shipping rates are out of control. Why? In short, Covid-related shipping delays, extremely high inbound freight volumes, and logistical complications both inside and outside the nation’s ports have caused an unprecedented capacity shortage.
These factors place the power to negotiate better rates squarely in the hands of freight carriers. Fortunately, there are 7 things you can do right now to reduce your shipping rates, and make your supply chain more cost effective.
How to Reduce Shipping Rates
There are many high-level adjustments you can implement to make your supply chain more cost-effective over time, like shipping automation, or a lean supply chain model, but those are unlikely to save you money in the short haul.
Ship Closer (Reduce Shipping Distance)
One thing you can do right now to reduce shipping rates is decrease shipping distances. In fact, you could start saving money today if you were to employ a fulfillment service with a large network of warehouses to ship from. The closer the warehouse is to your customer, the lower your shipping rates will be. A shorter distance also makes it easier to keep an eye on shipping status and transit time.
Ship Smaller (Reduce Shipment Weight and Dimensions)
Shipping heavy/large items costs more than it does to ship lighter/smaller items. Shippers can reduce their shipping rate by reducing the dimensions and weight of their shipments.
Use Discounted Packaging and Supplies
Shipping companies like USPS, UPS, and FedEx often provide small businesses with certain boxes and envelopes for free or at a discount for certain packing supplies. Shippers can also purchase packing supplies like boxes, dunnage, bubble wrap, air-fill, and poly mailers in bulk to save even more.
Seek Out Discounted Shipping Rate
Ecommerce giants like Amazon and Target ship so much, with so many carriers, that they often negotiate tremendous volume discounts that are impossible for smaller shippers to win on their own.
Shippers should be on the look out for any shipping deals that are available through their eCommerce platform or shipping software. Similarly, if the products you ship require insurance, you may be able to get lower rates through a third-party than through the carrier directly.
Try Prepaid Shipping
If your shipments are consistently the same rate, then prepaid shipping can offer up to 20% off shipping costs if you purchase a certain number of shipping labels upfront. This also works if you know the exact weight and dimensions of your shipments well ahead time to ensure accurate shipping costs.
Liaise with Suppliers
Most eCommerce merchants know that liaising with their suppliers can help them reduce shipping costs. Some suppliers will even ship products by using your own FedEx account number, which increases your shipping volume and in turn, gets you cheaper rates. This practice additionally eliminates the need to pay extra shipping costs for each of your consignments.
Negotiate with Carriers
Every carrier and shipping service provider employs its own unique pricing schedules, which are mostly based on the volume of shipments. If you ship often, try negotiating lower rates with multiple carriers and see which one works best for cost savings for your business.
Employ Region Carriers
Regional carriers offer the same services as major carriers like UPS and FedEx but at significantly reduced prices. The only difference is that their delivery network is limited, as they only operate within a small geographic area, but this can be a good option if your deliveries are within their region.
Avoid Additional Fees
There are over 75 charges that could apply to each of your shipments, including Saturday delivery fees, fuel surcharges, and signature fees. If the shipping cost is on your customer, make sure this is included on their final bill, or you’ll be forced to absorb them.
Outsource to a Fulfillment Center
Unless you’re an industry leader like Walmart or Amazon, a third-party logistics provider is likely going to employ a larger carrier base over a larger geographic footprint than your current operation.
With a network of fulfillment centers, a platform like Flowspace can deploy different inventory volumes to different warehouses across the country and choose the fastest, most cost-effective delivery method for you, and your customer, no matter where they live. Contact Flowspace today to get started.
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