Saving on shipping doesn’t have to be difficult. If you’re not ready yet to negotiate a new contract, start by claiming your refunds. And if you’re not in a position to move distribution centers, try optimizing your packaging instead.
Here are 10 easy steps companies can take to cut back their shipping costs.
1. You’re Not Using Packaging Provided By Your Carrier
This is an easy one! If you use packaging designed and provided by your carrier, you’ll dodge surprise surcharges for oversized packages. In some cases, carriers price only by actual weight and not by dimensional weight if shippers use their packaging. Contact your carrier to find out what their policy is.
And remember, if you use the U.S. Postal Service, Priority Mail boxes are always free with their Flat Rate shipping — reduce shipping costs by not paying for shipping materials when you don’t have to.
2. Your Box Is Too Small
If a particular product doesn’t quite fit into the box it’s supposed to fit into, the box may bulge slightly. Believe it or not, carriers will charge you for that extra inch.
For example, perhaps you ship a 13x13x13 box. That package has a billable weight of 16 pounds under current UPS and FedEx shipping rates. But if the package scanner measures 13x13x13.5, the carrier will round the bulging side up to 14 inches. That drives billable weight up to 17 pounds increasing your total cost.
This is an avoidable mistake! Use your carrier’s packaging, or size your boxes up slightly so you’re not taken by surprise.
3. Your Box Is Too Big
Then, of course, there’s the opposite: Perhaps you’re shipping small items but trying to use up large boxes for these orders. Because carriers bill by dimensional weight, you could be paying for a package much larger and heavier than the product you’re actually sending. Plus, you may be risking oversized package surcharges.
If box size isn’t something you can change right now, then reconsider the experience you give customers when they receive their orders. Unboxing experiences are very trendy right now. Can you enhance box-opening for the end customer without further increasing your costs?
4. You’re Using The Wrong Transportation Service
The “Amazon effect” — a near-universal expectation of free two-day shipping or even same-day delivery— has led many shippers to believe they need to ship by air for packages to arrive on time. That’s not true! Ground shipping can often reach nearby zones in the same amount of time and can rapidly reduce costs.
5. Your Fulfillment Center Is Too Far Away
Make a mental map of your biggest customers. Ideally, they should be within a few hours of your key distribution centers so you can quickly complete shipments by ground. If they aren’t, your distribution centers may not be located in the best places.
Moving warehouses is an expensive undertaking, especially for a home-based business, but if your distribution centers are too far from your customers, you and your team should have a discussion about creative ways to cut distribution-to-customer shipping costs.
6. You Don’t Monitor Billing Errors
Carriers make mistakes all the time when they bill shippers. They mix up residential and commercial customers, charge you for address correction fees that aren’t your responsibility, mix up dimensional and actual weight and mark packages delivered when they weren’t.
This isn’t a criticism of carriers — human error is common to all of our industries. But that’s all the more reason for shippers to review their invoices and make sure they’re correct.
7. You Don’t Collect Refunds
Most carriers offer surprisingly generous refund policies, including that if shipments are even a minute late, shippers can claim a full or partial refund. The key is that companies have to claim these refunds. Many don’t — it’s a difficult, lengthy process. But these refunds can add up to thousands of dollars in savings.
If you decide to prioritize filing these claims, take of carriers’ specified delivery time guarantees — they’re the easiest to monitor and claim. Be aware of blackout dates when these guarantees don’t apply. Carefully document your findings and submit them. It’ll be worth it.
8. You Don’t Know Your Data
Knowing what you ship and where it goes is the first step in reducing shipping charges for all aspects of your company’s shipping profile. It’s essential to know how much your packages weigh, how big they are, which zones they ship to and whether those customers are residential or commercial. Leaders who know those numbers can quickly understand how changes to shipping rates or accessorial fees will impact them, and make the changes necessary to avoid them or mitigate their impact.
9. You’re Not Negotiating Your Contract
Carriers set “fixed costs” in a way that seems ironclad. It’s almost the opposite. Everything is on the table in negotiations — l large package surcharges, minimum package rates, base rates and other variable costs. Most shippers simply don’t ask.
This is another reason knowing your data is key. That information can reveal which of your carrier’s policies most impact your bottom line, and what changes could save you the most. Once you know your data, you know what to target in your next negotiation to reduce costs. And if you need backup, Reveel can help you prepare.
10. You’re Not Auditing Your Invoices
Invoice auditing is another ongoing practice that — for shippers who can implement it — can result in long-term savings as well as data-gathering. Find out what your carrier billed you for and make sure it matches your records. Then start a database of what you shipped, where it went and how much it cost. After a few months, you’ll have a vast store of records that reveal inefficiencies and points for negotiation.
Reveel offers a free invoice audit for shippers who want to reduce their shipping charges but aren’t sure where to start. Call today to set up yours.
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