Career Testing
Career Testing
Career Testing
ENTREPRENEURSHIP / AUG. 27, 2014
version 2, draft 2

How to Lower Shipping Costs

Shipping can be a major challenge for small and large businesses alike. Choosing the wrong shipping method or failing to understand international shipping laws can have a severe negative impact on your bottom line. To improve your profit margins, you need to find ways of lowering your overall shipping cost. Here are some suggestions:

1. Ask carriers for discounts

If you regularly receive or ship merchandise, you can negotiate with your carrier for a discount. To enhance your chances of getting such concessions, it would be advisable to become part of an industry trade association. In many cases, such associations leverage on the numbers to negotiate for more favourable shipping rates for their members. Alternatively, you could opt to look for better discounts via a third-party logistics provider. You will need to provide samples of your shipping paperwork for the logistics provider to recommend the best pricing.

2. Consolidate orders

Shipping several small orders separately usually costs more compared to shipping one large order. Therefore, whenever possible, it would be advisable to combine small orders into a single shipment. This will lower the cost of packaging, as well as the overall shipping cost. In addition, it will save on the time required to receive and restock orders. Take time to study your vendor’s shipping guide to establish how you can make savings on shipping.   

3. Use the appropriate service level and mode

Many businesses find it difficult to choose the proper shipping mode for their products. Some of the common modal options include small package, rail, air, ocean, ground, LTL freight and intermodal. When choosing between these different modes, you need to keep in mind the shipment destination, the features and weight of the shipment, the fees required, service needs and damage or loss considerations. Every mode has its own speed, liability protection and cost. Selecting the appropriate mode will not only minimize shipping costs, but will also result in greater customer satisfaction.

4. Change your shipping terms

Taking charge of your inbound shipping can help you make significant savings on your daily freight and small package shipments. Using ‘inbound collect’ instead of ‘prepaid and add’ is a very effective way of lowering your inbound freight costs. This means that you can recommend a specific carrier to your vendor, thus getting rid of any handling charges. Getting the carrier to bill you directly for the shipping charges will allow you to enjoy a discounted rate.

5. Make use of shipping tools

There are numerous free shipping tools online that can help you manage the shipping process more effectively and lower your costs. For instance, the USPS Shipping Assistant is a great tool that can be used for calculating international and domestic shipping costs. In addition, this tool can help you track shipments and standardize addresses.

6. Avoid hidden costs

When it comes to international shipping, you need to beware of hidden costs such as taxes and custom duties. Such costs can end up inflating your overall shipping costs significantly and affecting your bottom line. Therefore, it is very important to discuss with your carrier about all the implications of international shipping. Find out how you can cut costs related to export compliance, custom charges and proof of delivery.

With a little research and planning, businesses can significantly reduce their shipping costs. If you find the whole process too complicated, you could consider hiring the services of a third-party logistics provider.

Image: Parcel

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