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Reducing Expenses: The Best Ways to Cut Shipping Costs

shipping containers

Customers are becoming more demanding as online ordering becomes the default option and that sets a challenge for your business in terms of providing a fast and efficient delivery service without eating into your profit margins or charging too much and losing out to a rival business.

Here is a look at some of the best strategies for cutting your shippings costs and streamlining the process so that you can deliver on your promises and get the goods delivered to your customers quickly at the lowest possible shipping cost.

Negotiating with carriers

You might face a potential dilemma when it comes to negotiating rates with a partner carrier and nailing down a great rate for your shipping costs as the best deals are often heavily influenced by volume.

In simple terms, the more packages you are looking to ship the lower your rate is likely to be.

Even if you are a small business and you are not currently shipping large volumes of parcels on a daily basis that doesn’t mean you can’t try to negotiate a keener deal than the first price offered to you.

If you get quotes based on current and projected future volumes from at least two or three carriers this not only gives you the chance to compare the prices and choose the best one, you can also point out that a rival is vying for your business and see if they will better the rate offered.

When you are shipping perishable or hazardous items you will need to negotiate a solution for transporting these items safely and you can get more information at www.clsmith.com/packaging-solutions/ibc/ for a better insight.

In general terms, whatever it is you are shipping and even if you are still building up a volume that gives you greater buying power, you should be able to negotiate a lower price if you pitch a couple of carriers against each other and challenge them to beat the other on price.

Use your suppliers to boost the numbers

Another useful strategy to consider that will help keep costs down is to encourage your suppliers to use your shipping account number.

There are two distinct advantages to working with your suppliers in this way.

Firstly, it helps to increase your shipping volume and that can drive the price down overall. Secondly, it gives you a much closer control over suppliers shipping costs and helps to ensure that you are not being overcharged by your supply partners.

Getting your suppliers to work with you in this way can give you tighter control over all aspects of the shipping process, including costs and administration.

Flat-rate is a good solution

You will find that all of the major carriers all offer a flat-rate shipping option and this is something that is well worth considering for your business.

One of the obvious benefits to your business is that you are fixing a cost for shipping across a wider number of shipments which can potentially reduce your shipping costs by as much as 15%.

Many of the carriers will provide flat-rate boxes at no extra cost, which increases the savings when you are spending less on packaging materials. Experiment with different sizes to see which option works best for the type and size of products you are shipping, then strike a fixed-rate deal based on what sizes and delivery zones are relevant to you.

Upfront savings

Another cost saving idea that should be on your radar is to consider prepaid shipping.

How this works is you agree to buy a specific quantity of shipping labels upfront at a discounted rate as opposed to paying for each package as you send it out.

It is not uncommon to be able to slash as much as 20% off your shipping costs by paying up front in this way. This option tends to work best when your shipping requirements are fairly standardized and you regularly send out parcels of a similar weight and size.

Shop around for insurance

It is the shipping add-ons that can often eat into your margins and insurance is a classic example of that.

Carriers charge an average of about 80 cents or so for every $100 of insurance cover they provide. You need that insurance to cover for items that get lost or damaged in transit but you can often find an alternative insurance quote that is not built into the shipping fee that might be anywhere up to 50% cheaper.

Don’t take the carrier’s insurance deal as the default option until you have checked whether you can get a better deal elsewhere.

If you follow some of these strategies you should be able to cut your shipping costs and offer a keener deal to your customers. Plus remember your customers are also keenly assessing their experience with your business after delivery i.e. your post delivery follow up and brand promise.

Sebastian Holloway has learned how to cut costs in his business. He started out working from his kitchen table at home, before expanding into a smaller, then larger, warehouse. He shares his tips on shipping, packaging, websites and more in his articles.

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