Shipping costs are a significant factor that can directly impact a company’s profitability. Controlling these costs requires a strategic approach and attention to detail. Here are seven practical methods manufacturers and distributors can implement to lower shipping expenses.
1. Ensure Accurate Shipments and Addresses the First Time
While it may seem basic, shipping the correct products to the correct address is critical to avoiding costly mistakes (for more on this, discover what dreaded shipping errors can cost you). Implementing proper procedures, such as double-checking orders and validating addresses, can minimize errors. If a full-scale wireless warehouse management system or barcoding solution is not feasible, assign specific personnel to verify shipments against original orders before they leave the facility. This simple step can save significant costs associated with shipping errors.
2. Negotiate Rates with Carriers and Diversify Shipping Partners
Invest time in negotiating with your current shipping carriers and explore options with alternative providers. Gather data on your shipping volume, shipment types, and service requirements to strengthen your bargaining position. Rates can vary significantly based on location, shipment frequency, and other factors, with some comparisons revealing up to a 37% price difference. Broadening your carrier network ensures more competitive rates and options.
3. Compare Rates Across Carriers and Automate Processes
Rate-shopping tools can simplify the process of finding the best shipping rates. These tools allow team members to compare rates in real-time and automate processes such as label printing, packing lists, and documentation. Streamlining these tasks reduces manual errors and improves efficiency, saving both time and money.
4. Offer Cost-Effective Free Shipping Options
If your business provides free shipping, avoid using the most expensive shipping methods. Many companies optimize costs by leveraging carriers that collaborate with USPS® for last-mile delivery in specific areas, offering significant savings. Clearly communicate available shipping options to customers, including faster delivery for a nominal fee, to provide flexibility while controlling costs.
5. Consolidate Shipments and Optimize Packaging
Combining multiple orders headed to the same destination can reduce shipping expenses. Additionally, evaluate carrier pricing structures that consider box size rather than weight for potential savings. In some cases, waiting to ship a full truckload instead of partial loads can yield cost advantages. Carriers may also offer incentives for bulk shipments, such as leaving containers for daily pickup.
6. Explore Local Carriers and Alternative Resources
Local shipping providers often offer competitive pricing and personalized service. Additionally, investigate options such as airline cargo pricing for potential savings. Before partnering with a new carrier, research their track record to ensure reliable delivery and maintain customer satisfaction.
7. Collaborate with Customers on Shipping Terms
Open communication with customers about shipping costs can lead to mutually beneficial arrangements. Many customers understand the importance of managing expenses for long-term profitability. Discuss options such as using their shipping accounts, freight rate markups, or other predefined shipping terms to balance costs and service expectations.
By implementing these strategies, manufacturers and distributors can take control of their shipping expenses while maintaining high levels of service and efficiency.
About DCSC
DCSC Inc. helps distribution and manufacturing companies with ERP (Acumatica), Shipping, and Supply Chain Solutions. They are also the developers of DCWarehouse© Automation (a WMS and Shipping Software built in the same toolset as an ERP Package called Sage 500). If you are looking for a technology partner to help take your operations to the next level, they’d love to talk to you! Their down-to-earth team has decades of industry experience, and their customer relationships are the real reason for their successful track record. Visit www.dcsccorp.com to learn more today!
