8 Tips for Minimising Shipping Costs

Does your business deal in big inventory and large deliveries? If so, then minimising shipping costs will be a top priority to maintain healthy profit margins and continued business growth. For many business owners in Australia, transport costs and how they’re worked out can be a mystery in itself, and with so many freight classes, products and constantly changing prices, shipping costs can be downright confusing.

You need to find ways to reduce shipping costs on a daily basis and this article provides some timely tips on how to achieve just that.

1. It pays to shop around

While there are loads of freight and shipping companies out there ready and willing to offer you their services, you need to find one at the right price that’s a good fit for your needs. That’s why it always pays to shop around first.

Don’t just look at the major freight companies either. Research smaller, independent shipping companies, as these companies may offer more competitive prices and be willing to go the extra mile to secure new business. You can also ask other business owners with similar operations to yours which freight company they use.

If you’re shipping large quantities of freight regularly, you might be able to negotiate cheaper prices due to the sheer volume of work you’ll be providing.

2. Pack freight more efficiently

One of the simplest ways to reduce your shipping costs is to pack your items more efficiently to both save on space and reduce the overall weight. The more space your packages consume, the more they will cost to send.

Often, there is a lot of free space surrounding packed items. Reducing this dead space will result in lower freight charges. This can result in massive savings over the long-term if you’re shipping many items. Ensure items are still packed securely when reducing any free space so no damage occurs during transit.

3. Ship less often and save more

Rather than regularly shipping out deliveries daily, it’s more cost-effective to ship in bulk. Bulk shipping rates are invariably cheaper overall than the sum total of sending out smaller consignments more regularly. Being able to pack freight containers more efficiently in less time when bulk shipping results in lower transport costs for you.

If you’re a wholesaler who is shipping products to a retailer, first discuss bulk shipping with them. Can they handle a larger inventory or will bulk shipping increase storage costs on their end? Using the savings you receive on bulk shipping, offer your clientele a slightly better deal on the product. This way, everyone wins.

4. Consider fixed volume shipping

While this option certainly won’t suit all businesses, it is something to look into if you want to minimise your shipping costs long-term.

Fixed volume shipping involves agreeing to purchase specified space with a freight company on a regular basis. Why would you do this? Because you can negotiate discounted shipping rates as well as preferential treatment (your shipments will receive top priority). This is a great option if you regularly ship products to the same locations. With standing capacity, you’ll avoid paying higher prices during any demand for transportation spikes too.

5. Ship on off-peak days

With some freight carriers, certain days or times of the week are off-peak times when you can save on shipping costs. If you’re not supplying perishable goods, then this could be a good option for you.

You can save a lot of money on transport costs if you allocate most of your shipping to off-peak times. Also, if the transport company is doing backhaul shipping (also known as backloading), this provides another opportunity to reduce costs. Backhaul shipping is where transport companies attempt to fill empty or near-empty trucks that are heading back to base.

6. Offer a local pickup option

You can save money on transporting goods if you offer a pickup service for local customers. Simply incorporate a system where customers can arrange an appropriate time to collect their order directly from your premises.

You won’t need to pay any delivery fees and customers will feel like they’re getting a better price by picking up the order themselves, rather than paying extra for shipping. It’s also faster and more convenient for the customer this way, as they won’t have to wait on the scheduling of the freight company.

7. Offload the cost of shipping to the customer

If you’re not already charging the cost of shipping to your customers, it might be time to change tactics if you want to lower your freight expenses. Shipping rates are always on the rise, so offering free shipping just won’t be sustainable in the long run.

If you haven’t been charging freight fees to your customers to date, they may baulk at the idea that they’ll suddenly be incurring shipping charges. To ease the burden, start off by offering a 50/50 split on the freight charges, with a view to all customers being responsible for freight costs from a given date in the future. Another option is a simple flat rate freight cost for all customers.

8. Sell products that are smaller or lighter weight

You can reduce your shipping fees by switching to selling products that are smaller in size and/or lighter in weight. When calculating transport costs, freight companies take into account both package size and weight volume in most cases, so if you introduce lighter and more compact items to your inventory, your overall shipping bills will go down as a result.