Minimising Shipping Costs

Are you a business that deals in large quantities of inventory?

If you are then you are well aware that transportation costs can have a significant impact on the profitability and growth of your business. Transport costs can be a total mystery for many business owners. With so many different freight products, classes, and constantly changing costs it can be very confusing.

There is little doubt that it is prudent to plan for cost spikes. There is one obvious strategy to reduce the financial burden of transporting your inventory. That is to reduce freight costs on a day-to-day basis. We have brought together seven strategies that we know will help you to unlock cheaper and more reliable freight.

1. Shop around

When it comes to freight and shipping there are plenty of companies out there to choose from however, it is all about finding the right one that works for you and your business. Consider all the large corporations you know, they are very competitive, especially in their pricing. So, with that in mind don’t be afraid to shop around, research other independent freight companies, ask other business ‘who do they use?’.

Also, while you’re on the hunt for a great shipping partner don’t feel like you can’t ask for discounts. Most often freight companies may offer discounts to those sending out large quantities of freight regularly.

2. Be mindful of your Packaging

Packing freight more efficiently is one of the easiest and most straightforward ways to reduce your costs. Space occupied is typically a key factor that businesses take into account when setting freight rates.

Reducing the dead space in your freight will almost always result in lower rates. It is worth bearing in mind that dead space in your packaging may increase breakage or spoilage rates. We know that the rule of thumb is to always reduce the amount of damaged stock. Therefore, we highly recommend taking immense consideration when packing your freight.

3. Shipping less regularly can save you money.

Quite often, shipping in bulk is less expensive. You will find that you can ship the same volume of products in multiple, smaller consignments and it will cost you more. You will find that bulk customers get cheaper rates because carriers can load a container more efficiently as less time is needed for loading. This is because instead of the carrier having to process, load, and unload a number of customers’ shipments it has fewer if they are all bulk shipments.

On the other hand, regular shipping requires your customers to carry a larger quantity of inventory. It may be that they will have to take much more than they immediately need which can incur inventory carrying costs. You may need to consider a small reduction in price or otherwise slightly better terms as a bit of an incentive.

4. Agree to ship a fixed volume

Larger businesses often turn to standing capacity to reduce transportation costs. So, what does that mean exactly?

It is when a business agrees to regularly purchase specified space with the carrier. He does this in exchange for discounted rates and preferential treatment. It isn't an option that suits all businesses. Small businesses may find it out of reach however it can prove to be a great option if you regularly ship products between fixed locations. It comes in particularly handy where demand for transportation spikes. Having standing capacity can save you from paying significantly higher prices.

5. Have a Look at Shipping off-peak

This again is an option that isn't right for every type of business. However, unless you’re in the business of supplying perishable goods, there is no need to pay for on-peak shipping. From time to time, customers who have implemented just-in-time inventory control will require on-peak delivery, but at their own expense.

Shipping on off-peak days can quite often create significant savings. Backhaul shipping, where carriers attempt to fill empty trucks heading back to base, can further reduce expenses. If you ship significant volumes, consider contacting carriers based in destination centres to see whether they have any backhaul capacity availability.

6. Do you offer a local pickup option?

If your customers are local, it may be that you can save considerable costs by arranging a pick-up service. If customers think they will save a few dollars and it isn't far out of their way, they may be more than happy to arrange a collection. It can be quicker than waiting for a courier and is at their convenience.

7. Offload the cost to the customer

You might find that you are incurring a large sum of shipping costs to accommodate your customers however this method may not be viable for the long term. At the rate of shipping costs increasingly getting higher perhaps you might consider offloading the shipping cost to the customer. We know that not everyone will appreciate this discussion so perhaps an agreement can be made. Common agreements include splitting the shipping cost 50/50, incur a minimum flat rate cost that every customer has to pay, or depending on the distance of a customer and weight of a package, a percentage of the freight cost must be contributed by the customer.

We hope that these ideas will contribute to your business growth and allow you to be more profitable. If you would like to chat to us about the options we offer to clients regarding bulk orders then please email us at info@mobilesourcegroup.com.au