Reduce Your Freight Costs

Reduce Your Freight Costs

Small businesses are constantly looking for ways to save money, and shipping is one area where you can control the costs without skimping on quality. Follow these tips from experts on how to trim the fat from your shipping budget:

Get to know your rep

Shipping representatives help negotiate rates, answer questions and make the process easy for small-business owners, says Peter Gasca, a contributor to Entrepreneur magazine. Develop a mutually beneficial relationship with your rep; he or she can be a valuable resource and may help contribute to the success of your company.

Consider flat-rate shipping

All major shipping companies offer flat rate options, which helps keep costs somewhat consistent, Gasca says. Shipping companies set flat rates by zones, or the distance the package travels. Ask your rep for more information about flat-rate shipping and whether it’s the right option for your business.

Compare shipping rates

Whether you’re looking to switch carriers or not, it always pays to compare rates, Gasca says. If you have a good relationship with your existing rep, you may be able to renegotiate a new agreement with lower rates.

Use their equipment

Most major carriers can provide software and equipment for your company, including computers, printers and scales, Gasca says. Depending on your volume and what you negotiate, many will provide it at no charge or find ways to help subsidize the costs.

Manage your supplies

Compare rates between small and large packing-supply companies, Gasca advises. The larger ones can typically ship within a day and may offer volume discounts as well as incentives for large orders. But don’t overlook the smaller companies; they may offer even bigger savings.

Use packaging provided by your carrier

If you use your own packaging, you could face additional “dimensional fees” if your box exceeds the size regulations set by your carrier, says Jane Porter in an article for Entrepreneur. Instead, consider using the packaging provided by your carrier, which doesn’t have dimensional fees.

Consolidate your accounts

Shipping rates are often based on volume, so ship as much product on your account as possible — inbound and outbound, Gasca says. When possible, ask your vendors to ship product on your account, which many will do. This also eliminates any markup you may be paying on that cost. You may even want to include this shipping requirement in your purchase order, Porter says.

Look for shipping refunds

If your carrier fails to meet their delivery guarantees, you are entitled to a refund, Gasca says. Package auditing companies can manage your account and provide refunds in exchange for a percentage of the money recovered, he says.

Factor in all shipping fees before billing customers

Carriers have various accessorial charges, including fuel surcharges and after-hours delivery fees. If your customers pay for shipping, include all these extra costs in their bills, Porter says, so you don’t end up absorbing them yourself.