How to Reduce Shipping Costs

Rich Harkey

January 21, 2013

Wondering how to reduce shipping costs? It is important to cut transportation costs in order to make your supply chain agile and ensure that your logistics efforts are sustainable. Many small and medium-sized businesses do not always realize the magnitude of cost savings as applied to logistics costs. When logistics costs are streamlined, a savings of even a few fractions of a penny per transaction can lead to extraordinary savings over time. As your logistics operations expand, the measures you put into place earlier in an enterprise’s history compound exponentially.

Luckily, there are many ways to reduce shipping costs and cut transportation costs:

• Align Insurance Costs With Value: Many carriers have created extremely complex plans around freight and parcel insurance. Unfortunately, many of these programs are both inadequate and overpriced. Carriers rely upon clients failing to scrutinize their terms, agreeing to “packaged” services, and failing to develop a process for collecting on a claim when necessary. Third-party insurance services brokered by a logistics consultant can reduce transportation costs while providing meaningful insurance coverage. Likewise, they can streamline the intentionally labyrinthine process of collecting on an insurance claim in the event that a package is lost or destroyed.

• Acquire Strategic Relationships With Carriers: Many carriers have very powerful “brand” recognition that allows them to acquire small and medium-sized enterprise clients with relatively minimal expense. Unless your transaction volume is very high, your business is unlikely to be provided with a dedicated account executive or other features that business customers should demand. Remember that smaller carriers often have significant expertise in the states, regions, or countries they serve. To ensure you get maximum value from a small carrier, use a consultant with an established relationship.

• Maximize Your Existing Carrier Relationships: If you have a smaller firm, you are at an inherent disadvantage when negotiating discounts or initiating other measures to reduce transportation costs. Carriers may not recognize the profit potential of your business or the value that you bring to their book of clients. As is the case when opening the carrier relationship, revising the relationship in your favor can often be accomplished with consultant services. Source Consulting brings clout to the table on your behalf thanks to our ability to steer business to carriers who demonstrate excellence.

• Hold Carriers Accountable for Errors: With a transaction volume in the millions, major carriers frequently make mistakes. In fact, even specialty carriers can make serious errors, and they usually impact the costs assessed to you. Since these charges are clearly erroneous, you are always within your rights to challenge them and can even do so after a significant period of time has passed. However, uncovering them becomes more difficult with time, as does collecting an appropriate refund. Regular invoice audits are a must.

Companies often make the mistake of seeking out cost saving measures with huge impact. While you should expect your measures to yield benefits immediately, it is important to combine both large- and small-scale cost cutting to ensure that you get continuous value over time. Source Consulting can help you with a comprehensive logistics cost saving strategy.

Discover more below:

• Carrier Contract Negotiations Services from Source Consulting
• Transport Costs

Author

Rich Harkey

Rich Harkey is a results-driven professional with extensive experience in the logistics and supply chain industry.

As the Senior Strategy Manager at Lojistic, Rich leverages over three decades of expertise to help businesses improve their shipping strategies and reduce costs. With a deep understanding of the requirements of shippers and the operational intricacies of carriers, he excels in everything from optimizing business rules and managing carrier invoices to negotiating carrier contracts.

Rich's comprehensive knowledge of the logistics industry, combined with his strategic insights and passion for data analysis, has enabled thousands of companies to gain visibility into their shipping expenses, driving impactful results.