Keeping your commercial shipping costs low has always been important, especially if your business relies on a high volume of incoming and outgoing deliveries. With inflation and sticky supply chain issues over the past few years, finding ways to keep costs down and the lights on is even more difficult to track down.
While this guide isn’t exhaustive, we put together some of our favorite strategies to save money on commercial shipping. But before we get into that, let’s discuss what goes into shipping prices and what factors affect cost.
Common Factors for Commercial Shipping Costs
It’s true that different logistics companies will have their own list of factors to consider when calculating shipping costs. However, there are a few universal factors that every logistics company will account for.
- Distance: the most obvious factor with shipping is how far the goods will travel; the greater the distance, the higher the cost.
- Volume and Weight: physical weight and volume (also known as dimensional weight) affect shipping costs as well; the more space something takes up and how much it weighs will increase its costs.
- Cargo Type: not all cargo is the same, especially if it’s perishable, hazardous, fragile, or requires any other special treatment in transit.
- Mode of Transportation: delivery trucks aren’t the only way packages move from point A to point B; transloading shipments with a mix of planes, ships, trains, and even drones will affect shipping costs.
- Fuel Costs: no matter what you’re shipping or how, it all uses fuel to move; any change in fuel costs will affect shipping costs as well.
- Tariffs: if you plan on shipping internationally, you might be subject to tariffs, depending on what you ship; tariffs also change depending on current laws, market demands, and general politics, either raising or lowering the cost depending on the sitting governments’ goals.
- Insurance: ideally your shipments will arrive safely without any problems but that’s not always the case; purchasing insurance is its own cost associated with shipping which is also affected by the number of goods, their type, and what transportation you use.
What are the Best Strategies to Save Money on Commercial Shipping?
As the world returns to normal after the past few years of the pandemic, economies and businesses have been rocked with supply chain issues and inflation. Trying to save money anywhere is important – doubly so while maintaining the quality of service for your customers who are also trying to get by.
With that in mind, here are a few of our best-suggested strategies to keep your commercial shipping costs down despite the chaos of today’s market.
Shop for the Best Rates
It’s true that trying to find the best shipping partners can be overwhelming, but you shouldn’t be afraid to compare rates between different carriers and services. Even if you have a longstanding relationship with your current carrier, researching shipping rates regularly and exploring new modes of transportation and shipping strategies can help you negotiate better deals with them.
One helpful tool is the Online Shipping Calculator which can compare shipping rates across some of the most popular carriers so you can choose which one is the best for your budget.
Leverage Economies of Scale
If you’re unfamiliar with the term, economies of scale references the inverse relationship between the cost of producing (or, in this case, shipping) something and its quantity. In other words, because of our world’s focus on mass production and transportation, the more of something that’s made or moved at once, the cheaper those costs usually are.
You can apply economies of scale to your advantage to save money on shipping costs. For instance, try to consolidate your shipments into as few as possible while also using larger containers to ship to make consolidation easier. Moreover, consider using different types of transportation: it might be more cost-effective to fly a large shipment than send it by rail or truck.
Streamline Your Shipping Process
In the same vein as economies of scale, find ways to make your shipping process more efficient. This can be accomplished by reducing handling (and their associated costs) and speeding up delivery (allowing you to sell more in the same amount of time).
You can also save money and time on your shipping process by choosing the right kind of packaging for your products and sizing your packaging correctly to avoid excess dimensional weight fees.
Use of Technology and Automation
Living in the 21st century has its perks; there seems to be an app for everything and if one doesn’t exist already, there’ll be one soon. There are plenty of digital tools and solutions to help further streamline your shipping processes.
Supply chain management software, for example, can increase your warehouse and shipping visibility, collecting and analyzing real-time data to show you statistics such as delivery times, order accuracy, where every product is within a warehouse or shipping vehicle – the list goes on. If you aren’t sure where to start, there are plenty of logistics partners that offer automated supply chain management solutions to help bring your company up to speed with the latest tools.
Review and Negotiate Shipping Contracts Regularly
While it’s always preferred to develop a trusted relationship with your logistics partners, don’t shy away from reviewing and renegotiating carrier contracts regularly. If you find that you’ve been shipping more than usual over the past few years, you might be able to negotiate better discounts using economies of scale with your provider.
Of course, there might be a few new competitors who’ve popped up since you last negotiated a logistics contract that offer better rates and services. This gives you more choices to find the right solution for your business and leverage renegotiating costs with your preferred partner.
Lower Your Commercial Shipping Costs with UCanTrade
Shipping costs are inevitable, but paying way more than you should doesn’t have to be. At UCanTrade, we pride ourselves on helping our partners and customers find the very best options to ship their products, no matter the size of their business. If you’re interested in learning more, reach out to us today and we’d love to help you save money on shipping.