Always source to multiple shipping companies
Ok, we start with an easy one: there is no single “best provider.” Despite what you may read out there, the cost of your shipments relies heavily on location, service level and size. Yes it is true that for certain types of shipments you may find a clear winner (e.g. USPS often has bare bones international rates). However there is no standard and it depends on how well you negotiate your rates (more on this later). Accounts are free to setup, so there is never an excuse to not consider all your options.
Here are the links to each company’s registration page:
Find technology that manages accounts/rates
If you do more than a few packages a week, and you should use a web application to help you manage your shipping accounts, labels, tracking, rates, etc. I personally recommend Boxton’s Parcel Solution, because of course I helped build it. It’s designed to consolidate and manage accounts across providers for the occasional shipper, but it’s certainly not the only option out there. Stop using excel, stop going to multiple websites to check pricing (or one because you are short on time), and stop going to the Post Office every time you need to ship something!
Automate your mailroom
Mailroom processes don’t usually get a lot of attention. Often times companies set up some sort of manual process whereby employees submit requests to get something shipped, go the mailroom to drop off the required forms where someone in the mailroom has to manually enter this information back into a shipping system. Self-service is the name of the game here. Your employees should be able to request and track their own packages through an automated process and they should have access to ship on your company accounts with the proper controls in place!
This will save you money, so much so that I wrote a whole blog on Why Your Mailroom is a Major Opportunity for Cost Savings.
Connect with a GPO
Group Purchasing Organizations (or GPOs) often times offer highly discounted rating programs for carriers such as USPS, FedEx, and UPS. Often times for free, or minimal cost, you can get access to rates that are 30-50% cheaper than standard. You just need to find the right one that aligns with your company size and shipping patterns.
Hire a Company to Look for Clawbacks
Many customer agreements have rebates (or penalties) for late/delayed service. Even if you don’t there is also MANY situations where the rate you agreed to with your carrier is not the rate you end up getting charged (happens all the time). Unless you love pouring through invoices at 3AM, go get yourself some tech or services firm that will audit your invoices for you. Many will work for a % of the savings they generate – so your risk is minimal.
I’ve would recommend a company called Reveel Group to anyone looking for these types of services.
Make sure you’re considering multiple modes
I touched on this previously, but it’s critical that you are considering the right modes of transportation for bulk freight. And this means that your logistics providers can help you run numbers based on different options. A common pitfall is to align with a single carrier that may have great trucking rates, but when you need Air or Ocean, you’re out of luck. Be sure that you have good visibility into all of your options through a well managed bid process.
Manage scope changes
Freight shipping is complex. It’s not uncommon that things change during the shipping process. Items may be much heavier than expected, special equipment may be needed to load a truck, and sometimes unexpected delays occur due to normal business activities. All of these things have cost impacts – some driven by the customer (yes, you), others driven by your shipper. What’s important here is that you need to have a process in place to review AND APPROVE any scope changes as soon as they are known. And you need someone on your team who can take an honest look at any additional charges and determine the root cause, and who should pay. The answer is not always the customer, and good shipping companies will understand that and work with you.
This is a time saver, not a money saver. Many businesses I speak with will go to their local post office whenever they have small packages to ship. It’s easy and there is a piece of mind in having an expert to answer questions. However, shipping is not hard, and when you have any regular amount of volume, for a small fee (usually less than $15), all major carriers will come pick up packages directly from your office. In this case you obviously will need a parcel management system to prepare your package, but once you have that be sure to save yourself the annoying trips to ship.
Restrict Service Level Access to Employees
In today’s on-demand workplace it’s not surprising that people expect everything quickly. This applies especially to deliveries, and even more so when it’s on a company shipping account. You would be surprised how much money major corporations lose because employees choose Next Day Air options for non-critical shipments. Do yourself a favor and put a process in place to restrict out service levels, or at the very least add an approval workflow. This can range from a simple spreadsheet, to actually implementing workflows in your account management tool. However you do it, just make sure you have the right controls in place, or else it will cost you.
This may be obvious, but it bears mentioning: shipping via ocean transport is MUCH cheaper. The difficulty is that you need to have long lead times to accommodate. It’s not always possible to have enough advance notice (usually 20-30 days) to take advantage of this method, but if you find yourself always shipping AIR, especially for international orders, then this is something you need to look at.
Ask for longer delivery times
In today’s Amazon-esque world, everyone wants their products now, or at least in 2 days, and with free shipping. In the world of LTL and FTL shipping there is no exception. When you ask your forwarder for a quote, they may (reasonably) assume you want it there as fast as possible, or at least at an average service level. Sometimes this means there may be service levels that are a few days slower, but much cheaper. Be sure to ask!
Alright this one is arguably not much of a cost saver. Courier services are when you need something there ASAP, often with white glove level service. This literally means you may have a single person deliver your package end to end with it never leaving their sight. This is obviously not cheap, but it’s an extremely valuable service, and the loss/damage rates are significantly lower than normal shipping (because after all, someone is literally carrying your package). So from a normal operational perspective this should be the exception, not the norm, HOWEVER keep in mind that service interruptions or late products can often cost much more than a Courier, so make sure you keep a provider in your arsenal of suppliers. Or use Boxton (have I said that enough yet?).
Bid out your bulk freight
At Boxton, we’ve built an entire business around providing technology to make the process of building out freight shipments easy and effective. So there’s a lot we could cover here (and if you’re interested you should CALL US), however suffice it to say the one take away is that you should always bid out your freight requests to multiple providers. Forwarders are like airlines in that they all have areas of the world, and modes of transport, that they are strong in, and areas they are weak in. You need to be considering multiple partners for every shipment if you truly want to get the best pricing.
Consider an annual RFP Process
If you ship the same product (or relatively the same products) from Point A to Point B over and over again, then you should be getting a discount based on volume (assuming you meet a reasonable threshold). This is very predictable logistics work, and if the volume is high enough, shipping companies will be eager to lock in this consistent freight. Consider conducting an annual RFP process to evaluate different vendors and discover which one is right for you.
Ship multiple packages at the same time
Did you know that if you ship multiple packages at once that certain carriers will give you a discounted rate? The catch is that the packages have to have the same From and To location, so this only works with recurring shipments. But nonetheless save yourself some cash and stop breaking up your shipments.
Watch out for upcharges
Did you know that carriers charge for requiring a signature on a package? It’s often only a few dollars, but if you start doing this regularly the cost can add up. There are plenty of other services that carriers offer (e.g. pickups), most of which have a value when used properly. All of which are easy to forget about, especially when they just get billed directly to your account. Keep an eye out for these and make sure they’re not being overused, especially in situations where whatever you’re sending is easily replaced.
Shipping is never free
I get this a lot when talking to potential customers: “oh we don’t pay for shipping.” It’s usually in the context of manufacturing, and what they are really saying is that they have no idea what they’re paying because shipping is built into a larger cost bucket. Bulk shipping is expensive – regardless of your size, expertise or relationships. So unless your manufacturing is raking in huge profits, so much so that they honestly don’t care about the price of shipping (which is not common), then you are paying for shipping – you just don’t know how much. Ask your vendors to break out your shipping costs and consider bidding that work out to multiple providers to save big!
Centralize your shipping activities
A huge reason why companies spend a lot on freight is because their employees don’t have a way to get adequate help. Sure, your core product may get a lot of attention, but what happens when marketing is shipping fixtures to every Wal-Mart in the Northeast? Who is reviewing your IT freight for inbound infrastructure? These questions often get answered by the non-logistics team members in the respective area of the business, and through no fault of their own they are not likely going to reach out to your logistics team for help. Instead, you need to provide them with a central platform they can use to request freight, get help tracking, and deal with issues.
Validate Your Addresses
This is exactly what it sounds like – make sure your addresses are correct. Companies charge $5 or more when you ship to bad addresses, or worse, packages will get returned and then you have to deal with angry customers. Address validation should be built into any software you’re using (if not, come talk to us).
Ok, this one’s a duh, but it’s worth its own section. Your shipping costs can decrease 30% or more by planning ahead just 3 days! I swear. Of course this is not always possible, but you may be surprised how many times last minute shipments get sent out when the product or items were ready for days. This also means tackling the processes that get in the way of being efficient. If it take 3 days to get a PO approved, and this causes you to have to ship Next Day Air then fix your PO process!