How to save costs with shipping carrier optimization

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If logistics and transportation costs are taking up a large portion of your operating expenses, you're not alone. But the good news is that there are many ways to cut down on shipping charges and improve your bottom line. Here's how you can save money with shipping carrier optimization.

Audit Your Inbound Freight

If your suppliers are shipping "freight prepaid," you may be paying a 10-40% premium and state sales taxes on freight charges. These extra costs are sometimes referred to as “freight allowed” or “freight included” and may be buried in your overall product cost. To avoid these hidden expenses, audit your inbound freight periodically to ensure inbound supplier compliance.

Standardize Outbound Routing

Do you know if your employees are picking the cheapest, fastest, or most convenient option when they choose carriers? To better control cost, you should establish standard criteria for selecting carriers. Then, operationalize the procedure by using a web-based transportation management system (TMS) with a network of pre-qualified carriers so your team can quickly compare rates and find the best option for each shipment.

Reduce the Number of BOLs

You can combine multiple orders into one shipment to create larger volume and more cost-effective loads while reducing the number of bills of lading (BOLs) you generate each day. This can be achieved by increasing intra-company transparency and using the right technologies to better manage shipment requirements across the organization so you can optimize cost-saving opportunities.

Use a Non-Asset Based Shipping Carrier

Compared with using an asset-based carrier (which owns some or all of the parts of the supply chain,) working with a non-asset based carrier often gives you more flexibility thanks to a less biased approach to lane or trucking selections. It allows you to take advantage of a zoneless pricing model so you don't incur surcharges when product volume increases. Also, the interests of a non-asset based third-party logistics are often more in line with its customers' priorities.

Use a Carrier with Zoneless Pricing

A zoned approach to pricing means you need to sort through every parcel and determine the rate for every package. This process increases the time, labor cost, and complexity of the logistic process. Besides saving time and money, zoneless pricing also helps improve your business forecast's predictability so you can be in better control of your expenses.

Combine or Pool Shipments

Combining shipments saves costs by moving shipments into an alternative, less expensive shipping mode. You can also use multimodal shipping services and logistics solutions to leverage pooling opportunities that combine your shipments with other deliveries to reduce overall cost.

Increase Lead Time

More lead time allows your logistics provider to secure the best carrier and equipment for your load and lane, identify opportunities to improve efficiency, and negotiate rates. Include ample time in your workflow to plan for pick up, staging, and loading so carriers can reduce idle time, lower costs, and pass the savings on to you.

Leverage Backhaul Discounts

A carrier incurs expenses if a truck travels back to its home base unloaded. Many carriers offer a discount to customers for shipments that are headed back to their bases or the next pick-up destinations. Your logistic service providers can help you negotiate backhaul credits or targets with carriers so you can get additional savings.

Choosing the Right Shipping Carrier

You can save more money with shipping carrier optimization when you partner with a provider that offers the flexibility you need to implement the above tactics. A carrier that uses advanced technologies to automate shipping arrangements and streamline package delivery can lower costs while improving your processes' reliability and speed.

X optimizes the connection of in-motion supply chain assets with their network of warehouses, local delivery services, etc., to help your customers find the most cost-effective shipping methods and delivery routes. See if X is right for you.

Author Bio

Pete Hillowe is the Head of Marketing at the #1 shipping carrier for high-growth D2C brands called X Delivery, and is responsible for planning, budgeting, and managing all marketing stakeholders. In ecommerce he has helped open and grow several key national brands online with a roster of 1,500+ Shopify Plus merchants. Before that, he was at 23/7 Global working on mobile fan club technology, global merchandising/ecommerce, and experiential marketing campaigns growing the company from $2MM to $20MM in annual recurring revenue. At HomeAdvisor he was a top sales rep and team lead. Before that, Pete founded a record label; and two ecommerce brands as well. He has an MBA from Syracuse University and a BA from the College at Oneonta.

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