While economies throughout the world appear poised for a strong recovery, shipping companies still face significant supply chain disruptions and bottlenecks. Demand for product deliveries continues to surge even as the global pandemic recedes. The Port of Los Angeles logged its busiest month ever in May, handling more than one million shipping containers. As this record volume of cargo overwhelms dock workers, truckers, warehouses, and railroads, supply chain companies struggle with costs associated with delays, rising inflation, and a shortage of shipping materials and capacity. It now costs around $10,000 to bring a refrigerated container from Italy to New Jersey, double the rate before the pandemic.
To stay competitive amid these difficulties, supply chain companies can implement a variety of best practices for reducing shipping costs.
Negotiate with Multiple Shipping Carriers
In the frenetic rush to fulfill consumer orders, companies may sometimes feel forced to contract with the first available carrier. This can result in unnecessary expenses, as all shipping rates are negotiable. Giant retailers like Amazon often command shipping discounts because of their sheer volume of orders. For smaller companies, however, negotiating with multiple carriers is a proven strategy for reducing shipping costs.
Companies should invest in the time it takes to get quotes from multiple carriers and familiarize themselves with those carriers’ operations. Offers from one carrier can be used as leverage for talks with another carrier. Another consideration is that different carriers will have a wide range of capabilities, best suited to some companies but not others. A carrier that relies heavily on a trucking fleet, for example, may not be the best fit for company seeking shipping discounts on cross country railroad lines.
Buy Third-Party Insurance
Companies that ship goods to consumers may want to buy insurance to protect expensive products. This can be particularly important if just a few lost shipments significantly impact a business’s bottom line. Given the current supply chain disruptions and delays, shipping insurance is a wise investment.
Buying third-party insurance can be key to reducing shipping costs. Shipping carriers usually charge significantly more than third-party insurers. Companies should consider purchasing shipping insurance through third-party insurers such as Cabrella and ShipSaver, as saving even just a few cents on every dollar can add up quickly.
Reduce Package Dimensions and Shipping Weight
Companies should avoid paying for unnecessary dimensional weight, or DIM weight, which is the amount of space a package occupies in relation to its actual weight. Carriers generally base their charges on DIM weight or the actual weight, whichever is greater. Efficient packaging is key to reducing shipping costs.
Whenever possible, packages should closely fit the size of the products being shipped. For products that are not fragile, like clothes, companies can consider using flexible poly mailers, which take up much less space than boxes and generally result in cheaper packaging costs.
Reducing overall shipping weight also reduces shipping costs. Carriers charge more for heavier loads, while companies that manage their own fleets will pay higher fuel costs to get these heavier loads to consumers. Businesses can reduce shipping weight by using lighter shipping materials, such as lightweight pallets.
Durable, recyclable, plastic pallets are up to 35 percent lighter than wooden pallets. This results in more product shipped by weight per load, and greatly reduces both fuel consumption and greenhouse gas emissions from a vehicle fleet. As this greenhouse gas calculator demonstrates, using lightweight plastic pallets is both better for the environment and can help lower a company’s Total Cost of Business (TCOB).
Supply chain companies continue to face significant delays and bottlenecks in their efforts to meet surging consumer demands. Companies that implement best practices for reducing shipping costs can stay competitive and profitable in an emerging post-pandemic economy.
Companies that prioritize reducing shipping costs use pooled iGPS plastic pallets for all their shipping needs. Our lightweight, durable, plastic pallets help lower fuel expenses and reduce your Total Cost of Business. For more information, contact us at 1-866-557-0047, email a specialist at [email protected], or visit our contact page.