Even in ordinary times, shipping costs make up a significant portion of a business’s expenses. However, when the COVID-19 pandemic disrupted supply chains, shipping costs worldwide skyrocketed. According to McKinsey, shipping a container from China to Europe costs up to six times more now than it did at the beginning of 2019.
Despite these challenges, businesses, whether small companies or large corporations, can still lower their shipping expenses and thus mitigate the impact of rising rates on their bottom line. Read on for five ways to reduce your shipping costs.
1. Monitor Your Shipping Volume
If your contract includes volume-based discounts, avoid losing them by making sure your volume matches your tier. By regularly monitoring your volume and keeping within spending minimums, you can ensure that you always qualify for these discounts.
However, doing so can be challenging, as your shipping volume is likely to fluctuate over time. Using software or an intelligence platform can help make keeping track of expiring discounts much easier.
2. Audit Your Carrier’s Invoices
Some shipping companies offer on-time delivery or your money back. If the carrier you have a contract with offers this kind of guarantee, it will be worth your while to audit your invoices. A parcel audit will identify late deliveries, empowering you to alert your carrier that you are entitled to a refund.
You can also uncover the following during an audit:
Duplicate bills
Because of the high volume of shipping invoices, it’s possible for carriers to make a mistake and submit duplicate bills. Often, these bills have different reference or tracking numbers, making duplicates hard to spot. Carriers will typically issue refunds for bills paid more than once, but businesses should be proactive and identify duplicate bills before payments are made.
Missing discounts
Like any other business, shipping carriers are not immune to committing errors. It’s possible for a carrier to apply the wrong discount to an invoice or neglect to apply it at all. An audit will help you determine whether the correct discount rates were applied per the terms in your contract with the carrier so you can avoid overpaying.
Rate Errors
Possible invoice errors include incorrect base rate, product classification, mileage, and weight. These errors, if left unidentified, can end up costing you. However, an audit will alert you to any inaccuracies in your invoices so you can request an adjustment or refund from your carriers.
A parcel audit takes hours or even longer, depending on the number of invoices you receive. What’s more, carrier invoices can be several pages long, making errors difficult to spot.
A software-assisted audit crunches your shipping data to pinpoint opportunities to save on shipping costs. It will identify overcharges, outsized line items, and other errors that translate to credits or refunds from your shipping carriers.
3. Watch Your Discount Expiration Dates
Losing discounts, due to expiration or because shipping volume no longer matches your tier, can significantly increase your shipping costs. For this reason, it’s essential to keep track of shipping discount expiration dates as well as your shipping volume.
4. Monitor Your Shipping Agreements
Annual rate increases, surcharges, and other changes to your shipping agreements can result in skyrocketing shipping costs. Actively monitoring and managing them helps you avoid these pitfalls and help you make better shipping decisions.
However, keep in mind that manually monitoring your shipping agreements is a time-consuming, labor-intensive task. Because of the complexity of these agreements, there is a considerable risk of human error. Using an automated platform that can analyze shipping agreement data and alert you to any changes is a much better option.
5. Negotiate With Your Carrier
It’s possible to negotiate better rates with your shipping carrier, but a lot of research, data collection, and analysis is required before you sit down to the table. Information you’d need to have include the frequency at which you ship products, how much tonnage you ship, proof of on-time payments, your freight description, and the freight class ratings you ship.
Once you’ve collected all the necessary data, you can either arrange for a meeting with your account manager at your carrier or send requests for proposals (RFPs) to several carriers so you can compare rates and offers.
At Reveel, we have extensive knowledge of and experience in carrier agreement negotiations. Our team will guide you throughout the process, identify what you can negotiate, and help you get the best deals.
Save Money on Shipping Costs With Reveel
The team at Reveel is composed of former sales executives and pricing analysts from UPS, DHL, and FedEx. As such, they’re uniquely positioned to help businesses like yours navigate the complexities of parcel shipping. We offer an easy-to-use platform powered by advanced data analytics that allows businesses to identify and make the most of opportunities to save on shipping costs. To learn more about our solutions, reach out to us today.
