Manufacturers, distributors, and wholesalers have been facing new challenges since the onset of the pandemic. Although supply chain disruptions have eased up somewhat, rising fuel costs, closed shipping ports and labor shortages have continued to present challenges that eat up the bottom line.
Your business must look for creative solutions to reduce costs to stay profitable at a time when margins are so slim. Now we enter the holiday shopping season when the pressure is on to deliver orders quickly and cheaply, but the major carriers are not making things any easier to handle. No matter how bad the economic situation, they manage to squeeze in new rate hikes. Knowing how to handle these unsavory characters is the key to trimming thousands off your shipping costs. To do that, you really need to know how to negotiate with UPS and FedEx or work with a company that can do it for you.
Some of the items you can renegotiate with the carriers are:
- Rate cap
- Additional handling
- Fuel surcharge
- Delivery area surcharge
- Third-party billing
- List rates
It’s not necessary for your contract to expire before negotiating a new contract. Even though there are few major carriers, they still do compete with one another for business and that gives you some leverage to negotiate better terms.
How do you know if you’re overpaying? You may not, but a shipping consultant can let you know. Often, they work on commission (they make a percentage of the money they save you) and they will dig through all your invoices to calculate how much you should have paid. That will give you an idea how much you can save when doing the same volume of parcels in the future.
- Moving forward, you can garner additional savings by comparing rates across the carriers for specific locations using software that gives you a side-by-side comparison of the same sizes and weights.
- Anticipate the upcoming bottlenecks the main carriers will face by staying on top of your own workload. Hire additional people to ensure you can fulfill and ship orders quickly for on-time delivery and happy customers.
- Rethink your shipping policy. Don’t miss out on potential sales lost to competitors who don’t charge for shipping. Today’s shoppers have been spoiled by Amazon and expect to find free shipping everywhere. Although free shipping trims your profits, the idea is you’ll make it up in volume because people won’t back click from your online store when they see fees added for shipping. Be lenient with your return policy for the same reason, but don’t leave yourself open to big losses. After all, half of holiday online shoppers will also be making returns after the holiday.
When the cost of everything is rising and consumers have less to spend as a result, you have to find every competitive advantage you possibly can to be profitable through the upcoming holiday season. More challenges are bound to lie ahead, but you will find it easier to control the operations that occur under your own roof than the chaos that occurs outside of it.