Fortunately, understanding the factors influencing these costs can help you make more informed decisions and potentially lower expenses. We don’t need to remind you about the importance of having a customer-friendly (and budget-friendly) shipping strategy. Let’s explore the factors that affect shipping costs for companies and what you can do about them.
Size and Weight
It goes without saying that the size and weight of a package determine the cost of shipping. The heavier or larger a package, the more it will cost to transport it. Shipping carriers typically use dimensional weight—a combination of package size and weight—to calculate shipping rates. This also includes the pallet or skid that holds packages.
To optimize shipment costs, you can consider using lightweight packaging materials and maximize space within the package. While there aren’t many differences between pallets and skids, a notable one is that skids tend to be a bit lighter, so consider using them. Every inch and ounce you save on shipments will reduce transportation costs.
Distance and Destination
It’s no secret that the further a package travels, the more it will cost to deliver it. This geographical factor directly influences fuel consumption and transportation time, which contribute to the final shipping cost. To mitigate the impact of distance on shipping expenses, you might consider working with local or regional shipping carriers or establishing multiple distribution centers.
Shipping Speed
Everyone wants their shipments as quickly as possible. However, expedited shipping comes at a higher cost, as carriers need to allocate resources for faster deliveries. Thankfully, you can offer speedy shipping without breaking the bank. For example, you could negotiate better rates with carriers, use shipping software to find the best carrier for each shipment, and evaluate your shipping methods to find optimal shipping times.
Package Insurance and Tracking Services
Shipping providers usually offer additional services, such as package tracking and insurance, for an extra fee. These services are essential for dealing with valuable and/or fragile items. However, while added costs may seem insignificant on individual shipments, they can quickly add up and become a financial burden. Carefully consider whether your clientele requires these services, and if so, explore different package insurance options to find a cost-effective way to provide them.
Carrier Fees and Surcharges
Some carriers have extra fees and surcharges based on factors like package type, destination, and delivery time. Additionally, fuel prices and labor costs can directly affect how carriers calculate their fees. Fortunately, your company can avoid this shipping cost factor due to the existence of multiple shipping companies to partner with. Keep an eye out for extra fees from your shipping provider, and try to negotiate better terms or find a new partner altogether.
Image Credit: WavebreakmediaMicro
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