When you own or operate a business there are two major concerns that drive profitability. The first is increasing revenue. The second, and equally important, factor is controlling expenses. Any industry that produces tangible products has to cope with shipping costs eating into the bottom line. Here is what you need to know to control shipping costs in four easy steps.
Know package sizes
Whatever you manufacture has a size and shape. The physical dimensions of your product may not match cost-efficient shipping sizes once you package it for your delivery service. A product shaped like a cube or brick probably matches a standard shipping box used as a metric by your courier. A product shaped like a fully-assembled fishing rod probably doesn’t.
Your goal is to examine your products to determine their actual volume and then match it to an appropriate shipping container. If your product is malleable, like a T-shirt, you can get creative in how you fold it before packaging it for delivery. The same concept applies for items that can be shipped in disassembled form. Arranging the parts creatively allows shipping in much more compact containers.
It’s like loading a home dish washer. If the plates are arranged neatly you can fit a lot more of them in a single load than you can if they are arranged haphazardly, or if you try to load them all in a single-file line. The size of the dish washer compartment remains the same, but the load it contains can improve with proper organization.
If the product is uniform in size it can be advantageous to pack large amounts in a single container. Imagine a log truck. A great many logs are stacked in the back of each truck rather than shipping each tree trunk individually.
This is important because shipping companies can charge by volume. If you minimize the wasted, empty space in your packages you will pay less to deliver your products.
Know product weights
While shipping companies can charge by volume they can also charge by package weight. Many, in fact, use both systems at once. If a package fits a particular container but exceeds a certain arbitrary weight limit a business pays more for delivery. It’s just as important, then, to know the weight breakpoints of your delivery service and how they compare to the weights of your goods when packed for delivery.
If you have very heavy products you will find it advantageous to work the numbers and determine if you would save money shipping the heaviest products together at a volume rate, or to ship assembled products in multiple boxes. You’ll have to examine all the possible combinations to find the most cost-effective one.
While doing the arithmetic can be tedious it’s absolutely worth the trouble to find the places you may be over-paying for shipping. Every dollar saved is another dollar in the black on your balance sheet.
Know your market
For any given industry there is a range of acceptable delivery times for its products. It’s important to keep a current understanding of that range because the faster you’re your delivery service brings products to their destinations the more they will charge you. Unless you sell a product that is in urgent need, or perishable, you can comfortably deliver it anywhere within the acceptable range for your industry.
The one exception flips the coin for a moment and addresses revenue. If speedy delivery is one of your competitive advantages and selling points you should maintain that differentiation from other businesses. Saving a few dollars on the expense side of the equation is useless, or even harmful, if it reduces your competitive advantage and causes you to lose revenue.
Know your shipping company
Every major delivery service has a service department dedicated to assisting business clients. The staff members in these departments are deeply familiar with their company’s offerings, breakpoints for package size and weight, routes, and more. They know how to configure your delivery service contract for maximum efficiency. They often have web sites, like this one at Purolator, providing a great deal of information on how to achieve that efficiency. The reason shipping companies invest so much effort in this is simple:
They want your business.
Shipping companies are competing for your business just as you have competitors in your market. There are many shipping companies, but only one of you. They know you can shop around and, because they are businesspeople too, want to make their shipping company as attractive to you as possible.
That means calling them and spending some time with one of the shipping company representatives is valuable to you. Their efforts to demonstrate how efficient they can be translate directly into reduced expenses for you and your business.
Package your products with volume and weight in mind. Choose the right delivery timing for your products. Deal directly with a shipping company’s business service center. You’ll get your products shipped and delivered for less money, increasing your bottom line.