5 Ways to Cut Shipping Costs

In these tough times with surging fuel surcharges and carrier rate increases, many shippers are left scratching their heads as to how they can save money. Here are five tips to help keep your shipping costs in check.

Know your shipping contract
There is no one shipping contract alike, each contract is typically customized for your particular business, so be sure you fully understand your contract. There are 3rd party logistics companies that can help you with this as many contracts can be very difficult to understand – they might also help you negotiate, but it’s always in your best interest to fully understand your contract.

Regularly review your shipping contract
Both UPS and FedEx promote their annual rate increases, but keep in mind these are typically just averages. When you review the various zones and rates for the different package weights you ship, the increases could be much higher than what is being stated. This can add up significantly when compounded year after year.


Beware of surcharges
Smaller shippers or those new to the industry may not realize they are being charged additional fees such as DAS (delivery area surcharge), residential (residential delivery surcharge), address corrections, dim (dimensional weight fees) and the big one these days – fuel surcharge. Most of these fees are also different for ground service and air service, so familiarize yourself with the surcharges.

Understand what you ship
Knowing the types of packages you ship and the services you use will help you to better understand how you are being charged. This in turn can help you determine where you might make changes to positively impact the bottom line. For example, shifting packages to ground service vs. air service when possible, especially for closer zoned destinations. You might assume air is faster, but for closer zones you can typically ship ground and get it there just as fast (sometimes faster), and for significantly less cost.

Negotiate, Negotiate, Negotiate!
Every contract is negotiable, so take advantage and negotiate. Keep in mind, rates are not the only items in your contract that are negotiable, so be creative and look to negotiate the ancillary fees and surcharges as well. In the end you may not get the rates you were hoping for, but this could easily be offset by negotiating a different part of the contract, for example obtaining a fuel surcharge discount, annual rate increase cap, or securing a rebate structure… If you aren’t negotiating your shipping contract, you aren’t getting the most for your money.

Kim Silva is operations team leader for
Fairytale Brownies.