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Advanced Strategies to Reduce Your Supply Chain Costs
shipping costs

Affordability is one of the top priorities, making business owners seek various opportunities to reduce supply chain costs. Advanced financial strategies will significantly benefit your shipping budgeting, whether you’re new to transportation or already have experience.

What factors affect shipping rates?

When planning a shipment, it’s vital to consider core principles that influence the rates. First of all, your freight size and specifics determine the nature of a future transit, including the choice of carrier and suitable transport unit. It’s necessary to know the cargo weight, measurements, and features that may dictate unique shipping requirements like temperature-sensitive products, hazmats, fragile items, etc. All these details identify your freight class so that it’s easier for you to get a tailored shipping experience.

Besides, the transportation price is straight dependent on the distance you need to cover and shipment dates. Long-distance shipping sometimes involves multiple carriers, which may result in additional expenses. Even if you need to deliver to remote locations, early booking can keep you from overpaying and let you access a broader range of carriers.

Finally, you need to pay attention to the shipping seasonality. Delivering items in harsh weather or during peak season costs more due to the increased carrier competition and limited capacity. Still, strategic financial management can help you ship at better rates even in high demand for transportation.

How to reduce supply chain costs?

Growing retail businesses are constantly looking for new ways to make their supply chain affordable to ship the goods proactively. Exploring advanced strategies for reducing shipping costs will allow you to expand your customers' audience and deliver their orders more effectively.

Reduce DSO and collect faster

You can reduce your DSO (days sales outstanding) by shortening your shipment's time limits. Choosing a carrier with a fast transit time is essential to accomplish this. Besides the timely delivery, your company will be able to speed up the payment process, so every supply chain member receives their finances with no interruptions.

Finding a carrier with dependable rates allows you to begin collecting right away by offering discounts for those who pay within five days of delivery. You’ll minimize the risks of payment delays, thus shaping and managing your budget according to your plan.

To reach the reduced DSO, you need to know your customers and track their buying interests. You can explore consumer feedback and apply demand forecasting. Subsequently, this method will help you learn what products generate instant payment and kick off shipping operations. Plus, you’ll see what items of your brand seem irreplaceable to your buyers.

Take transit time into account

It is important to consider transportation time and price when choosing a shipping service. If your LTL carrier can provide a faster transit time at a standard or slightly higher cost, you will be able to carry less warehouse stock while improving fill rates. When selecting a carrier, compare the money you have spent and saved to see if you are reducing your supply chain expenses. 

One of the ways to shorten the transit time is the warehousing practice. Try to evaluate the warehouses you might use and see if the price for storing goods looks lower than what you spend covering a part of the entire shipping route. If so, keeping your products in a well-located warehouse is reasonable. The carrier you cooperate with can pick up the freight from a storage space closer to the destination point, thus reducing the delivery terms.

Avoid freight claims

Overlooking a carrier’s claim ratio can cost you money and loyal client relationships. Before choosing the carrier service, thoroughly investigate their damage reduction measures. Verify that the shipper provides sufficient cargo protection and knows to handle various items without damaging them. 

Many carriers offer freight liability that proves their responsibility in case of freight damage on their side. You can also get full freight insurance to keep yourself from unwanted expenses and losing the total item’s value. In addition, insurance facilitates the process of filing freight claims.

Studying carriers can benefit your supply chain and lets you establish long-term cooperation with reliable partners. Also, it can impact your ability to expand sales, earn you referrals, and save you money. 

Using companies like GoShip makes it easy to compare shipping rates and connect with many professional carriers. We’ll help you make the right choice to deliver your goods fast and safely. Check out our digital tool and get a free quote today!