Let’s face it, shipping costs have been out of control since 2020, and both ecommerce retailers and the third-party logistics (3PL) warehouses that serve them have felt the added pressure to maintain profitability. Regardless of which of these groups you belong to, you’ve had to contend with things like…
… just to name a few.
But there is relief in sight, if you are willing to act now.
Don’t believe me? Let’s find out why this is the case and what you can do to take control of your shipping costs.
The law of gravity also applies to parcel pricing. Sort of.
Large rate increases are still happening, and surcharges continue to increase and become more complex. But carrier pricing power has weakened—meaning lower rates can be negotiated compared to a couple of years ago. Unfortunately for shippers, this won’t last forever, which is why now is the time to cut shipping costs.
The bad news is that cutting shipping costs can be hard. The good news is that there is a long list of ways to do it (which can also be bad news if you don’t know where to start). Rather than just giving you a list, we have distilled it down to two of the most effective ways to cut shipping costs: building a carrier mix and negotiating parcel contracts.
There are more delivery providers in the market than ever as well as dozens of ecommerce shipping apps and fulfillment software options featuring automated rate comparisons, like Small Parcel Suite in Extensiv's 3PL Warehouse Manager. Whether you need coverage in a certain region or are looking for a cost-effective lightweight carrier, there are plenty of carriers to choose from—and tools to inform your choices. This is another reason why now is a great time to cut costs by building a carrier mix... But having too many choices (and so little time), isn’t that great.
Potential areas of savings include:
Lightweight residential: There are many cost-effective options here, but be sure to consider changes to delivery speed.
Local next day: This volume segment is often overlooked, but there are many options that can offer savings (compared to UPS or FedEx Ground), provided you can sort and segregate the volume.
For shippers, parcel contract negotiations have been far more ‘give’ than ‘take’ over the last few years thanks to the new era of parcel shipping brought on by the pandemic. But—due to weakened demand, excess capacity, and the proliferation of carrier options—we are now in a shipper’s market. It’s time to take it back.
If only it were that simple. Parcel contracts are complex, and you'll have to do plenty of prep work before jumping into carrier contract negotiations, including:
Of course, if you don’t have the expertise and/or time to do this work yourself, help is available; there are plenty of parcel consultants that can do the heavy lifting as well as advise on negotiation strategy.
Once you’ve done your pre-negotiation homework, follow these tips to generate cost savings results:
If this seems a little light on details and you'd like to hear the nitty gritty about how to cut shipping costs, you’re in luck.
In a recent webinar hosted by Extensiv, I led a deep dive into strategies for slashing your shipping costs, including optimizing your carrier mix and using powerful negotiation tactics to secure the best rates. Whether you're a retailer or 3PL, this webinar will equip you with the essential knowledge and techniques to take control of your shipping expenses and drive significant savings to your (or your customers’) bottom lines.
Missed the live event? You can find “Shipping Hacks 101: The Time is Now to Cut Shipping Costs” and other webinars covering the top fulfillment trends and insights from industry experts and thought leaders in Extensiv’s resource library.