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As you will no doubt be aware as a business owner, prices are going up, and this trend doesn’t seem to be slowing down in the slightest. The price of everything, from luxuries to the bare necessities, is on the up, and that means that, without some needed adjustments, profits will be on the down. If you’re a business that relies on shipping, you will have noticed a significant increase in the cost of that too. The rising price will take its toll when you book incoming shipments to replenish your stock or schedule outgoing shipments to distribute your goods to customers. The fact is, shipping costs are soaring and prices are rising around the world. It may feel like there is no escape from this trap of overspending, that the closing margin between expenses and sales is unavoidable. However, you’ll be glad to know that in the area of shipping, there are steps you can take and measures you can put in place to reduce costs. In this article, we’ll consider why costs are on the increase and what you can do to cope with it.
Why Shipping Costs Are Soaring
There really is a rich tapestry of reasons why shipping costs are going up. The covid-19 pandemic was the first challenge that struck the trading market. Workers had to stay at home with sickness, truck drivers were unable to cross borders due to health restrictions, and the surge in demand from all of those customers stuck at home flooded the supply chain.
In the 18 months that followed March 2020, the cost of shipping a container across the trade routes of the transoceanic scene increased seven-fold. The pandemic is not the only event to have an impact on shipping challenges and the resulting inflation in prices.
The war in Ukraine is expected to make things a whole lot worse. Interestingly, around the world shipping costs are found to be one of the main drivers of inflation. The effects of rising shipping costs are not short-lived either and tend to last for many months to come. Recent studies suggest that the inflation caused by rising shipping costs will only continue to grow through the year 2022. As the unrest in Eastern Europe develops, this will no doubt cause disruptions to the supply chains of the world which will continue to drive up prices.
The truth of the matter is that costs are rising and as a business owner you have very little to no control over the factors that are driving them. In fact, one business owner in the UK admitted that rising shipping costs are proving to be “exceptionally challenging.” There’s nothing any individual can do that will stop the chain reaction of global events on the economy. So, is it completely inescapable?
How to Tackle the Problem
The good news is that although you can’t control the world, you can control your spending when it comes to shipping. It is possible to reduce shipping costs without compromising on shipping quality, and by lowering shipping costs you are sure to improve your profits. With this in mind, let’s consider a few specific things you can consider as viable cost reductions.
#1. Don’t be afraid to negotiate
With a little initiative and self-confidence, you can make the most of the wriggle room that is always present, even if it’s just a small shipment. See if you can get yourself a good deal on a specific rate, like flat-rate shipping. This option means you pay the same flat rate for the same size box, regardless of the weight. This option could save you a lot of money if you ship heavy things of the same size. Do some research and shop around with different couriers to get yourself the best rate.
#2. Think about the packaging
There are a few elements to consider when it comes to changing up your packaging.
Size and weight. Take accurate measurements of the size and weight of all your products. Record all the dimensions you take for large, heavy, small, or light items. When you provide accurate dimensions and weights, you have a chance of significantly lowering your shipping costs as, most often, the less something weighs the less it costs.
It’s a great idea to calculate dim weight. DIM, or dimensional weight, is the formula that many couriers utilize when working out the cost of shipment depending on the volume of the package. You can use a DIM calculator to work out the cost of sending something according to its dimensional weight and compare it to the cost of sending it according to its actual weight.
Sometimes it works out cheaper, sometimes not, but it’s a good option to try. It’s most useful when sending large, lightweight, or fragile items. If you choose to use this method, it’s good to pack the item in the smallest box you can find with the most lightweight filler you can use.
Less is more when it comes to packaging – try and use as little as you can and when you need to use, use small and lightweight materials. Light, protective materials like air pillows and bubble wrap are not only light but also provide the security you need to send items you want to arrive in one piece! If you’re shipping smaller, lightweight items, use a padded envelope or returnable plastic bag. These are cheaper, tougher, quicker than boxes, and easy to brand too. If shipments are guaranteed, consider buying packing materials in bulk as that will reduce the cost in the long term too.
Recycling and reusing packaging materials doesn’t just save the planet, it saves your pocket too.
Cutting Costs in a Time of Inflation
Reducing expenses in an attempt to boost profits is no easy feat, but with the right tools and the right information, it may not be as impossible as you think. By applying some of the suggestions provided, you can reduce the cost of shipping and channel that money into growing your business.