Businesses face a difficult problem. 

On the one hand, they need to keep costs in check. This undertaking is only made more challenging by rising costs across the board.

On the other hand, they need to deliver a quality service, and it must be consistent. This means meeting consumer expectations, following through on promises, and delivering goods on time.

Prioritizing one of these outcomes can negatively impact the other. So, what's the solution? Educate yourself on key drivers and learn how to reduce shipping costs using technology and route optimization—not cutting service corners.

This is your guide to cost-effective shipping solutions that lock in trust-winning, loyalty-building delivery services.

What Are the Common Drivers of High Shipping Costs?

Before you can lower shipping expenses, you need to know what the causes of your high shipping rates are. Logistics is complex, and there are many moving parts. High shipping fees might also depend on your industry and any special requirements or regulations you are subject to.

However, you can't execute a shipping cost reduction initiative without addressing the following:

  • The cost of fuel. Oil prices continue to rise, with growth expected to steepen as a result of global conflicts.

  • Shipping carriers' fees. Inflation rates have been climbing, and labor costs are up. This, in addition to fuel costs, has forced many carriers to increase their fees.

  • Inefficient routing. Whether due to a lack of technology or a limited network, some carriers send goods via routes longer than necessary. This demands more fuel, which, in turn, pushes costs up. It's the opposite of efficient logistics.

How Can Businesses Optimize Their Shipping Routes for Cost Efficiency?

You want to reduce shipping costs. At the same time, you want to continue delivering a five-star service to your clients. Here's what you can do:

Negotiate Your Carrier Contracts

You might be able to secure a more cost-effective shipping solution by simply asking for one—particularly if you have a long-term relationship with your shipping carrier.

Carriers don't want to lose you as a customer. If you are unhappy, any professional carrier will hear your concerns and collaborate with you to shape a shipping services contract that meets your specific needs.

Here at SEKO Logistics, we put our customers first. We believe that by delivering the most efficient logistics service on the market, we can help businesses like yours meet their service objectives while maintaining their profitability.

Here's how you can approach the negotiation:

  • Know what you want before conversations begin.

  • Be clear and upfront with your carrier.

  • Be realistic about what you can expect.

  • Prepare yourself to give something in return. For example, you might secure a discount in return for extending your contract.

The benefits of getting this right are far-reaching. You avoid the hassle of changing carriers and ensure your delivery services stay consistent.

Use Technology to Reduce Shipping Costs

Technology can help you lower shipping expenses. It can achieve this outcome while not just maintaining but bettering your service quality.

For example, solutions like transportation management systems (TMS) and automated logistics platforms give you 360-degree visibility. You can track your goods in real-time, leverage data to make smart decisions, inform your clients should any delays occur, and identify and mitigate bottlenecks.

These advantages can change the game for your operations—they will minimize shipping costs and more. However, not all carriers have access to the latest logistics innovations. At SEKO, we do. That's why we are able to deliver a truly cost-effective shipping solution with a service second to none.

Understand the Impact of Packaging on Shipping Costs

Packaging is often overlooked. However, making small changes can result in significant shipping cost reductions.

Branding, for example, is an added expense. While you might think branded packaging is important to your customers, this may not be the case.

Another issue is dimension and weight. You don't want to put something small inside a large package—in this case, you are paying to ship an item much larger than the actual product. In addition, oversized packaging puts the goods at risk of becoming damaged, as there's a greater chance of movement en route. Damage incurred may result in a returned item, which then needs to be processed and potentially restocked.

Make your packaging as cost-effective as possible by:

  • Removing branding

  • Choosing boxes that are an appropriate size

  • Including padding to mitigate the risk of damage

  • Avoiding special-sized boxes where possible

What Are the Challenges of Reducing Shipping Costs?

What stands between you and the cheapest way to ship?

  • A carrier that lacks the technology needed to reduce costs and improve quality

    • Overcome this by: Using lack of technology as a starting point to negotiate your contract. Alternatively, switch to a different carrier.

  • A carrier is unwilling to negotiate your contract

    • Overcome this by: Weighing the costs and benefits of moving to a competing carrier.

  • Inefficient logistics that fail to use tools like AI and data analysis to map the route of your delivery services and track order fulfillment status

    • Overcome this by: Implementing your own tracking system where possible. You could also ask your carrier whether they have these tools in their future development pipeline. If so, when can you expect them?

How SEKO Logistics Achieves Cost-Effective Shipping with Quality

This guide has shown you how to maintain quality shipping for less. But you cannot do it on your own. You need a partner who is committed to lowering shipping expenses as much as you are.

At SEKO, we negotiate with carriers on your behalf to secure the best rates available. We leverage a global network to build optimized routes that get your goods to your customers faster and use less fuel. We believe in the potential of technology and invest in the latest innovations. Our automated systems anticipate and solve problems before they escalate so you avoid costly outcomes.

You get all the benefits of a five-star carrier without the exorbitant costs. Plus, quality is our guarantee. Get in touch today, and let's discuss your needs.