Is Your Freight Spend Too High? Simple Steps to do a Freight Cost Analysis for DTC Shipping

High-growth ecommerce businesses may spend up to 70% of their budget on shipping and transportation. When shipping direct-to-consumer, there are many variables that factor into overall freight cost—cross-referencing each aspect alone can be a misleading way of optimizing your transportation spend.  

There can be aspects of your shipping mix or selected services that need to be consolidated or negotiated for a reduction in cost. The only way to know where you may be overspending on freight costs is to conduct a thorough analysis of your shipping invoice.  

Brands should conduct a comprehensive freight analysis on a regular basis to ensure they’ve optimized their shipping strategy. Only by collecting all costs and all shipping variables will you be able to properly assess your overall transportations costs.  

Here are the steps to take to conduct a thorough freight cost analysis for direct-to-consumer domestic shipping.  

What is a Freight Cost Analysis?  

A freight cost analysis is a systematic way of identifying areas within your shipping costs that may need to be adjusted. A freight analysis should be used to compare costs that you are currently incurring for parcel deliveries.  

Freight costs should be reviewed and analyzed on a regular basis. Any changes to your product, packaging, warehousing, fulfillment location, or delivery speed will mean changes to your shipping costs. Without assessing the optimal carrier and service for any adjustments, you may be overpaying for shipping.  

Here are a few examples of reasons to conduct a regular freight analysis:  

  • Your shipping carriers announced new prices—carriers adjust prices annually, sometimes more often than annually  
  • You notice consumer buying habits are trending up or down from different zones, which naturally changes the overall cost of your  
  • You’ve decided to make changes to your packaging (eco-friendly!), your kitting (fewer boxes!), or packing materials (safer products!), which may alter the dimensions of your parcels, naturally changing the overall cost