Scaling Your Shipping Strategy: How to Keep Transportation Costs Reasonable

Transportation is the life blood of the supply chain—it’s the logistics and all the flows of information and goods that get products to and from each place they go. It’s easy to think of fulfillment as just the fixed points along the supply chain, all the places where products go—warehouse, boat, plane, port, distribution center, truck, consumer, etc. But for each of those places there are transportation costs incurred to get it there. 

Transportation can make up as much as 70% of a sellers’ logistics budget. It’s no wonder that companies are constantly seeking ways to lower their transportation costs. While having an in-house transportation expert is nice, it’s often not possible. Working with a 3PL with expertise in the field can give your brand dedicated support to manage daily shipment operations, resolve transportation issues and inefficiencies, and ultimately create scalable strategies that will help your brand grow.

Include Services and Costs in Your Shipping Analysis

Because transportation makes up such a huge portion of your logistics budget, it’s important to optimize all aspects of your shipping strategy. To get there, analyze your brand’s shipment activities, often. It’s ideal to do this quarterly because of seasonal needs and carriers changes. Minimum, do a full analysis annually. Here are a few tips to help ensure your analysis will be worth your time. 

  • Go beyond the cost. Many companies fall into the trap of always choosing the low-cost option. This may cause more problems in the long run. Look for all the places you can create greater efficiencies, speed, agility, clarity, etc. For example, during peak times of the year, on-time delivery by carrier and service can vary drastically which can impact your customers’ experience. Make sure you do the proper research, including asking for delivery performance and on-time guarantees, when evaluating various carriers and services.
  • Use your data. If you work with a tech-savvy 3PL they’ll be able to track your transactional data and use that to rate-check for the best possible carrier option. Incorporate all shipping services, not just cost. That includes zone rates, accuracy, and delivery times. It’s also worth looking into each carrier network infrastructure, their level of responsiveness to issues, their account management, their booking process, and their reporting. Use historical purchase data to understand the optimal fulfillment location(s), carriers, and services.
  • Outsource to experts. Working with an experienced 3PL brands will have access to a dedicated team of transportation experts who truly integrate with each client’s team. With modern tools to help track and analyze data, you’ll be able to find the best rates and options easily. Plus a 3PL with excellent relationships can help advocate for your needs when issues arise. They may also be able to get big shipping discounts, which is always worth it.

Don’t Forget to Include Trade Compliance

It’s one thing to ship packages domestically, but it’s a totally different set of complexities once shipping goes international. Shipping internationally definitely brings in a whole new host of challenges, typically trade compliance related, but also transportation as well, because they are very intertwined. Trade compliance and international shipping are two areas often overlooked by brands who want to optimize their transportation budget. 

Just because your company isn’t shipping into international markets, doesn’t mean this section doesn’t apply to you. It’s common for online stores to have a significant amount of international website traffic; just imagine the revenue you can unlock by offering international shipping options. If you are importing components and products from an overseas manufacturer that counts too. 

Often the point at which a company realizes they need help with trade and transportation, it’s when a shipment gets stuck. This is too late. Plus it’s rare for startups and medium sized companies to have the budget to include an international shipping expert on their team. Companies need to have third-party partners and support ready to help navigate and negotiate on their behalf all the time, not only when something goes wrong. 

When seeking support look for help with the following areas: 

  • Guidance on classification for duties, not just in the US but around the world. 
  • Guidance on how to import and export products around the world to minimize that duty impact. 
  • Solution-oriented partnerships with carriers and freight forwarders. 
  • Knowledge of the entire shipment journey, from point of origin to the end-customers, whether that’s B2B or B2C.

Scalable Shipping Solutions for High-Growth Brands

Some smaller brands may think they’ll deal with transportation issues when they’re bigger. But it’s always a good idea to review and reflect on what you can do to make improvements now. 

DCL Logistics is committed to providing custom solutions that help a brand scale and grow. For example the Transportation Team at DCL created a simple freight pricing strategy called Time Definite Service or TDS. The pricing for small packages for LTL freight is somewhat complex. It takes time to convey an analysis or quotation that’s accurate and understandable. But with TDS our pricing is always one rate. All the typical components of a transaction, the freight, fuel, security, lift gate service, all of the line items are one flat rate per pound. Whether you’re shipping to PA from CA, or to FL, or to TX, it’s the exact same price. There’s no surprises, so now customers using TDS can easily audit their bills if they want to, they can forecast, they can budget, it simplifies everything for them. The program started with a way to help just one client streamline their transportation budget workflow, but it has blossomed into something that many of DCL’s sellers now have implemented. 

Sellers, especially during the pandemic, have found relief from the capacity we have with LTL, and for a flat price we’re able to accomplish very quick delivery intervals, on-time delivery exceeding 99% with this new TDS service.  

It’s these types of scalable solutions that give DCL customers an edge in the market. If you choose to work with a 3PL like DCL you’ll get the benefit of a whole team of trade and transportation experts. They operate as a team, but come to the table each with a long history of varied experience. The team is dedicated to customizing solutions for each brand to fit their particular needs. Our commitment to customization breeds new innovative solutions across the board. At DCL we really want to grow with our sellers. Our Transportation Team is great at building solutions that help companies of all sizes. 

If you’re looking to optimize your shipping strategy or have questions for our Transportation Team, send us a note, we’d love to hear from you.