Whether you’re in the logistics industry, or any company for that matter, you always want to be as successful as possible. This means increasing your revenue, offering high-quality products and services to your consumers, and keeping costs as low as possible. However, when you start making some easy-to-avoid mistakes when it comes to shipping, this can increase your overall carrier costs.
But how do you know what mistakes you’re making? And how can you avoid them once they’ve been identified? That’s where we come in to help. We’ve found the six most common mistakes that lead to an increase in carrier costs, and we are here to share them with you, as well as the ways to resolve them.
Let’s get started!
One of the main problems that many companies face when dealing with carriers is that there are errors in the invoice. This can come from either side. Either the billing information the carrier has provided you has inaccuracies, or you haven’t provided the right payment details, or you pay the wrong amount. Either way, this can lead to higher charges, which have a great impact on your overall costs.
If a carrier overcharges you and the rate doesn’t match your agreed-upon rate, or if you accidentally add an additional 0 at the end of your payment, this will impact your bottom line. Not only will you be paying more than you need, but you may also have to pay someone to deal with the administrative burden of it all.
The best way to prevent any invoice errors with carriers is to implement an automated invoice auditing system. A system like this will cross-check invoices against your contract with your carrier, identify any discrepancies, and ensure the right amount is paid. You may also want to consider giving your staff regular training on accurate invoicing practices.
You may not realize it, but packaging actually plays a great role in determining the shipping costs for your company. Not only does having the right packaging ensure all your products are kept safe and have a reduced risk of breaking, but it can also affect the overall weight and dimensions of the shipment.
One of the main mistakes that companies make when packaging their items is that they overpack or underpack. If you place too many items in one box, you’re increasing the dimensional weight of the shipment and end up paying more. On the other hand, if you don’t package your products correctly and actually underpack a box, you aren’t giving the products the protection it needs. This can increase the chances of damage, which ultimately leads to more costs, too (such as replacements).
You can prevent over or underpacking your items by optimizing your packaging strategies. Find the right solutions that effectively fit your items, and invest in high-quality materials that offer better protection. You should also implement a training program for your current employees, or consult with packaging experts, to ensure you’re placing the right weight and dimensions into each shipment.
Many businesses often believe that will be fine with relying on one carrier to move their freight, but this is a high risk, especially when it comes to impacting your costs. It might seem like a more simple way of managing your logistics, but it can actually lead to pitfalls such as higher costs, limited flexibility, and increased vulnerability to service disruptions.
When you only use one carrier, you don’t know if you’re using the best or most cost-effective option on the market. The carrier industry is a competitive one, and many companies like to offer competitive rates to stay on track. Relying on just one means they don’t have much incentive to offer you lower rates, and you lose any power in a negotiation. You’re also more likely to face service disruptions. If something happens with the carrier you’re using, such as a strike or technical difficulty, your items cannot be shipped, and you’ll end up with unhappy customers.
The best solution is simply to diversify your carrier portfolio. Get into talks with multiple carriers to see the best deal you can get. Once you’ve chosen your main company, you should also regularly review and negotiate contracts to ensure you’re still keeping your costs as low as possible. Always have another carrier you trust on standby in case of service disruptions, ensuring your freight will always get from point A to B on time.
The whole point of a customer purchasing your products is that they will receive them at their desired address. However, this cannot happen when you place the wrong address on a package. Not only will you have an unhappy customer because they haven’t gotten their package on time, but carriers often charge fees for correcting addresses once a shipment is already in transit. You may lose double in these sorts of cases, as you may have to offer compensation to the customer and pay your carrier more.
Preventing this type of issue is pretty simple. While we all make mistakes every now and again, you want to avoid them as much as possible. You can always use address verification software that automatically checks and validates addresses before shipping. By integrating this with your e-commerce platform and order management systems, you drastically reduce the likelihood of errors in the future.
A Bill of Lading (BOL) is an extremely important document in the shipping process that acts as a contract between you and your carrier. It includes all the vital information about the shipment, such as what it is, how much is in it, and where the goods are being taken. It also acts as a receipt for you from the carrier, keeping you as the legal owner of the items being moved.
Since the BOL is there to ensure smooth shipping operations and legal compliance, inaccuracies in the document can be detrimental, especially to your costs. Incorrect or missing information can lead to shipping delays and complications, which means you might have to spend more with your carrier to fix the problems. Similarly, when you’ve put down the wrong classification of your foods, this can lead to regulatory issues and fines.
All you can do to avoid these inaccuracies in the BOL is to remain vigilant and double-check every piece of information before your shipment is sent out. Outline a review process and checklist of what you need to go through each time to ensure all details are accurate and complete. You can also conduct regular audits of your shipping document processes to see where the most mistakes are made, and fix them for future shipments.
We’ve already touched on this point a little bit where we spoke about how sticking to one carrier can affect your bottom line. This is because a lot of the time, you end up overpaying for freight where you could get it for a much better price elsewhere, sometimes with an even better service.
This is often due to the fact that businesses lack market knowledge, such as being unaware of current rates and not doing their due diligence to find the best option. They may also not have the best negotiation skills, meaning they fail to leverage volume discounts with their carrier. If this happens to you, you ultimately end up having higher operational expenses and a reduced profit.
By regularly conducting market research on what the current carrier rates in your industry are, as well as staying informed on new trends and services, you can ensure you’re getting the best deal. Always have your negotiation hat on when you’re partnering with a carrier, to help you leverage your shipping volume for discounts and develop a stronger relationship for the future.
Running and operating a business is hard enough, and you don’t need to make it any harder by worrying about the costs of your shipments. By looking out for these mistakes and using the tips we’ve provided to prevent them, you can have better peace of mind that you’re not overspending, but rather increasing your bottom line.
If you need assistance in finding the best carriers or simply handling all these processes for you with zero mistakes, then Portless is here to help. We’re a 3PL company based in China that has all the tools and solutions for seamless shipments and logistics management. Get in touch with one of our experts today to get started.
