If there was ever a time for shipping cost control, now is the time. With the economy in low gear, businesses are focused on eliminating waste and unnecessary cost from across their organization, including the shipping department.

A article featured in the Operations and Fulfillment section of Multichannel Merchant reports  on the rising cost and increasing carrier complexity that affects all shippers.  Rate increases in 2007 and 2008 were the highest increases in more than a decade.

In addition, carriers’ dimensionalization policies “boosted annual costs for shippers by an estimated $1 billion.” Accessorial charges have also been increasing, such that “they now account for up to 40% of your overall freight costs.”

The increase in shipping costs from all angles means that you need to pay attention to a number of factors. One place to start is with your carrier agreement. Rob Martinez of Navigo Consulting Group, believes that “three out of four carrier agreements could be improved by 10% or more.” He goes on to say that “just a limited number of financial strategies could help you reduce shipping costs by 10% or more.” Here are some tips from Martinez on how to eliminate financial waste in your shipping department.

Become a Tougher Negotiator

• Don’t just negotiate list rates, all fees and terms are negotiable. Ask for reductions in accessorial charges, fuel surcharges, general rate increases and other fees.
• Increase competition by auditing invoices for overcharges and late shipments.
• Conduct annual bids
• Split your business between carriers
• Have frequent meeting with nonincumbents

Manage Your Fuel Surcharges

• Get a discounted base rate helps to reduce fuel surcharges which are percentages
• Ask about pre-payment options that lock in costs
• Use more ground shipping instead of express. Ground base rates are 30% to 79% less than premium expedited services, and fuel surcharges are a third the cost 7.75% vs. 25%).

Analyze Carrier Invoices

Setup electronic billing with your carrier to give you the foundation for deeper analysis. Dig into the data and  look for unnecessary costs/billing mistakes in:

• Service types used
• Discounts/incentive applied
• Build weight vs. actual weight
• Container type/packaging
• 3rd Party/collect billings
• Zones

Once you’ve found the most obvious financial wastes through basic analysis you can step up to professional auditing software or contracting with an outside auditing service provider.

Spotting and eliminating financial waste can have a significant impact on your shipping costs and competitive position. Could you become a leaner shipper?