Aug 1, 2007

Smart Questions: How to Save on Shipping Costs

Whether you use the big names or a small regional package carrier, your fee statement for shipping is probably as complex as your cell phone bill. Many carriers have dozens of separate fees. Here are six questions to ask when you're shopping for shipping.

 
  1. Have you added any surcharges?
    Carriers have always charged fees for things like fuel, but the number of add-on charges has risen in the past five years. Now they might charge you a fee for going through international security and another for an undeliverable package. The good news? The fees are all negotiable, says Mike Erickson, president of AFMS, a company that helps businesses negotiate shipping contracts.

  2. Can I have my account history?
    If you've been working with the same carrier for a while, ask to see historical reports that break down the fees you've paid. Then use that information to negotiate. If 97 percent of your packages go to New York City, your carrier might cut the fees it charges for the 3 percent you ship to rural Montana.

  3. What would make my freight more attractive?
    Carriers offer discounts to customers that ship cargo in the most profitable way. Ask how you can adapt your freight to meet their preferences--say, by aggregating multiple packages going to a single destination or by shipping denser cargo.

  4. What are your contingency plans?
    When the port of New Orleans was shut down after Hurricane Katrina, many carriers had no plan B, says Thomas A. Cook, author of Global Sourcing Logistics. Ask how your carrier would handle a natural disaster or a strike at the ports.

  5. What regions and types of freight do you specialize in?
    If you're shipping hazardous materials, perishable freight, pharmaceuticals, or even cosmetics, a specialized carrier might serve you better than a behemoth. Find out what companies the carrier ships to, as well. For example, CandyRific, a candy manufacturer, often ships to big-box retailers, so logistics manager Jenny Karem looks for carriers that can put her goods on a truck that's already headed to Wal-Mart.

  6. Can I do a trial run?
    When CandyRific is being wooed by a new carrier, Karem starts with a trial run of one container. "If they don't get us cleared quickly, or are slow in getting documents to customs, that throws up a red flag," she says. Most carriers will do trial runs during off-peak months, but few will take on new business during peak shipping season.

Reporter Nitasha Tiku covers technology, finance, green business, and social entrepreneurship for Inc. magazine and contributes to the staff’s daily links blog. Her work has appeared in New York magazine, The Villager, Chelsea Now, and on nymag.com. She lives in Brooklyn, New York. @nitashatiku