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How to Save on Shipping Costs as a Small Business?

May 19, 2022 Chase Flashman

In 2021, shipping companies charged sky-high rates and brought in over $150 billion in profit, according to Bloomberg. The companies who suffered the most? Small businesses. But even before 2021, shipping costs for the little guys accounted for large portions of their overall budget. It has many people asking how to reduce shipping costs for a small business.

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At ShipSigma, we work every day to be the answer to that question, by making savings a reality for small businesses. In this blog, we discuss the main ways small businesses ship and how they might be losing money. Additionally, we explain one of the major keys to unlocking savings, the parcel invoice audit or small parcel audit.

How do Most Small Businesses Ship Products?

When it comes to shipping, there are two categories…freight and parcel. Freight is a collection of boxes or packages all shipped together to the same destination, whereas parcels are boxes shipped individually to varying locations. The majority of shipping for most small businesses is parcel shipping.

The thing about parcel shipping is that there is a duopoly of providers, UPS and FedEx. This means that no matter how much experience you have, what kind of relational equity you have, or any other form of leverage you think you may have, when it comes to negotiating a parcel shipping deal, the carriers have the upper hand. You might haggle back and forth, or even switch carriers every year trying to secure the cheapest shipping for your small business, but ultimately with the duopoly it’s really up to the carriers how much you will pay.

However, if there were a way to not only hold your carrier accountable to the contract you end up negotiating, but to strike an even better deal, you could potentially save hundreds of thousands of dollars. Well the good news is that there is…let’s start with the parcel invoice audit.

What is a Parcel Invoice Audit?

A parcel invoice audit looks at all of your bills, transactions, and shipments to identify a few key data points. First and foremost, it provides you with an exact cost for every single shipment, line by line. In doing so, it also highlights any incorrect charges or inconsistencies with your carrier contract. These might include:

  • Shipments that arrived late
  • Shipments that arrived damaged
  • Parcels that were lost and never delivered
  • Duplicate charges for the same parcel
  • Incorrect dimension and weight charges
  • Inaccurate rates  
  • Shipments sent to the wrong address

The list goes on. However, the key with these discrepancies is that oftentimes you can get a refund from your carrier. The catch is that you have to ask for it and support your claim with data. Most of the time, your carrier wants to uphold their end of the bargain. With so many transactions, an error or two is bound to occur and unless you bring it to their attention, it will likely go unnoticed. So, by using the data from your audit to identify and claim refunds, you are automatically reducing your shipping costs from the get go.

The second major benefit from a small parcel audit is that once you understand exactly what you are paying and where your money is going, you can determine whether you are getting a fair shipping rate. You get a transparent and exact answer to questions like how much does it cost to ship a small item, or what is my average cost per parcel? With that kind of insight and data, you can enter your next contract negotiation with a clear strategy to strike an even better agreement and cut your shipping costs.

Partner with ShipSigma to Get the Best Shipping for Your Small Business

At ShipSigma, we make small parcel auditing easy with our auditing software and services. Our software automatically sorts and analyzes your data and delivers understandable and actionable insights. With over 50 audit points, automatic weekly audits, and easy claim filing, our software saves you money on every single shipment, guaranteed. In fact, if we can’t save you money, you won’t pay a thing.

What’s more, our team of committed and passionate experts has years of experience in the logistics industry. We know what it’s like to be on both sides of the negotiation table. We also understand that your shipping data is sensitive information which makes it all the more important you work with a company you can trust. We like to think of ourselves as the white glove service of cutting your shipping costs. So, reach out and start saving today.

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