How to Reduce Shipping Cost for Affordable International Shipping Rates?

As the eCommerce industry continues to grow, so does the shipping industry. With more and more sellers targeting the international market, the need for a fast and affordable international shipping has become a must. Based on the study by the International Chamber of Shipping, there are over 50,000 merchant ships trading internationally. Moreover, the international shipping industry is responsible for the carriage of around 90% of world trade. However, international shipping isn’t affordable. 

When you’re shipping from one country to another, there are tons of fees that you must pay, and these fees are paid by customers. Oftentimes, customers abandon their cart when they see the excessive amount of shipping costs. They want something fast and affordable. But, how can you offer them affordable shipping rates without sacrificing your profit margin? We’ll discuss ways you can reduce the cost of shipping, international shipping priority, and how to fill out international shipping address.

What is International Shipping?

Shipping is the lifeblood of the global economy. Without shipping, global trade, transport of raw materials, and the import/export of affordable food and manufactured goods would simply not be possible. International shipping is the shipment of goods from one country to another. There are different ways you can ship your goods. It can be through air, sea, and shipping carriers. 

Before we discuss each, let us give you some data on the international trading industry. 

• Roughly 90% of the world’s goods are transported by sea, with over seventy percent as containerized cargo.
• Global seaborne container trade is believed to account for approximately 60% of all world seaborne trade, which was valued at around 12 trillion U.S. dollars in 2017.
• In 2018, Shanghai's port was the busiest container port in the world, handling about 42 million TEUs of containerized cargo. 
• In 2019, the Port of Los Angeles handled around a nice 9.69 million TEUs of container goods.
• International shipping accounted for around 2% of global energy-related CO2 emissions in 2019.
• In 2019, revenue generated from parcel shipping activities amounted to 351 billion U.S. dollars globally.
• United Parcel Service generated a revenue of 74.8 billion U.S. dollars.

How to Reduce Shipping Cost to Give the Most Affordable International Shipping Rates

If you want to know how to reduce your shipping costs and give your customers the most affordable international shipping rates, here are some tips you can apply.

Select the Cheapest Shipping Option 

Let’s face it. If you want to ask your shipping carrier to lessen their delivery time, you have to pay them a higher price. If you want to pick a cheap shipping option, you may receive it after 8-10 days, which can put out your customers. This may also lead to customer service calls, cancellations, and chargebacks – not to mention the potential damage to your brand from negative social media postings. Hence, you need to find the sweet spot between speed and customer satisfaction. Choose the shipping carrier that offers you a fast and affordable shipping experience. 

Avoid Shipping Surcharges by Knowing Carrier Surcharge Rules

Shipping surcharges have the potential to increase your shipping and handling costs by up to 30 percent. The best way to avoid surcharges is to know the rules . You need to know what factors affect surcharges, so you can avoid them. Another way to avoid shipping surcharges is to use multiple carriers. 

Each carrier has its own book of shipping rules, rates, and scenarios that drive up shipping costs. Since carriers don’t have the same surcharge rules, you can pick which carrier can ship a particular product to avoid added costs from another carrier. This allows you to save on shipping costs and give the most affordable rates to your customers.

Understand the Different Pricing Models for Shipping Savings

There are different pricing models you can offer to your customers. You can offer them a flat-rate shipping rate or weight-based shipping rate. Depending on how far your product is being shipped and what it weighs, flat-rate shipping could be a better option. Another one is cubic shipping, which provides an opportunity for savings, especially if you’re shipping heavier objects.

Choosing the right pricing model depends on the package, location, and weight of the item. There is no easy answer for choosing a pricing model because you have to pick what’s best for your orders. But, do remember that picking the right pricing model helps in lessening the shipping cost, thereby offering your customers affordable shipping rates. 

What you can do is to provide them with different pricing models. You can offer a flat-rate shipping rate for products that have the same sizes and weight while offering weight-based rates for shipments traveling short distances. 

Control Product Packaging Costs

Product packaging is one of the factors that affect shipping costs. The heavier and bigger are your packaging materials, the higher your shipping cost. To reduce the cost of shipping, you need to use the smallest, most lightweight, economical materials. Many shipping companies offer free boxes and materials that you can use. Moreover, you can use these tips to reduce the weight of the packages.

• Change or remove insert cards - Instead of placing the thank you card in an envelope, it’s best to remove them and place the item as it is.  
• Change the packaging tapes - Instead of using that heavy wet brown tape, you can try using another one that will help you get your package down into the previous price bracket.
• Use a smaller or customized package - Instead of using a standard-sized box, you can try using a custom-sized box that fits your products.  

Work with multiple suppliers.

There’s no rule in eCommerce that you only have to work with one supplier. In fact, diversification is an excellent strategy for finding the best products at the best prices. This also applies to ship costs. You can look for a supplier that offers low goods and shipping prices. If one doesn’t work for you, you can always look for another one. 

This is also a sound strategy in today’s economy. With coronavirus hitting businesses, the suppliers that you currently have could face a halt in production at any time. Instead of stressing over your lack of inventory, you can look for other suppliers. They may even give you affordable shipping rates. 

Nurture Supplier Relationships

As the COVID-19 pandemic hits the world, every business is affected. Due to this, relationships between a supplier and retailer are becoming more important than ever before. We all know that a successful business is built on strong relationships. Your store wouldn’t expand without your customer’s patronage—the same way with your suppliers. Without them, you wouldn’t have anything to sell. Hence, you need to foster a positive working relationship with them. 

Reach out to your suppliers, and ask how they’re doing during this time. Doing so opens the conversation to shipping costs. This is important, especially if your supplier directly ships to Amazon’s warehouses, or your business model is dropshipping. When your supplier trusts you, they are open to new ideas and can help you brainstorm ideas to minimize packaging, get better rates from carriers, or source from different fulfillment locations if available. 

Negotiate shipping rates with suppliers

Speaking of supplier relationships, you need to put your business hat on and negotiate shipping rates. Talk to your supplier about discounted rates in exchange for a monthly order minimum. Or if they can take on more of the shipping costs in exchange for a constant order volume. Be assertive and respectful when you negotiate the prices. You can even ask them to use affordable packaging materials to lower the shipping cost. 

Negotiate with multiple carriers

Aside from suppliers, you also have to negotiate with shipping carriers—the same way with suppliers. You can negotiate for lower shipping costs for a certain volume of orders shipped monthly. Besides, the more you ship, the lower your rate. If you ship large numbers of packages, compare prices and try to persuade carriers to offer you lower rates.

When you are negotiating your prices, you need to give them clear data about your business. The stronger your data is, the more negotiating power you have. Talk about the following when you present your report:

• The average number of packages shipped each month
• The average weight per package shipped
• The average delivery zone

Aside from providing them a report of your shipping volume, you can also use these proven negotiating tactics.

• Read the terms and agreement - Check the fine print for spending minimums and surcharges that may affect your negotiated deal with the carrier.
• Look out for guaranteed volume penalty clauses - Look for this part because it may affect your profit margin when you fall behind the threshold. 
• Communicate clearly. You want to be crystal clear about the negotiation’s timeframe, so things don’t linger on.

Feel free to add any other information that can be helpful with your negotiation. Remember, your carrier wants to know what you can offer to them. Adding some brand partnerships might sweeten the deal for them. 

Charge more for product prices

If you ask your customers whether they like paying for shipping, they would ask no. A study from the National Retail Foundation (NRF) found that three-quarters of consumers believe shipping should be free. That’s why when they see an exorbitant amount for shipping, they would often leave their cart. To avoid these scenarios, you can raise your prices to cover the shipping cost. It is an effective way to lower cart abandonment, save money, and raise your sales. Plus, your customers wouldn’t even notice it! Just don’t raise them too high that they would pick other store’s products.

Prepaid shipping

Prepaid shipping can get you up to 20% off shipping costs from UPS and FedEx simply by purchasing a certain number of shipping labels upfront. You don’t need to label the boxes upfront since you can always insert them once an order has been made. However, this only works when you consistently ship orders containing the same weight and dimensions. 

Questions You Need to Ask to Save Money on Shipping Cost

Aside from the tips above, you also need to answer these questions for you to better understand your business and how you can find ways to reduce shipping costs. 

How are you charging for shipping?

The amount you charge  your customers affects your profit margin. If they see that your shipping fee is high, they will abandon their cart and choose another store. Offering them free shipping can be a major expense for your small business. Consider these ideas to lessen the shipping cost: 

• Adjust the product price to make up for the reduced shipping cost. 
• Offer a flat-rate shipping fee for orders of the same size and weight.
• Require a minimum amount of money to be on each order to avail of free shipping. 

Are you using the right packaging?

Many businesses make packaging mistakes, such as using boxes instead of a padded envelope to decrease weight and dimensions. These mistakes often result in high shipping costs. Hence, if you want to decrease your shipping cost, you need to avoid these packaging mistakes. 

Try ditching fancy packing supplies when you are packing your orders. A customized box is enough. Also, if you want to use customized branded boxes, make sure the dimensions don’t fall outside of standard box sizes because you may be charged with additional fees.

Where are your orders going to be shipped to?

Knowing the partners in shipping destinations can help you identify the cost of shipping from one place to another. This is extremely helpful for international shipping tracking and helps you decide if you want to work with an international fulfillment provider or not. Plus, you can use an international shipping rate calculator to compute the cost. 

Have you tried another shipping carrier?

If your allegiance is only to one shipping carrier, then you may consider looking for other options. There’s nothing wrong with talking to other shipping carriers. It allows you to compare the services and rates they offer. Plus, you can get cheaper rates than what you’re currently paying. 

Conclusion

Reducing your shipping cost doesn’t only mean knowing the factors that affect your shipping costs, but it’s about choosing the best option for your store. We know that you want to give the best service and products to your customers; hence, giving them a fast and affordable shipping service is a must. It’s a good thing that here at Stallion Express; we can offer you high-quality services for an affordable price. If you want to know more about our shipping services, contacts us now!

Tom Davison