If you hire a 3PL provider, they will help you decrease operational and shipping costs. Since 3PLs handle your shipping activities, they will use optimized techniques to decrease shipping costs. For example, route optimization, bulk shipping deals, and efficient packaging can save shipping costs.
Do you want to discover more about how 3PL providers help decrease shipping costs? Let’s discuss them below.
How 3PL Providers Help Brands Reduce Shipping Costs
1. Using Modern Technology For Cost Optimization
If you want to reduce shipping costs, the first thing you can utilize is using modern technology. Generally, technology is at the heart of modern logistics. Therefore, to create efficient techniques as a 3PL provider, you can use these technological tools as discussed below:
- Route optimization: Advanced algorithms can assist you plan the most efficient delivery pathways, reduce fuel costs and delivery time.
- Warehouse automation: Using robotics and automated systems helps you to increase picking and packing efficiency.
- AI-Powered forecasting: AI tools allow forecast demand and stock requirements. Therefore, they can even prevent overstocking and reduce overall storage costs.
- Integrated systems: Real-time data integration between your and the brand’s ERP helps to avoid errors and unnecessary shipping costs.
2. Utilize Bulk Shipping Discounts
As a 3PL provider, you may handle large quantities of packages for shipments. Therefore, you can negotiate with your carriers and get better rates. When you deliver them with more shipments, they will automatically offer you more reasonable rates, and you may also get bulk shipping discounts.
Here are some tips you can utilize to execute this technique.
- Carrier partnerships: Build strong relationships with multiple carriers, which helps get bulk pricing and decrease shipping costs.
- Multi-carrier strategy: You can analyze the best carriers based on shipment type and destination. By doing so, you may obtain the lowest rate.
- Freight consolidation: You can merge small shipments into one large shipment, which can assist you save on per-unit shipping expenses.
3. Use An Effective Inventory Management And Warehousing Technique
Did you know that Inventory management also impacts shipping costs? Therefore, if you optimize your inventory management, you can maintain an effective supply chain. Here are the key strategies you can utilize:
- Have regional warehouses to store goods closer to end customers. This helps to reduce shipping distances and transportation costs.
- Real-time monitoring and data analysis help you avoid overstocking and reduce storage fees.
- JIT(Just In Time) inventory systems help to decrease storage costs and minimize waste.
- If you use the JIT technique, you can transfer the goods directly from inbound to outbound shipping.
4. Flexible And Scalable Solutions
You can scale logistics operations up or down as required. Moreover, you do not need to worry about any unnecessary costs. Here’s how you implement this strategy:
- You can adapt quickly to demand shifts without additional infrastructure.
- Use multiple shipping options tailored to product, location, and urgency.
- Manage cross-border logistics and reduce tariffs and shipping costs.
- Handle peak season inventory and orders without excess capacity costs.
5. Use Efficient Risk Management Practices
As a 3PL, you should manage different risks associated with inventory, customers, taxes, customs, and more. But if you formulate the right strategies based on the brand, you can avoid these pitfalls.
Here’s how you stay prepared to formulate efficient risk management strategies:
- Reduce disruptions by addressing potential issues in advance.
- Minimize costly delays and customer impact.
- Stay compliant with changing regulations to avoid fines.
- Keep up with customs laws, tariffs, and trade agreements.
- Gain insights to optimize shipping, packaging, and inventory.
- Implement best practices to lower operational costs.
6. Sustainability And Green Shipping Practice
As a 3PL provider, if you provide importance for sustainability, you can reduce the overall shipping costs. However, there are specific practices you need to do to reduce shipping costs. Here are some practices suggested by us:
- Use recyclable or biodegradable materials to cut waste and packaging costs.
- The usage of electric or hybrid vehicles reduces fuel costs and carbon emissions.
- Combining shipments lowers the carbon footprint and reduces transportation costs.
- Energy-efficient, eco-friendly warehouses cut overhead costs.
- Promote sustainability in your business operations.
7. Economies Of Scale And Network Optimization
You can utilize economies of scale since you handle a large volume of goods from many clients.
Thus, you can own specific resources such as warehouses, transportation, and labor. You don’t need to pay rent and can even avoid the high operating costs when you operate it as your infrastructure.
You can also use your network optimization techniques to find the most efficient routes and methods, which can help you reduce shipping costs in the long run.
8. Advanced Freight Management And Shipping Options
Providing advanced freight management solutions helps you reduce shipping costs. Having suitable and cost-effective shipping options lets you find the reduced and perfect one for the client. To do this, here are some techniques you can use:
- Conduct freight audit and billing.
- Identify billing errors and overcharges to save brands money.
- Try to obtain discounted rates for faster delivery through optimized routes and order consolidation.
- You can manage claims for damaged goods, which helps prevent brands from covering the costs.
9. Customizable Packaging And Labeling
Since packaging plays a crucial role in shipping costs, you need to use efficient packaging and labeling techniques. Here’s how you minimize both packaging and transportation expenses:
- Reduce storage and shipping costs by packaging products efficiently.
- Use custom packaging to meet brand needs while reducing material waste and cost.
- Provide accurate labeling to prevent delays and misrouted shipments.
- Use packaging tailored to product dimensions to reduce unused space.
- Choose cost-effective, eco-friendly materials.
- Combine orders to reduce shipping frequency.
Final Thoughts
In conclusion, using the above strategies, 3PL providers can help you reduce shipping costs. However, if you function alone, you may be unable to utilize these techniques. However, if you hire a 3PL provider, they can help you optimize your business operations and also have a large pool of networks and carriers.
Haven’t you found the best 3PL provider that meets your expectations? Get in touch with 3PeeL to help you with 3PL matchmaking and find your ideal 3PL provider.
