4 Tips: Improve Profitability Despite Rising Transportation Costs

Articles

E-CommerceFinal Mile

May 12, 2022

Profitable shipping is a very attainable goal, even in today’s uncertain environment, where peak carrier surcharges have become a moving target for all parcel shippers. Despite these rising costs, there are ways all companies can manage operating costs for transportation to improve profitability.

Try using these four tried-and-true tactics for improving shipping profitability in any market conditions. 

  1. Think at a Package Level
    If you’re handling multiple pick-and-pack orders, you need to know what you’re putting into different sized packages. Align that information with the actual transportation costs, and then figure out the profitability level on each.

    This can be a complex process, but ultimately it is important to understand how the dollar amount on your transportation invoice ties into your product profitability. For example, once you determine what it costs to ship each SKU, it might become clear that offering free shipping at even a $50 order threshold may not yield a profitable order for your company.
  2. Use Good Margin Management
    When your marketing department launches a promotion – “Buy $50 worth of stuff and get free shipping” – make sure the “losers” do not fill-up an e-commerce shopping cart and drive your total cost (including transportation costs) above profitability. To avoid these problems, share relevant information across your organization to make sure everyone is paying attention to the operating costs for transportation when planning pricing or promotions. 
  1. Leverage Data 
    Look not only at carrier data, but also sales data, product costs, fulfillment costs, and other metrics that go into a single order. Transportation Insight helps shippers accumulate all of that information and consolidate it into a unified dashboard that is used to track trends, pinpoint winning/losing SKUs, and single out other areas where the company may be losing money.
  1. Partner with a Transportation Expert
    Work with a reliable logistics provider that has built out the necessary systems and that spreads the value of those systems across numerous different users. This allows logistics providers to leverage economies of scale and offer their services at an affordable cost. This translates into high value for shippers in any business or economic condition while directly addressing transportation costs.

Protect Profit for Every Customer and Every Order

Our latest strategy guide “You Shipped It, But … Did it Make Money?” raises a question that is on the minds of many business leaders. 

Your business has responded to significant shifts in consumer buying behaviors and your customers’ expectations are being met. But to help ensure the transaction yields a profit, don’t let transportation costs eclipse your margins in the rush to serve.

For more strategies to help you master your supply chain and protect or even improve profit on every order, also check out “A Manufacturer’s Guide to Achieving E-Commerce Fulfillment Excellence.”

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