7 Shipping Pitfalls To Avoid in Your Commercial Business

Transportation accounting is critical for retail, e-commerce, and manufacturing businesses. If you run a company in one of these industries, what you don't know about your shipping expenses could cost you a ton of money. Not to mention time and decent sleep.

Below, we'll fill you in on the shipping info you might be overlooking that impacts your bottom line.

Shipping Costs That Rock the Boat

Shipping is one of the largest variable expenses your commercial business faces. You know the importance of efficiently delivered products, but unmonitored shipping expenses can quickly eat into your margins. From hidden fees to inefficient carriers, the pitfalls and costs can hit you hard from all sides.

Pay close attention to your shipping to keep your profits intact and operate smoothly. Many businesses overlook the details until it's too late. You might assume you're getting the best rate, or that little oversights won't make a big difference. However, those "minor" mistakes compound quickly over hundreds (or thousands) of shipments.

The good news? With awareness and proactive planning, you can steer clear of the most common traps and keep your shipping costs under control.

Pitfall #1: Not Rate Shopping and Carrier Comparing

Setting up an account and rolling with the same provider for every shipment is convenient. However, one of the most common pitfalls in managing shipping expenses is sticking with a single carrier without reviewing other options.

Rates can vary wildly depending on package size, destination, and delivery speed. By failing to rate shop, you're likely missing out on better pricing or more flexible terms.

For example, one carrier may offer more competitive ground rates than another on your medium-sized parcels shipped across the country. At the same time, a different provider might prove better for your local or international deliveries.

Without a quarterly comparison, you could be leaving money on the table. Switching carriers or renegotiating contracts based on shipping volume could save you thousands.

Pitfall #2: Neglecting Dimensional Weight Calculations

Shipping costs aren't based solely on package weight. If you're not accounting for dimensional (DIM) weight, you could be in for a surprise. DIM weight pricing factors in a package's size and weight, so bulky but lightweight items can cost more than expected.

For example, let's say you're shipping a large but light pillow in an oversized box. Even if it weighs only two pounds, the bulky size means a heftier charge.

Understand how carriers calculate the DIM weight. Instruct your team to use the smallest, most efficient packaging possible. You could pay far more than necessary if you're not actively managing this part of your packaging strategy.

Pitfall #3: Incurring Surcharges and Hidden Fees

Hidden fees and surcharges are another often overlooked area in shipping expense management. The following fall into this category and can quietly inflate your costs.

• Fuel surcharges
• Residential delivery fees
• Saturday delivery premiums
• Oversized package penalties

You may not even realize how much these charges are costing you each month if you're not reviewing your invoices line by line.

Suppose you're shipping to residential customers but haven't flagged those addresses appropriately. Carriers may tack on residential delivery fees not anticipated in your original cost estimate.

Similarly, regularly scheduling expedited shipments without need can lead to excessive fees. Avoid these costs whenever possible by setting up rules in your order system to flag special delivery requests and review them manually for approval.

Pitfall #4: Not Automating Shipping Workflows and Audits

Shipping errors like incorrect addresses, service levels, or duplicate orders can quickly become expensive. If you manually process shipping labels and invoices, you increase the risk of human error. Not to mention, you waste valuable time.

Automate your shipping workflows. It will help eliminate mistakes and streamline the process, saving both time and money.

Shipping software tools can automatically choose the most cost-effective carrier, calculate dimensional weight, generate labels, and track deliveries. They can also integrate with your accounting systems to flag discrepancies between quoted and actual charges. For example, if a carrier charges more than expected for a delivery, an audit tool can alert you to the error so you can file a claim. Over time, these small recoveries can add up to substantial savings.

Pitfall #5: Misunderstanding Customer Expectations and Service Levels

You want to stay competitive, but defaulting to free two-day shipping might not be the answer. Overcommitting to fast delivery without understanding your costs can wreck your margins.

Align your shipping promises with both customer expectations and your profit model. Offering free expedited shipping to customers who don't require it is a fast way to erode profits.

Take the time to understand your customers. If the majority are comfortable waiting five to seven business days for delivery, offering free standard shipping might be enough. You can still provide expedited shipping as a paid option for those who need it faster.

Also, communicate delivery timeframes clearly on your website or invoices to manage expectations and reduce customer service issues related to late deliveries.

A certified business accountant can help you find the right balance so you're attractive to customers and profitable.

Pitfall #6: No Clear Return Policy or Process

Returns are a reality in most industries. Handling them without a clear, efficient system can double your shipping costs.

If you're covering the cost of return shipping without tracking or conditions, you're exposing your business to unnecessary losses. And returns that take weeks to process can tie up inventory and frustrate customers.

Design your return policies with both customer satisfaction and cost control in mind. Implement prepaid return labels with negotiated rates. Establish clear guidelines about return windows and conditions. For example, allowing customers to initiate returns through your website and select the reason for the return helps you gather valuable data while keeping costs predictable.

Pitfall #7: Ignoring Data and Shipping Trends

The final pitfall many businesses fall into is not reviewing shipping data regularly. Don't miss opportunities to optimize by tracking 1) shipping costs per order, 2) carrier performance, 3) return frequency, and 4) surcharge patterns.

Analyze shipping just like any other key business expense. Set up monthly or quarterly reviews of your shipping data. Look for spikes in cost, late delivery trends, or repeat errors. For instance, if one product frequently incurs oversized package fees, consider repackaging it or discontinuing it if margins are too thin.

Insights gained from reviewing data and trends can lead to better operational decisions and more profitable fulfillment strategies.

Freight Expectations

Managing your shipping expenses effectively doesn't mean just picking the cheapest carrier. It means understanding the whole picture.

Every piece of the shipping process either adds to your costs or improves your margins, from packaging decisions and automation tools to customer expectations and return logistics. By avoiding common pitfalls and paying close attention to your data, you put yourself in a stronger position to scale sustainably.

Small changes can lead to significant savings, and being proactive now can protect your bottom line for years to come. So, take a closer look at your current shipping setup. Keep in mind that an expert business accountant can help. You may be just a few tweaks away from major improvements.