Automotive Industry Shipping: 3 Ways to Battle Costs
People love their cars — so much that 63% of Americans say they get their car serviced more often than they see a dentist.
But needing a repair can keep you off the road if you’re waiting for a part. That’s why the auto parts industry is under such intense pressure to meet customer demands — often busting shipping budgets to do it.
Automotive parts shipping challenges
There’s a lot for any shipper to manage when it comes to keeping costs down, but the automotive parts industry is particularly affected by the labyrinth of shipping surcharges. Why? Many reasons:
- Auto parts are often heavy and oddly shaped, triggering dimensional weight charges or surcharges for additional handling.
- Shipping directly to consumers piles on residential surcharges and delivery area surcharges.
- The enormous SKU count and diversity of products complicates inventory management and causes inefficient use of your fulfillment network.
And, of course, all of these challenges are compounded by the fact that the customer wants their part as fast as possible so they can get back on the road. It starts to feel like an impossible balancing act, but there are strategies you can employ to ensure you keep customers happy without losing money on shipping costs.
Examine your packaging
The awkward shapes and hefty weights inherent in the auto parts supply chain make your packaging choice critical. To keep costs down, ensure that:
- Your packaging is a squared cardboard box — tubes, plastic bags and foam will all incur an additional fee.
- Your packaging doesn’t exceed your carrier’s maximum dimensions. Larger packages will be subject to additional handling and the associated surcharges.
- You’ve examined your company’s specific rate increases for 2020 — not just the General Rate Increase. Every year, carriers tinker with their charges, sometimes lowering the DIM divisor, or others, like for 2020, lowering the weight threshold for their additional handling surcharges from 70 lbs to 50. You must understand how your package weight and dimensions match up with your carrier agreement.
Study your distribution network
With hundreds of car models available in the United States and thousands of parts that make up each of those models, maintaining a well-oiled auto parts inventory management system and fulfillment network can be a nightmare. Ask yourself:
- Do the number and placement of your fulfillment centers create zones that allow for the fastest shipping for customers?
- If you have a well-distributed set of fulfillment centers, are they stocking the parts that are in demand in their areas?
Work to lower destination surcharges
While it’s difficult to avoid residential surcharges and delivery area surcharges when you ship directly to customers, you can offer options that potentially reduce these costs. You can:
- Ship to an access point like a UPS or FedEx store or other participating retail outlet. While this delivery isn’t as direct as customers might like, it does offer the advantage of ensuring their packages aren’t swiped by porch pirates.
- Use your own retail stores as pickup points. Again, it’s not direct to the customer, but it does bring them to your stores and potentially drive additional sales.
The more you know
With such a vast array of items to ship as an auto parts supplier, it’s imperative that you understand your shipping profile and how it affects your carrier agreements. Ensuring your contract is optimized can make a big difference in your shipping costs.
It’s also important to find a way to monitor for surcharge irregularities and correct them. SimpleTire ships more than 1 million packages a year, but leaders at the rapidly growing tire seller realized that their shipping costs were getting out of control. They found a way to better understand their cost-per-package and protect their margins. Read their case study to find out how.