The manufacturing and distribution sector is soaring, but it’s also in flux—and even for the biggest names in the industry, rising shipping costs can hamstring operations and the warehouse.
There are plenty of reasons for the rising costs, from carriers like UPS and FedEx increasing their prices from year to year, to dimensional weight and warehouse inefficiencies. But the end result is the same: logistics costs that reduce your margins and make it harder to turn a profit.
At MCG, we’re here to tell you that it doesn’t have to be that way. Most manufacturers struggle to go it alone, but with third-party expertise and market intelligence on your side, there’s a clear path to cutting costs and optimizing your bottom line.
Rising Carrier Costs
Carrier costs, including those charged by major players like UPS and FedEx, continue to rise year over year, and that can spell major trouble for businesses in the tech manufacturing industry. In fact, despite what seem like great margins, most carriers will raise their prices by about 4-6% each year and that doesn’t include other peak season increases imposed. In some cases, these are straightforward rate hikes—but they can also take the form of ancillary costs and fees.
A willingness to negotiate costs is an important first step, but if you really want to improve your bottom line, you’ll need an experienced, knowledgeable partner. At MCG, we analyze contracts and pricing, then apply industry expertise and advanced, proprietary cost modeling to scorecard and identify savings opportunities then work very closely and surgically through negotiations with our clients to deliver double digit further reductions.
Dimensional Weight Pricing
In the last decade, all of the major carriers have applied dimensional weight pricing—in which the volume of your parcels impacts the billable weight—to an increasing number of shipments. Keeping up with the changes can spell major headaches for your manufacturing business, but ignorance could be even worse, as dimensional weight pricing can balloon your shipping costs and seriously dent your bottom line. It’s a great example of how complex changes in carrier pricing can mean additional, sometimes unexpected costs for your business to absorb.
But you do have options. Beyond negotiating better rates with carriers, a third-party partner like MCG can also help your business to make more efficient and cost-effective shipping choices. With MCG, every decision is powered by superior business intelligence, including benchmarks and visualizations. We can also provide managed services to reduce labor costs and improve the overall efficiency of your operations.
Why Market Intelligence Matters
We often work with partners in the manufacturing and distribution sector who’ve tried to bring logistics costs down on their own—but they end up running into the same wall. Without thorough market intelligence and accurate benchmarking, you lack the information to negotiate—and you may be overpaying by more than you realize. That’s the typical pattern we see across the board.
Here’s what we’ve learned: Confidence isn’t enough to negotiate the best possible carrier pricing. When you work with MCG, you’re also working with powerful market intelligence, including our proprietary shipment database, containing detailed pricing information on millions of shipments.
We like to say that the best negotiator is the smartest negotiator and the smartest negotiator is the one with all the market intelligence — and our stellar results back it up, with savings for our clients that average 15-25%+ on average. MCG will put you in a position of strength at the negotiating table to fully optimize your contract negotiations and rate structures.
You don’t have to go it alone. Contact MCG today to learn how your business can cut costs and turn shipping and logistics into a unique competitive advantage.
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