6 Tips for Starting a Shipping Business

 | 
May 31, 2022
UPDATED: 
May 31, 2022
6 Tips for Starting a Shipping Business

Today, every millennial is looking for a business opportunity. Some have ventured into the restaurant business, whereas others have opened digital marketing firms. It might seem like a viable business idea, but unfortunately, the competition is fierce. As a result, gaining traction in the market becomes arduous. So, how about you think out of the box? 

As many companies have started to import and export, the need for shipping corporations is skyrocketing. Business owners are looking for reliable shipping companies to bridge logistics gaps without delays. So why not capitalize on this business opportunity? Besides a solid market demand, the shipping business can reap hefty profits. But before you call the shots, you have to learn about this industry inside out. 

As business dynamics evolve continuously, the shipping business is more than buying a ship and delivering cargo. It involves a lot of complicated factors such as customs, licenses, permits, etc., that you have to manage. Once you have the paperwork sorted, focus on your business model. If you are wondering where to begin, have a look below. Here are six tips for starting a shipping business. 

1. Draft a Business Plan 

Truthfully, an impeccable business idea isn’t enough to kickstart a company. You will require funding sources, partners, and a team to run the operations. Then, to put all these requirements in order, you’d need to develop a business plan. It will include your company’s mission and vision statement. Likewise, you have to include your target market and the strategies you will use to attract customers. 

Most importantly, throw some light on business operations and how your model will work. Lookup reputable shipping companies like gokoho and study their model. Having an idea of other market players will help you align your strategy accordingly. Once the plan is ready, run it through different investors to acquire funding. 

Moreover, create a separate section for your legal entity. Whether you are bringing partners, seed funding, or bank loans – include that in your business plan. 

2. Outline Your Shipping Strategy 

When it comes to picking a strategy, you have to answer three questions. First, where do you plan to sell your services? Most entrepreneurs start from their garage until they have enough money to rent an office. As your business takes off, you have to consider a multi-channel approach. You have to promote your services on multiple channels like Amazon and eBay. It will expose your company to thousands of sellers exporting and importing their products worldwide. 

Secondly, who will be your shipping partner? Even though using one carrier will put you in a better-negotiating position, you need a shipping partner. It will allow you to mix and match carriers depending on the shipment and location. Lastly, do you plan to outsource? Some shipping companies collaborate with fulfillment centers instead of offering packing services themselves. If you have similar plans, start shortlisting your partners now. 

3. Understand Shipping Costs 

As the shipping industry is still in its infancy, the vendors and suppliers have a monopoly. Therefore, you have to strengthen your numbers game. For starters, understand the costs and see what factors into shipping calculations. Have a look below. 

  • These days, customers want fast shipping, which costs more money. So you can offer air shipments for this segment but at additional shipping charges. 
  • List down the services that involve extra costs. It would include insurance, packaging, and tracking. 
  • Select the destinations for your shipment services. Remember, the far the package travels, the higher it will cost. Also, delivering to commercial properties will have higher charges. 

When preparing the price list, you must keep all these factors in mind to ensure you aren’t over or undercharging customers. 

4. Negotiate Rates with Carrier

Do you have strong negotiation skills? If so, you can work a great deal with your carrier. Of course, your entire negotiation will depend on the shipment volume and dollar amount. Ideally, the volume should be lower with a high dollar worth to get the best possible rate. But you can always check out rates that other companies are getting and use that as a benchmark. 

Similarly, you can also cross-model. For this, you have to consider the different characteristics of your shipment. For example, if the products aren’t fragile, you can negotiate for a lower rate since there is less likelihood of damage. Remember, you have to settle for the best rate. Only then your shipping costs will seem competitive to the customers, providing you a market edge. 

5. Purchase Shipping Software

Some entrepreneurs want to manage things the traditional way. However, in 2022, businesses that can adapt to the changing circumstances are the ones that stand out. Hence, don’t shy away from technology. Instead, integrate shipping software into your business model. In addition to increasing efficiency, it will save you a lot of time and money. 

The software’s AI-powered features provide detailed reports on your shipments. It will show where you are the most and the average shipment costs. Likewise, it will provide real-time shipment rates across carriers, allowing you to make arrangements with low-cost carriers. Besides this, the software will enable companies to customize and print shipping labels, an incredible way to market your business. 

6. Partner with Fulfillment Center 

As a shipping business owner, you have to manage different things simultaneously. It can be overwhelming, from packing goods and dealing with customers to delivering door-to-door. So, why not outsource a couple of tasks? First, you can partner with a fulfillment center to streamline delivery. They will ship your products from centers nearby your customers’ residences. Hence, minimizing the number of zones you have to cross. 

In addition, they can help you market your business through fulfillment marketing. They will use customized packing to create a memorable unboxing experience for clients. Also, these centers have long-standing relationships with carriers. That means you can negotiate highly favorable rates. 

Most importantly, you have to ask if your chosen fulfillment center offers discounts on bulk business orders. If so, this will help you streamline costs and maximize profits. 

Final Thoughts 

While the growth prospects in the shipping industry are substantial, starting a shipping company is no cakewalk. You have to keep up with the industry dynamics, find reliable carriers, and minimize the shipping costs. Simultaneously, you have to offer the best prices to customers with different shipping modes. A well-aligned and stringent shipping strategy will streamline operations while taking your startup in the right direction.

Author

  • Chuck is Score LA’s Executive Director of Events and Marketing. He aims to help business owners and would-be entrepreneurs in Los Angeles improve their business practices.

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