Shipping
How to Reduce Shipping Costs in a Tough Economy
- Written by Jana Gentry Smith
Between rising costs, changing regulations, and global uncertainty, running an ecommerce business in 2025 feels like you’re a squirrel trying to dodge the wheels of oncoming traffic. Which way do you go? Should you just freeze?
While many retailers are scrambling, smart companies are finding ways to minimize the impact of a rocky economy. Let’s explore what's happening and strategies to help you save on shipping costs.
What is impacting shipping costs?
Are you attempting to budget for shipping costs, but tariff rules keep changing? You're not alone. Jeff Berman, Group News Editor for Logistics Management and related publications, said, “The one word that continually comes up regardless of sector or mode of goods transportation, it all comes back to this feeling of uncertainty."It's not just small businesses feeling this way. Jeff says even giants like Walmart are struggling with the same issues. “Companies are dealing with a feeling of near paralysis, where they're unable to forecast beyond the next quarter.”
Current events are creating chaos
Adding to the complexities companies are facing, the pause on the "Liberation Day" tariff, a sweeping set of import duties and trade policy changes announced by U.S. President Donald Trump on April 2, 2025, ends on July 8, 2025. After that, retailers and consumers might see 50% tariffs on European goods along with increases on goods from other countries.Remember cheap packages from China that made dropshipping so attractive? The elimination of the de minimis exemption for China and Hong Kong now means those packages face new tariffs of up to 145%.
Plus, if you're shipping anything through conflict zones, you've probably noticed ocean freight rates have jumped 76% from Shanghai to UAE ports. Smaller retailers are being hit hardest, while larger companies can push back against rate increases.
At this point, everyone has an eye on the news that late summer will bring. “Things have settled down a bit now. But again, we'll see what happens in August, “Jeff explains. “I think that's what everyone was very curious about, and it's kind of alarming that we haven't heard much in the way of any of these so-called trade agreements outside of what we’ve heard about the one with China and the one with the UK.”With all this uncertainty swirling around tariffs, rates, and regulations, you might think the best strategy is to wait and see what happens. But successful companies are taking the opposite approach.
Instead of trying to predict the unpredictable, they're building flexible systems that can adapt quickly to whatever comes next. The strategies below focus on creating operational agility — automating decisions that formerly required manual analysis, diversifying shipping options to avoid single points of failure, and building data-driven processes that work regardless of which way the economic winds blow.
6 ways to optimize your shipping costs for the rest of 2025
All of these variable costs make it nearly impossible to budget accurately, so companies are looking to maximize savings where possible. You likely are too if you’ve read this far, so here are six ways you can save on inventory, warehousing, and shipping costs while providing a great customer experience.
1. Automate your way to savings
When tariffs can change overnight and shipping rates change weekly, manual processes become your biggest vulnerability. Imagine trying to manually compare shipping costs when a new tariff kicks in, or scrambling to find alternative routes when conflict zones disrupt your usual shipping lanes.
Automation becomes your competitive advantage because it can instantly recalculate optimal shipping routes and carriers based on real-time rate changes. Here's what to automate:
Rate comparison: Automatically find the cheapest shipping option when tariffs change
Route optimization: Instantly switch shipping paths when geopolitical events affect costs
Inventory allocation: Automatically move stock closer to customers when cross-border shipping becomes expensive
With automation, you can also streamline your operations without adding to your workload. Look for areas in your shipping process that don’t require the human touch, and consider automating those:
Process multichannel order information
Create and bulk print shipping labels
Select carriers and find the best shipping rates
Set custom shipping rules and presets
Forecast like your margins depend on it (because they do). Better predictions mean fewer emergency shipments and more strategic inventory placement.
When companies can only plan a quarter ahead, good forecasting becomes your life preserver. Combined, all these automations help operations run smoothly while saving you time and money.
2. Stop manually comparing rates
With the rapidly changing tariff rate fluctuation, who has time to check UPS, FedEx, and USPS for every single order? That's like manually calculating taxes when TurboTax exists.
This is where shipping software like Veeqo comes in. Veeqo automatically scouts the cheapest option for each shipment. It eliminates the guesswork and effort, so you don’t leave money on the table and can focus your energy on other aspects of your operations.
You get pre-negotiated shipping rates without needing to ship thousands of packages a month. All Veeqo users' volumes are bundled together, so even smaller companies get enterprise-level pricing.
3. Stock smart (not just more)
Jeff says companies handling this chaos better are "those who brought in inventory sooner and built up their buffer stock ahead of potential tariff fluctuations.”
Balance is key here. You need enough inventory to avoid rush orders, but not so much that you're drowning in tariff costs. Review your multichannel sales data to learn which products are your best sellers and where most of those orders are coming from. With this information, you have a solid idea of how much product to keep in stock.
Real-time inventory tracking prevents those panic moments when you're out of stock and need to resort to expensive expedited shipping. It also stops overselling, which creates its own costly problems.
4. Use smart routing
Plus, you can use smart routing to automatically assign shipping locations to orders based on factors like available stock and shipping costs. If products have less distance to ship, they’re less expensive to ship.
Veeqo's free inventory management software automatically syncs inventory levels across all sales channels. So, you always know what's where and how much you have on hand. Plus, automatically move stock closer to customers when cross-border shipping becomes expensive.
With accurate stock information, you’ll avoid those "oops, we're out of stock" situations that force you into expensive overnight shipping to keep customers happy.
5. Put extra thought into packaging
Who hasn’t come home to an online order delivery in a battered box that looks like it was trampled by buffalo, kicked off a cliff, and sprayed with a firehose? The results of the beating a package endures in last-mile shipping directly impact the customer experience.
As dimensional weight charges increase with fuel costs, investing upfront in better packaging customized for your products in the last-mile phase of shipping usually pays for itself within a few months. Here’s how the right packaging contributes to shipping savings:
Prevents damage and returns
Reduces dimensional weight charges
Supports your brand’s sustainability initiatives
Every return you prevent is money in your pocket twice. You save on return shipping and replacement costs while winning over customers with a positive experience.
6. Make a Plan B (and maybe a Plan C and Plan D)
Use scenario modeling to test how changes might affect your costs. What happens if tariffs go up 20%? What if fuel costs spike? Regular operations and contract reviews keep you competitive.
What was a good deal six months ago might not be today. A process that worked in 2023 might be seriously outdated, considering the state of international relations and rapidly changing tech capabilities and software integrations.
Take 2025 one step (or quarter) at a time to save on shipping
While you can't control global trade wars or fuel prices, you can control how you respond to them. Shipping isn’t going to get simpler anytime soon. Success will depend on managing volatility, embracing technology, and adapting to new regulatory and market realities.
As Jeff Berman puts it, “We don't know what's around the corner," but businesses with solid strategies will handle whatever comes next. Start with one or two changes to build an adaptable, data-driven operation rather than trying to overhaul everything at once:
This week: Audit your current shipping process. What tasks are you doing manually that could be automated?
This month: Implement one or two major changes. Will they be automated rate shopping, inventory management, or improved packaging?
This quarter: Build scenario planning into your operations. Test how different tariff changes would affect your costs, and have contingency plans ready.
Remember: every dollar you save on shipping is a dollar you can invest in growth, better customer service, or building even more competitive advantages. Consider making it less of a challenge by using integrated tools instead of juggling multiple tools.
Veeqo's free shipping software combines rate shopping, inventory management, and profit analysis, and shipping credits that give you up to 5% back on eligible shipments? That's free money on spending you're already doing.
Sometimes the best solution is the simplest one. With the right approach, you can actually reduce expenses while making customers happier. The businesses that figure this out now will have a huge advantage when things settle down.
Create your free Veeqo account today to stop reacting to shipping costs and start controlling them.
