How to cut your costs, emissions and transit times by optimizing your distribution center locations and inventory

I love California, but it is truly one of the worst places in the United States to ship ecommerce parcels from to the rest of the country.

Why?

It all comes down to location, location, location. While California has great weather, it’s far from where the majority of the US population lives, and therefore shipping items from California results in much greater emissions, transportation costs and transit times.

In fact, if you were to move your distribution center from Southern California to Atlanta or Chicago, you would reduce your average shipping distance by about 40%, or from about 1,500 miles as the bird flies to about 900 miles as the bird flies to the majority of the US population. 

If you begin shipping out of two distribution centers, e.g. in Atlanta and Las Vegas, your average distance drops by 65%, meaning you can:

– Reduce CO2 by 50% and more 

– Reach 90% of Americans within two days

– Cut shipping costs by up to 40% 

EMISSIONS: Cut CO2e by over 50%!

Each 1% reduction in mileage = a 1% reduction in emissions, so a 65% reduction in mileage equals a 65% reduction in emissions. 

You still most likely have to get your items from the California ports to  these inland locations, but in most cases, you can ship items in bulk mostly via train, which is 90% less polluting than trucks. In addition, you eliminate the emissions associated with shipping the additional packaging required for individual ecommerce shipments.

End result, shipping from Las Vegas and Atlanta instead of Los Angeles for example, can reduce CO2e emissions by over 50%! 

I’m using California as an example, but any time you can shorten your supply chain, the better off you are

COSTS: Cut shipping costs by about 20%!

The average distance to the majority of the US population is longer than just about anywhere else in the continental United States, which means on average you’ll pay between 10% to 50% or more per shipment versus shipping from a more centralized location, or versus shipping from two or more distribution centers.

For US intercontinental shipments, UPS and FedEx use distance to determine which one of 8 zones a shipment falls into, with the smallest zones being cheaper than the larger zones.

For example, the top zone based on percent of population when shipping from:

The net result is that the most common price you would pay for a 10-pound item based on FedEx Ground published pricing would be: 

For heavier weight items, the cost differential is even greater, growing to a nearly 50% differential for a 45 pound item. 

Now layer on the demand for faster shipping, which means using more express shipping, which is even more expensive for you and the environment.

The bottom line is that moving from a single distribution center in California to a more centrally located distribution center or to two or more well-placed warehouses results in significantly lower costs and emissions, especially as the weight of your shipments increase.

PERFORMANCE: Cut transit times in half!

From California, over 60% of your ground shipments will take four or more days. Essentially, almost everything east of Texas will take at least four days, and almost anything in New England will take five days to arrive. 

On the flip side, if you ship from Atlanta and Las Vegas, you can deliver to over 90% of the United States population in two days or less. 

In addition, if you ship from Southern California, in order to deliver faster, you’ll be tempted to use more express/air shipping, which results in anywhere between 6 and 60X more emissions per shipment, as well as increased costs. 

BOTTOM LINE: California truly does suck for shipping nationally!

So if you love saving the environment and money while improving your sales and customer satisfaction, then find one or more centrally located distribution centers to ship from.

Just imagine, instead of paying extra to be green, you’ll be saving green and adding more green to your profits.