David's posted a great post on shrinking the transaction log and log shipping. Log shipping and shrinking transaction logs

Unlike shrinking the data file shrinking the transaction log isn't a bad thing, IF you don't need the log to be that size.

I've seen many systems that shrink the log because it has grown only for it to grow the next day to the same size becuase of an overnight operation.

To reduce the growth of the transaction log you need to do one or more of the following,

1.Back it up more frequently
2.Change to simple recovery model
3.Use minimally logged operations
4.Keep transactions short and small
5.Break large transactions into smaller transactions
6.If using replication ensure that your backup of the replication topology is frequent enough