Top 5 tips for parcel shippers to save money

The world of internet shopping is growing ever larger with each year. Here are some good tips for all the shippers on how to save time and money to become more competitive.

1. Do not over rely on a single carrier.

Many shippers are relying too heavily on two major carriers in US for their shipping — UPS and FedEx. You might be surprised, but by diversifying your carriers you can not only save money, but improve timing for you deliveries and get a higher customer satisfaction.

Rookie mistake is to look for other large shipping companies like DHL Global Mail or USPS. Local carriers tend to have lower prices due to their regional focus, direct loading and often higher attention to details due to the small size of the company.

A 2012 Shipware survey on shipper’s usage of regional carriers reveals that less than 30% of volume shippers are using regional parcel carriers. And the vast majority of those companies that do use regional do so for less than 15% of their overall shipments.

Many regional carriers offer discounted pricing through simple contracts that often carry no volume commitments, include better pricing, improved dimensional divisors and far fewer surcharges than FedEx and UPS.

2. Having local carrier rep.

Local carrier rep often means higher knowledge of the area and therefore better advice. Since your region of operation is their main market, local reps tend to have a higher impact on your pricing. Smaller companies usually care more for their customers.

Many carrier reps complain that some customers do not make time for account reviews which allows the rep demonstrate additional value, new services and cost savings opportunities. Many shippers only contact the rep when there’s a problem, to resolve a billing issue or address the occasional late or lost shipment.

3. Failure to route packages by least cost/best way

Since carriers provide free shipping systems, why then would anyone consider a third party shipping solution that costs money? While carrier provided automation might be adequate for some shippers, third party automation options should be evaluated periodically to ensure maximum productivity and efficiency.

Here are several reasons to explore third party solutions:

Savings: Reduce Transportation Charges as much as 10% through: Least cost routing across multiple carriers and service classes; Upfront address validation to avoid address correction fees; Upfront capture of total costs for accurate charge backs, and more.

Leverage: The carriers provide free automation solutions not only so customers can efficiently use their services, but also as a means to lock them into exclusively using its services. The more integrated the carrier is in company operations, the stronger the lock becomes. The ability to ship with any carrier on a minutes’ notice offers significant leverage in negotiations, promotes multi-carrier solutions, and provides a backup plan.

Ask yourself the question, what is my “free” system costing me? Then explore alternatives. Most shippers realize rapid return on investment when deploying third party solutions. Leading software providers include ABOL, ADSI, Agile Network, Cloud 9, CMS GlobalSoft, Descartes, Digital Shipper, Enroute Systems Corp, Harvey Software, Kewill, Logicor, Malvern, MEI Distribution, Oz Development, Pitney Bowes, Precision Software, ProShip, ProcessWeaver, RateLink, ShipJunction, ShipStation, ShipWorks, StarShip, and Varsity Logistics.

4. Not Using the Right Box Size

You will be surprised by how much money you can save simply by changing your packaging. You have probably experienced it before, when a small item arrives in a large mostly empty box.

Carriers like FedEx and UPS tend to intentionally use larger packaging because it will raise cost profile. Try using your own packaging, or negotiate the packaging with your courier rep.

The Retail Industry Leaders Association (RILA) recommends an evaluation of current materials and packaging designs, analysis of alternatives, and education and engagement with product suppliers, transportation vendors, retail buyers, customers and other stakeholders.

5. Pay close attention to the contract with your carrier.

Do not ignore the fine print!

Many shippers tend to focus contract negotiations on discounts at the expense of ignoring terms and conditions. Complicated and lengthy agreements that large couriers often use can contain a lot of hidden costs like minimum shipment charges, general rate increases, accessorial charges, late payment fees and other such contract “gotchas.”

A single word within a carrier agreement can result in significant rate hikes. As an example, UPS recently created a new set of list rates called “Standard” rates. However, these new “standard” rates are anything but standard. The new tariff is as much as 30% higher for air services than their “Daily” rates!

Remind the carriers that you are the customer, and that you will only sign a fair, transparent and equitable contract free of undue burdens and penalties. Most companies will be very reasonable once reminded about that.

For more tips read an article by Rob Martinez [part 1] and [part] where he lists top 10 mistakes that parcel shippers make.