With the never-ending string of rate increases, surcharges and additional costs levied by the carriers upon businesses that rely on parcel shipping, it is no surprise that managing your shipping expenses has become a C-level concern. The sheer size of the expense these days necessitates it. And when business expenses become C-level concerns, the orders are typically pretty clear: find ways to cut costs.
While shipping contracts vary from company to company, and encompass a large number of variables – some that can be negotiated and some that can’t – our research and experience in this area has shown us that there are 5 common, and potentially expensive decisions that many companies often get wrong. Why do they get them wrong? – because without ways to organize and visualize vast amounts of shipping data, the right answers are hidden. These decisions can have a dramatic effect on your shipping expenses – so getting them right is paramount.
With that in mind, let’s take a look at the five decisions companies should make sure they pay attention to and immediately adjust if misconfigured and costing you money:
- Air vs. Ground Shipping – There’s a reason that there are different ways to ship a package. Not everything needs to be shipped via air. Understanding the difference requires looking at where the packages are being sent from and who they’re going to. In several cases, we’ve uncovered companies paying extra to ship packages 3-day and 2-day standard when the package would have arrived the very same day if shipped via ground.
- International – Priority vs. Economy – Don’t make your type of shipping be a blanket selection for every package and every order. There are savings to be realized in separating out which orders truly need priority international shipping – and which can be sent international economy and provide some cost relief, without hurting customer expectations. In many cases it’s only a difference between 1-3 days and 4-6 days.
- Overnight Priority vs. Overnight Standard – Similar to the prior settings, this just goes to illustrate how important it is to ensure you’re optimizing your service level for cost and need. Priority overnight usually means arrival by 10:30am, while overnight standard costs less, but still means overnight, just a bit later in the day – and is less expensive.
- Early Morning Guarantees – Very few packages need to be at their destination by 8:00 am. Be judicious in your use of early morning guaranteed services. Why pay extra if it can still get there overnight, but just later in the day? Early morning guarantees can be very expensive with very little upside. Save this designation for only when it’s truly necessary.
- Recurring Address Corrections – Carriers charge extra when an address is incorrect and the package has to come back, or the address corrected before delivery. And because the shipper corrected it and delivered it to the correct address, it doesn’t fix that information in your shipping system. Shippers aren’t going to do you any favors and call this out to you. It’s up to you to recognize when this happens and correct these errors in your system as soon as you can, otherwise you’re just throwing money away when continually trying to ship to an incorrect address.
As I mentioned earlier, there are a great number of variables and settings to consider when managing your shipping contract with one of the large carriers. The aspects listed above are only scraping the surface of what can be done to improve your bottom line, as long as you have the data needed to make informed adjustments and decisions.
Correcting these five common mistakes is a good place to get started, and to show the C-level bosses your new dedication to gathering data on your shipping operations and using it to lower expenses wherever possible.
The Reveel App uses AI and machine learning to provide an unparalleled look into what’s impacting your bottom line. Through invoice audits, peer benchmarking, and rate modeling/simulations, you can see the health of your operation and assess pricing changes from parcel carriers like FedEx and UPS. Sign up for a free Reveel account today to see how you can leverage automation to synthesize your data, ship more for less, and reduce the time needed to identify issues and action items.
