There are very few companies not concerned with rising small parcel shipping costs. If they aren’t, they should be, with the recent GRI announcements from UPS and FedEx impacting shippers’ rates an average of 4.9%. But, that’s just an average; the impact for many is far greater. When you consider parcel shipping can account for 5%–10% of a company’s total operating costs — it’s no small line-item cost to ignore.
Here are 3 ways shippers can take control of their small parcel shipping spend to make sure their costs are optimized.
Audit Your Invoices
During a freight audit, invoices are checked against shipping and discount in the company’s rate agreement. It is well worth the effort, since errors on freight and parcel invoices can make up 2% or more of a business’s freight spend.
Rate Verification: A rate audit makes sure that all the negotiated prices, discounts, and incentives are invoiced properly. It’s the only way to catch if the wrong base rate, mileage, or weight was used.
Late Shipments: Packages that do arrive on time should be credited for the full cost of the shipment. Approximately 2%–5% of packages do not arrive on time, with higher percentages occurring at peak seasons. This is money you, as the shipper, are entitled to have returned.
Compliance: Because of the volume of parcel invoices, carriers often submit duplicate bills with different tracking or invoice numbers. While carriers offer a refund on a double-paid invoice, it is better to catch this error before payment is made.
Clearly there are direct savings to be had by auditing invoices. But, since auditing invoices is a very labor-intensive process and made easier with technology, many organizations choose to outsource auditing to a third party.
Get a TMS
A Transportation Management System (TMS), which helps automate and optimize the entire logistics process, is one of the most effective ways to drive cost savings.
A TMS can lower logistics costs in several key ways — such as by decreasing the time spent on freight management tasks like load planning and completing paperwork. Decision making is also optimized (like ensuring the lowest-cost carrier is always selected), as is the ability to plan shipments and capacity across multiple locations when necessary. Overall supply chain visibility improves, as well, with the ability to perform real-time track and trace through carrier API connections.
Use a Negotiation Consultant
An expert at carrier agreement negotiation is another overlooked tool shippers can put to use to lower their small parcel shipping costs. Because carriers negotiate constantly, and their business depends on them doing it well, they’re really good at it. The key is that they have an information advantage by knowing what their costs are to serve your business, and what real market rates other companies like yours are paying. This is how a negotiation consultant provides value. Shippers on their own have no insight into what competitive rates are, but a negotiation consultant does, so you’ll know what you should be paying.