Would you like to do your part to reduce your company’s operating expenses and increase profits? Take a closer look at your shipping spend! Costs are on the rise. For large production shippers, labor costs have gone up 10-15% and more the past five years, according to fulfillment consulting firm F. Curtis Barry & Co. For office shippers, labor costs have likewise escalated. But worse is the hike in carrier costs. General shipping rates have increased more than 60% in the last decade, some up nearly five percent just this year. Carrier costs are pushed even higher by added fees, fuel surcharges, residential delivery, rural area delivery, and the list goes on. So how can you get these ever-growing carrier costs under control?
Step 1: Uncover Your Company's Shipping Habits
Today, shipping can be initiated from any desktop. This makes it difficult to see what your company’s shipping habits — including total number of shipments, types of packages being shipped, and destinations — actually are. You also need to know which carrier services are being used and whether they’re necessary. For example, does a package have to be delivered by a next day morning deadline, or can it wait a few hours? Are people inadvertently requesting, and paying for, extra-cost services after the cut-off times?
Step 2: Understand What Your Shipping Spend Truly Looks Like
Most companies have no idea what they’re actually spending on shipping and where they’re spending it. For example, you may ship from 50 locations, including sales offices and employees working from home. Each location may have its own USPS, UPS, and FedEx accounts. But to get the volume discounts you deserve, you need to prove your total carrier volume, and to do that, you need a record of all those volumes from each location.
With shipping activities spread across multiple carriers using different reporting tools, how can you see what your shipping habits and total shipping spend actually are? The answer is to use a shipping solution whose software aggregates all carrier usage, charges, and fees on one platform. Until you get a global view of carrier costs, you don’t know what they are — so how can you start finding savings and negotiating discounts? A shipping solution can show you what your entire spend looks like, so you can start to realize the carrier-specific benefits available to you.
Step 3: Start Reducing Your Spend
Today’s shipping solutions can open up a host of ways to cut costs:
- Carrier negotiation — Once you know total carrier volumes, you can leverage that data to get the best rates.
- Optimized carrier selection — Different carriers have different rates depending on destination, recipient type, package type, levels of service, and other criteria. Avoid “sweetheart” deals with a single carrier, as those arrangements typically have exceptions and can end up costing you more money in the long run. Instead, with a multi-carrier system, your users can see which carrier and services are best for each individual package. Presenting the cheapest and best rate for each package to users on every desktop across the entire organization can add up to substantial cost savings.
- Consolidated carrier payments — Look for a shipping solution partner who offers a consolidated payment service. You make just one payment once a month to the partner who then pays all carriers on your behalf.
- Business rules — These let you define the levels of carrier service employees can use when shipping certain package types to particular locations. With a shipping solution that lets you configure your own business rules, you can control costs at the user level.
- Central control, decentralized implementation — Shipping solutions give you centralized control of all shipping costs, yet the latest cloud-based solutions make system implementation simple and easy to do across an entire organization, including mobile and home-based users.
- Upfront visibility into accessorial fees and surcharges — These supplementary fees are in your carrier agreement, but they only appear on the carrier invoices, not upfront orders. They can be added to any package, so costs can unexpectedly explode. They include:
--Acknowledgment of Delivery (AOD) and Proof of Delivery (POD)
--Call tag — for carrier to pick up package from consignee and return to shipper
--Collect on Delivery (COD)
--Delivery Area Surcharges (DAS) for residential and commercial rural and super rural areas
--Dimensional (DIM) weight rating
--Oversize fees — for larger lightweight packages
--Peak shipping charges during the holidays
--Residential Delivery Surcharges (RDS)
--Stop off charges
- Upfront billing visibility — Users often don’t enter all shipping information correctly and therefore receive an inaccurate (usually lower) shipment cost when printing the label. This in turn leads to incorrect payment fees from your carrier, as well as additional accessorial charges. With a shipping solution, you can require users to enter all required “ship from” and “ship to” information, so the system can check to make sure an accurate rate is shown to users before they print their labels. This lets users make accurate decisions when choosing which carrier and service to use.
To further reduce costs, use your software to:
- Take advantage of commercial base pricing, for savings up to 20%, or commercial plus base pricing for an even deeper discount
- Use Optical Character Recognition (OCR) data capture to save labor by taking a picture of an address label and auto-entering the “ship to” information into the system
- Facilitate rate shopping across all carriers
- Integrate into back-end accounting systems to reconcile department charges
- Limit ship requests so you can centrally control carrier and service level choices
Once you have a single view of all your shipping activities to see and control the spend, the next step is to streamline your processes. Having cut carrier costs, you can now look for ways to boost productivity and further trim labor costs.
Aaron Videtto, Director of Office Shipping Solutions at Pitney Bowes, has extensive experience designing, building and delivering global, user friendly, enterprise-class sending and receiving solutions for mobile, SaaS and on-premise needs.