The no-end-in-sight rise in transportation costs is putting everyone in extreme savings mode. Identifying ways to reduce costs and streamlining processes have become companies’ top priorities. Yet, when considering where to make changes, many companies tend to overlook their own parcel operations as a significant source of savings.
Two operational areas that can yield quick savings are negotiations and auditing.
Negotiations
Carrier negotiations are used by many companies that ship small packages. With the shift in carrier market shares, competition among parcel carriers has increased, giving shippers more choices and more opportunities to get additional services. In this “buyer’s market,” companies can offset inevitable cost increases such as fuel and accessorials by effectively negotiating with carriers.
Most organizations lack the time and resources to effectively address the complex nature of parcel carriers’ billing methods. Consider this: More than 80 accessorials alone exist today, making billing and tracking shipments nearly impossible to manage. As such, many shippers turn to a third party to help with negotiations. Many factors determine whether a company chooses to outsource or keep negotiations in-house, but the most important thing to consider is that negotiation is a fundamental step in reducing parcel costs.
Taking this step not only lowers parcel costs but also improves transit and pick-up times, billing, and operations. And with international shipping on the rise, knowing how carriers perform in these areas and how you can receive the best possible discounts goes a long way toward improving your bottom line.
To ensure that your parcel negotiations produce the desired results, study your current parcel operation, including volumes, discounts, changes in parcel volumes since the most recent contract negotiation, and other data specific to your small package freight.
Another valuable way to maximize your negotiating position is to receive electronic billing from your carriers. This provides a wealth of detailed shipment information that will help you when it’s time to start the negotiation process.
Before starting negotiations, have answers to the following questions:
1. What was your actual rate increase last year?
2. How many packages hit minimum revenue per package?
3. How many packages were hit with a DAS in the past 12 months?
4. How many accounts have a weekly service fee?
5. What is your average weight ground and air?
6. What did you spend on fuel in the past 12 months?
7. What is the air and ground DIM factor?
8. How many packages had address corrections?
9. What tier are you hitting on your current contract?
10. What actual discounts are currently in place?
Knowing your contract and volumes is the key to negotiating a contract that meets your needs, and can result in savings of 3 percent to 7 percent.
Auditing
Parcel auditing provides financial recovery for accessorials associated with each small package that goes out the door. Charges such as rating errors, billed but not shipped, duplicate billings, and guaranteed service failures are likely to be overlooked if there is no auditing process in place.
Another critical area many companies neglect is parcel fraud. Unfortunately, this crime is becoming more prevalent because companies don’t have the technology and auditing in place to prevent it. However, parcel audits can detect fraud within shipping facilities, adding to a company’s potential savings.
Performing parcel audits, either using internal resources or outsourcing to a third party, has resulted in up to 17 percent savings for some companies. Typical savings range from .3 percent to 3 percent.
GENCO’s parcel negotiation and auditing services allow companies to focus on their core business functions. Buoyed by visibility to $2.5 billion in parcel freight annually, the management of $1 billion in freight annually, and the in-depth negotiation and auditing experience of more than 50 analysts, GENCO is well poised to help your company save now.
For more information about GENCO Supply Chain Solutions’ parcel solutions call (800) 378-9671 or email solution@genco.com.
Bill Knasinski is Vice President of GENCO’s Parcel Solutions. He can be reached at (920) 593-8935 or knasinsb@genco.com.
Two operational areas that can yield quick savings are negotiations and auditing.
Negotiations
Carrier negotiations are used by many companies that ship small packages. With the shift in carrier market shares, competition among parcel carriers has increased, giving shippers more choices and more opportunities to get additional services. In this “buyer’s market,” companies can offset inevitable cost increases such as fuel and accessorials by effectively negotiating with carriers.
Most organizations lack the time and resources to effectively address the complex nature of parcel carriers’ billing methods. Consider this: More than 80 accessorials alone exist today, making billing and tracking shipments nearly impossible to manage. As such, many shippers turn to a third party to help with negotiations. Many factors determine whether a company chooses to outsource or keep negotiations in-house, but the most important thing to consider is that negotiation is a fundamental step in reducing parcel costs.
Taking this step not only lowers parcel costs but also improves transit and pick-up times, billing, and operations. And with international shipping on the rise, knowing how carriers perform in these areas and how you can receive the best possible discounts goes a long way toward improving your bottom line.
To ensure that your parcel negotiations produce the desired results, study your current parcel operation, including volumes, discounts, changes in parcel volumes since the most recent contract negotiation, and other data specific to your small package freight.
Another valuable way to maximize your negotiating position is to receive electronic billing from your carriers. This provides a wealth of detailed shipment information that will help you when it’s time to start the negotiation process.
Before starting negotiations, have answers to the following questions:
1. What was your actual rate increase last year?
2. How many packages hit minimum revenue per package?
3. How many packages were hit with a DAS in the past 12 months?
4. How many accounts have a weekly service fee?
5. What is your average weight ground and air?
6. What did you spend on fuel in the past 12 months?
7. What is the air and ground DIM factor?
8. How many packages had address corrections?
9. What tier are you hitting on your current contract?
10. What actual discounts are currently in place?
Knowing your contract and volumes is the key to negotiating a contract that meets your needs, and can result in savings of 3 percent to 7 percent.
Auditing
Parcel auditing provides financial recovery for accessorials associated with each small package that goes out the door. Charges such as rating errors, billed but not shipped, duplicate billings, and guaranteed service failures are likely to be overlooked if there is no auditing process in place.
Another critical area many companies neglect is parcel fraud. Unfortunately, this crime is becoming more prevalent because companies don’t have the technology and auditing in place to prevent it. However, parcel audits can detect fraud within shipping facilities, adding to a company’s potential savings.
Performing parcel audits, either using internal resources or outsourcing to a third party, has resulted in up to 17 percent savings for some companies. Typical savings range from .3 percent to 3 percent.
GENCO’s parcel negotiation and auditing services allow companies to focus on their core business functions. Buoyed by visibility to $2.5 billion in parcel freight annually, the management of $1 billion in freight annually, and the in-depth negotiation and auditing experience of more than 50 analysts, GENCO is well poised to help your company save now.
For more information about GENCO Supply Chain Solutions’ parcel solutions call (800) 378-9671 or email solution@genco.com.
Bill Knasinski is Vice President of GENCO’s Parcel Solutions. He can be reached at (920) 593-8935 or knasinsb@genco.com.
