Price sheets are promises – invoices are facts. Ever promise to charge your client $15 shipping and end up paying $25 and having to eat the difference? Commercial carriers like UPS and FedEx have over 50 different kinds of surcharges. They quote a base price for a shipment, but when they add surcharges for fuel, signature, residential and extended delivery, dimensional weight, and so on, the base price rises steeply. Resellers usually do the same thing: they give you an “estimated” price – which will rise with carriers’ surcharges – and the reseller’s end-of-the-month invoice.
Multi-carrier rate shopping is so complex, you may need to make dozens or even hundreds of computations to get the right answer to one simple question: what’s the best way to ship this parcel?
Comparing Carrier A to Carrier B is just apples to apples – when what you often really need is an orange.
Which is cheaper?
• A 25% discount with Carrier A?
• Or a 35% discount with Carrier B?
Who knows? Carriers often present maximum discounts. That means they may discount 35% between City X and City Y or on 3-Day Service (which you may never use), but they only give you 5% discounts to City Z on 2-Day Service – which may be the way you mostly ship.
The rep from your favorite carrier will seldom advise you to use the competition when it makes sense for you – because it never makes sense for him!
So how can you really find the best way – cheapest, fastest or both – to ship a particular package?
Solution
Don’t make any one carrier or one service a habit. Use the carrier that’s just right for each shipment.
If you’re shipping a $150,000 parcel from New York to Bangkok, FedEx International Priority is a great choice. Sure, it’s an expensive class of service, but the value of the goods and the cost of shipping insurance far outweigh the cost of freight.
If you’re shipping a $150 parcel to a residence in the USA, why not use First Class Mail and pay under $4 (with insurance) rather than $8 or more with FedEx or UPS?
Diversify. Ship with a multi-carrier transportation management system that offers you options, like:
• FedEx
• UPS
• USPS
• FedEx SmartPost (FedEx Ground with last-mile via the USPS)
• UPS SurePost (UPS Ground with last-mile via the USPS)
• Regional Carriers
Get real-time, final quotes before you buy, using multi-carrier shipping software that directly pings carrier servers and displays all the results online. The price you get at the time of purchase is absolutely accurate and is the final price you’ll pay. Multi-carrier software uses computer power to make humanly impossible calculations possible at a keystroke. Some companies offer it for free. Some charge licensing fees. Either way, it will abundantly pay for itself in savings.
Ask the $1 Million Question
I once watched an account rep try to persuade a jewelry company with 6,000 stores to use overnight AM service for all jewelry shipments for “security reasons.” Of course, carriers make more money on overnight air than on 2-day air.
The VP of Logistics of the jewelry giant brought out a huge computer print-out. He said:
“At the start of last fiscal year, I told all my people to ask one question every time they shipped anything to anyone. The question was: ‘Is 2-Day OK?’
“Everyone screamed. They said the clients wouldn’t stand for it. The competition would kill us. But I told them: just ask. Guess what? 80% of the time the answer was: ‘Sure.’ Now let me show you this computer print-out. I saved $1 million this year by asking that one, simple question.”
When you order something online and get the choice of “Overnight: $20 Shipping & Handling” or “3-5 Days, Free Shipping,” which do you usually choose?
Solution
Every time you ship anything to anyone, even valuable goods, ask, “Is 2-Day OK?” or “Is Ground OK?” You may even want to say: “2-Day is Free, but there’s a $10 surcharge for overnight. Which do you want?” Ten dollars might not entirely cover your overnight up-charge, but it may get a lot of recipients to agree that 2-Day is fine. You may not be a multi-million-dollar company, but in percentage terms, you’ll benefit in the same way the big guys do.
Worried that 2-Day is less secure than overnight air for high-value? I once conducted a statistical analysis of five million shipments of jewelry in the US. More losses occurred by overnight service than by 2-Day or Ground. More losses occurred on Wednesdays than over weekends. And double-boxing produced no fewer losses than not double-boxing. Why? Who knows? All I care about, when it comes to shipping losses, are statistics. Urban myths won’t save you a dime.
James Moseley, President/CEO, TransGuardian, Inc. can be reached at www.transguardian.com,jim@transguaredian.com or (877)570-SHIP.
This is just an excerpt of James Moseley's full article on insured shipping (and other issues shippers face), which will appear in the September/October issue of PARCEL. Don't miss it!
Multi-carrier rate shopping is so complex, you may need to make dozens or even hundreds of computations to get the right answer to one simple question: what’s the best way to ship this parcel?
Comparing Carrier A to Carrier B is just apples to apples – when what you often really need is an orange.
Which is cheaper?
• A 25% discount with Carrier A?
• Or a 35% discount with Carrier B?
Who knows? Carriers often present maximum discounts. That means they may discount 35% between City X and City Y or on 3-Day Service (which you may never use), but they only give you 5% discounts to City Z on 2-Day Service – which may be the way you mostly ship.
The rep from your favorite carrier will seldom advise you to use the competition when it makes sense for you – because it never makes sense for him!
So how can you really find the best way – cheapest, fastest or both – to ship a particular package?
Solution
Don’t make any one carrier or one service a habit. Use the carrier that’s just right for each shipment.
If you’re shipping a $150,000 parcel from New York to Bangkok, FedEx International Priority is a great choice. Sure, it’s an expensive class of service, but the value of the goods and the cost of shipping insurance far outweigh the cost of freight.
If you’re shipping a $150 parcel to a residence in the USA, why not use First Class Mail and pay under $4 (with insurance) rather than $8 or more with FedEx or UPS?
Diversify. Ship with a multi-carrier transportation management system that offers you options, like:
• FedEx
• UPS
• USPS
• FedEx SmartPost (FedEx Ground with last-mile via the USPS)
• UPS SurePost (UPS Ground with last-mile via the USPS)
• Regional Carriers
Get real-time, final quotes before you buy, using multi-carrier shipping software that directly pings carrier servers and displays all the results online. The price you get at the time of purchase is absolutely accurate and is the final price you’ll pay. Multi-carrier software uses computer power to make humanly impossible calculations possible at a keystroke. Some companies offer it for free. Some charge licensing fees. Either way, it will abundantly pay for itself in savings.
Ask the $1 Million Question
I once watched an account rep try to persuade a jewelry company with 6,000 stores to use overnight AM service for all jewelry shipments for “security reasons.” Of course, carriers make more money on overnight air than on 2-day air.
The VP of Logistics of the jewelry giant brought out a huge computer print-out. He said:
“At the start of last fiscal year, I told all my people to ask one question every time they shipped anything to anyone. The question was: ‘Is 2-Day OK?’
“Everyone screamed. They said the clients wouldn’t stand for it. The competition would kill us. But I told them: just ask. Guess what? 80% of the time the answer was: ‘Sure.’ Now let me show you this computer print-out. I saved $1 million this year by asking that one, simple question.”
When you order something online and get the choice of “Overnight: $20 Shipping & Handling” or “3-5 Days, Free Shipping,” which do you usually choose?
Solution
Every time you ship anything to anyone, even valuable goods, ask, “Is 2-Day OK?” or “Is Ground OK?” You may even want to say: “2-Day is Free, but there’s a $10 surcharge for overnight. Which do you want?” Ten dollars might not entirely cover your overnight up-charge, but it may get a lot of recipients to agree that 2-Day is fine. You may not be a multi-million-dollar company, but in percentage terms, you’ll benefit in the same way the big guys do.
Worried that 2-Day is less secure than overnight air for high-value? I once conducted a statistical analysis of five million shipments of jewelry in the US. More losses occurred by overnight service than by 2-Day or Ground. More losses occurred on Wednesdays than over weekends. And double-boxing produced no fewer losses than not double-boxing. Why? Who knows? All I care about, when it comes to shipping losses, are statistics. Urban myths won’t save you a dime.
James Moseley, President/CEO, TransGuardian, Inc. can be reached at www.transguardian.com,jim@transguaredian.com or (877)570-SHIP.
This is just an excerpt of James Moseley's full article on insured shipping (and other issues shippers face), which will appear in the September/October issue of PARCEL. Don't miss it!
