It used to be that only high-volume senders had complete visibility into carrier costs. Their core business depended on efficient shipping to maximize profitability, and they invested significant time and resources in sophisticated systems to manage their multi-carrier relationships.
In the past, these sophisticated multi-carrier shipping systems required a level of investment and support that made them impractical for office shippers who send mail and parcels regularly, but at much lower volumes. The default option for office shippers has typically been to track their parcel spend via multiple tedious spreadsheets and analyze their total cost of shipping after all the charges have been billed.
Until recently, overseeing sending costs after the fact didn’t involve too many surprises. But now the stakes are getting higher. Shippers now face growing complexity and escalating costs, including new surcharges and carrier fees that are often applied after a package ships. The challenges of managing these costs are becoming greater, and so are the consequences.
MORE COSTS AND MORE COMPLEXITY
Last fall, private carriers hiked rates and re-configured dimensional ratings. January saw a rate hike for United States Postal Service (USPS) Priority Mail and package services, plus their own set of dimensional surcharges.
As reported in PARCEL, FedEx has decreased the maximum length of packages not subject to its Additional Handling Fee. As of June 1, a $10.50 surcharge is now applied to packages whose longest side is 48 to 108 inches. Previously, a package with a longest side of up to 60 inches could be sent without a surcharge. UPS followed suit with the same fee and dimension limit, starting June 6. Incidentally, the fee itself was raised January 1, from $9 to $10.50 per package, a 17% boost, which now applies to a greater number of packages. This latest announcement is the sixth fee increase from FedEx and the seventh from UPS since the beginning of 2015. To say that sending costs are soaring is an understatement.
Compounding the challenge for office shippers, many of these new fees are not readily visible to the sender. Carrier sites give you base line pricing, but you may not know the price for other services upfront. For example, there may be a surcharge for delivery to a residential address. If you don’t check that box on the site, you won’t see the charge — typically around $3 per package — until you receive your invoice.
In a similar vein, many shippers don’t enter the actual weight and dimensions online. This can lead to additional charges and handling fees by the carriers. If your package exceeds the maximum length, you will incur an Additional Handling Fee, but you won’t see the $10.50 charge until your bill arrives. If you had known up front, you may have been able to re-package the shipment to avoid the fee and reduce your total cost.
You also may not know whether you’ve entered an incorrect address. If you have, your carrier will correct it and add a fee of $11 to $14 for the service. It doesn’t take much of an “error” to incorrectly address a parcel. In fact, any address that does not match what’s in the carrier’s database is defined as incorrectly addressed. For example, sending a parcel to “River Road” instead of “River Court” could cost you upwards of $14. Even for businesses that send a relatively small volume of parcels, that’s a scary proposition.
Another area where shippers often leave savings on the table is with flat rate boxes. These are simple to use — “if it fits, it ships” at one flat rate for whatever you can fit into that size box. But the flat rate depends on distance, so it may not always be the lowest cost way to ship. You should compare it with other shipping options to find the best one for shorter distances.
OTHER SENDING TRENDS
In many companies, shipping is done by multiple people across the organization. This of course makes it even more difficult to get visibility into the total multi-carrier spend. It’s easy for an employee to go directly to a carrier site, enter a credit card, and ship. But it makes it much more difficult to see and manage the total shipping costs across the company. In addition, it often prevents adherence to standardized shipping practices. As a consequence, individual senders may not be leveraging the carrier’s corporate discounts, since contracted rates cannot be easily shared among fragmented sending operations, and could be selecting carriers based on personal preference at greater cost to the company.
Without visibility of your total shipping volume, you may not qualify for the best negotiated rates from your carriers. Likewise, a standardized corporate sending policy may not be the most advantageous when it doesn’t factor in the entire sending operation.
The point is, office shippers need the same total visibility into carrier costs as high-volume senders. Fortunately, affordable multi-carrier solutions are now available in the cloud that offer greater visibility into sending costs and help businesses select the right carrier for each package. Companies pay only for the service they engage, while users get to see all costs and compare options among carriers, so they can make the best choice — before they send. Finally, small- and medium-volume senders will be able to choose their carriers wisely!
CHRIS GILES is Vice President, Business Development, Global Product Management, Pitney Bowes.