Do you ever feel that since you’re a low-volume shipper, you can’t get the shipping rates, discounts, and savings your larger competitors do? Although a higher shipping volume can have a positive influence on your shipping costs, it is by no means the keys to the kingdom. What are the keys to the kingdom are those practices that will allow you to access the path to lower rates, better service, and higher profits.
For the purpose of this article, low-volume means those commercial shippers who send between 500 and 2,000 shipments a day. However, it should be noted that some of these strategies may also be appropriate for much larger volume shippers as well.
Accumulate many options. You must spend the time and do the work to first understand yourself and your parcel data. Volume is just the beginning; you must also know your product, weight, packaging, service level agreement (SLA) requirements, and size. The more you know yourself, the more you will be able articulate your requirements to your potential vendors or partners. I use the word partners because utilizing your carrier, technology, and consulting vendors as partners in conjunction with one another will provide the best results. The days of utilizing only one carrier are over. You must get quotes, contracts, and SLAs from multiple carriers (national carriers, regional carriers, and specialty providers) for multiple services. This might seem laborious, but it will pay off in the long run. If you don’t have the time or labor, you can hire a consulting company that will do the negotiating for you.
Take advantage of rates negotiated by others, such as your customers, fulfillment houses, your trade association, marketplaces, and your technology providers. For example, if you do business with larger companies and are not trying to make a profit from shipping, your customer will often want you to use their rates when shipping, even if it gets billed to them directly. Of course, if you are drop shipping, it can be aggregated with the company’s other shipments. Utilizing a fulfillment company for pick-and-pack capability can also afford you better rates as they have negotiated their rates based on their volume and business. You must negotiate this up front as part of your deal, as they are out to make a profit from these rates.
Utilize technology to enable the automatic and correct choice of service, carrier, and price. If you have done the work above and want to take full advantage of all of that work, then you must employ technology that allows you to automatically rate-shop the multiple carriers, services, and pricing. Multi-carrier rate-shopping engines have become much more prevalent today than they were even three years ago. They range from cloud- and SaaS-based offerings contracted on a monthly basis and priced on volume, to on-premise full-blown parcel and TMS systems that have software development kits (SDKs) for you to integrate into your own systems. All of these systems are very capable for the audience they serve, and many also have better negotiated rates inside the systems.
Putting It All Together
A few years ago, I was a consultant for a technology provider. In the course of my time there, I spoke with several low-volume shippers to find out how they were combining the above steps into one streamlined strategy. Most of them had several contracts with national and regional carriers, as well as specific contracts with specialty carriers like DHL eCommerce that took care of specialized needs such as lightweight postal network delivery products. Many of them had system-provided USPS special rates through a postal third-party partner, as well as pre-negotiated LTL rates in addition to their own. They had their customers’ contracts in the system. All of these rates, services, and prices in the system led to automatically choosing the best option and printing the label in less than a second based on business rules that had been put in the system in a point-and-click environment.
Remember, with a little elbow grease, a little negotiation, and a little technology, shippers of any size can reduce their shipping cost, increase customer satisfaction, and increase their company’s profits.
James Reed is Senior Vice President, Strategic Alliances, for Altametrics LLC & Hubworks.com
This article originally appeared in the November/December, 2019 issue of PARCEL.