The year is still in its infancy, and yet so much change is happening in the parcel world. Your company’s logistics department should be up to date with the ever-changing parcel landscape. But that is not enough; you also need to have a plan to mitigate risk, in all of its many flavors.
1. Mitigate the risk of your customers being dissatisfied with your supply chain. When a shipment gets delivered, the recipient typically looks at it as though it was delivered by the company they ordered it from. If that shipment is late or damaged, it hurts the company’s brand. A customer may see the expected delivery time before they even complete their order and begin anxiously awaiting it. To uphold your end of the bargain, you need visibility into all your shipments, so that you know as early as possible if there is any danger of a package being lost or delayed. The sooner you know, the sooner you can act and have a replacement product sent to your customer to ensure a positive brand experience. Don’t let this last step in your supply chain tarnish that experience.
2. Mitigate the risk of paying for oversize and large packages. These types of surcharges vary in cost from $165 to $195 for oversize items and up to $36 for additional handling. A peak surcharge of as much as $40 can also be added on top of these surcharges. Review your data and run different scenarios to see if it’s better to send some of these items in multiple smaller boxes to avoid these fees.
3. Mitigate the risk of dependence on a single carrier. If a carrier fails to pick up or deliver, you likely lose revenue and customers, along with damaging your brand’s reputation. Ensure you have at least a two-carrier model. You should also confirm both carriers are compatible with your systems and reliably deliver all shipments on time. The pandemic pushed carriers to capacity, stirring talk of labor disputes and contractor dissatisfaction. Don’t wait until the situation worsens to have contingencies in place – act now.
4. Mitigate the risk of overpaying for shipping. Find a way to audit your shipments to validate that you are only paying what you are supposed to pay and that your invoices are free from overcharges or errors such as services, surcharges or accessorials that should not have been applied to your packages in the first place. Shipping is already expensive; overpaying is not an option you can afford.
5. Mitigate the risk of being ill-informed. The parcel industry is changing constantly, and these changes affect your shipping costs. Fuel continues to be a huge cost and is applied to all packages. Peak surcharges are being extended with no end in sight. As we saw in 2022, labor disputes are always potentially on the horizon, carrying with them the threat of capacity disruptions that can significantly impact service and cost. Stay informed so that you can effectively optimize your shipping strategies around these changes.
Micheal McDonagh is President of Parcel for AFS Logistics. Micheal has over 26 years of experience in the logistics industry with companies like FedEx, Google, Target Freight and FreightWise. Based in Atlanta, he leads and supports a team that manages over $4 billion in annual parcel spend. To learn more about how AFS can help you mitigate risk, visit afs.net.
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