Parcel rates keep going up. Shippers like you know that at the beginning of 2023, small parcel list rates went up about 7% for FedEx and UPS, but that is not the whole story.
You may feel like you’ve already negotiated good carrier contracts, only to look at your invoices and expenses lately and be shocked at what you’re paying. Where are the extra costs coming from? Educating yourself on these extra fees and surcharges is the first step to avoid paying them.
No one is saying FedEx and UPS do not have costs to service shippers’ needs, but it is easy to see how these kinds of fees are just another way of padding their margins.
How to Avoid Accessorial Fees and Surcharges
The good news is it is possible to cut down on these charges, if not avoid them entirely. The key is finding out which charges you’ve been paying and then changing the behaviors causing them. The good news is the causes (your behavior) and consequences (your extra costs) are hiding in plain sight in your parcel data.
The first step in avoiding these extra costs is simply using the shipping data you already have.
Common Surcharges You May Find
The following is a list of some of the most common surcharges. Check your parcel carrier invoices to see if any of these are a factor in your higher-than-expected shipping costs. Better training and internal processes can help avoid them.
· Incorrect destination zip codes
· Shipping manifest mistakes
· Mistaken or unavailable package labels regarding contents, values, or delivery requirements
· Assigning a residential delivery to commercial or vice versa
Whether the culprits are on this list or you’ve identified other unexpected sources of extra costs, you can use the information to your benefit. One option is to reach out to your carrier, even if you have a current contract, to give them a clearer view of what your business does and needs. And with that, see if you can negotiate better terms.
At the same time, look at your distribution network and parcel operations. Now that you’ve analyzed your historical shipping data, you’re in a better position to realign your processes in a way that will lower your costs. Consider using something like Parcel Business Intelligence (BI) to help identify even more opportunities.
Unfortunately, we all know that clear and straightforward pricing is not something carriers are good at. They’re just not. But, proactively using the data you already have in your parcel operation to improve your carrier agreements and change how you operate is a direct way to reduce the amount you’re paying in extra fees, accessorials, and surcharges.
Jey Yokeley serves as Vice President of Parcel Sales. Since joining TransImpact in 2017, Jey has used the knowledge and skills gained over 10 years in sales, marketing, and entrepreneurial arenas to help the companies stay viable and strong. He has transformed the sales team at TransImpact and is responsible for $20 million in revenue yearly. Jey graduated from Appalachian State University with a Bachelor of Science and a Masters in Business.