Parcel shipping and healthcare share a fundamental economic challenge: a concentrated market dominated by powerful carriers, complex contractual arrangements, and an imbalance of information that often puts buyers at a financial disadvantage.
Having spent much of my career in healthcare, I've seen the consequences of that imbalance — and what becomes possible when organizations challenge established pricing practices with better intelligence, independent oversight, and specialized expertise.
Now, as I enter the parcel shipping industry, I see many of the same dynamics and an opportunity to apply lessons that fundamentally changed how healthcare costs are managed.
Challenging the Economics of Complexity
In healthcare, major insurers such as UnitedHealthcare, Cigna, Aetna, and Blue Cross Blue Shield plans negotiate complex agreements governing provider reimbursement and employer healthcare costs. Historically, some contracts included provisions restricting independent audits of charges.
Industry leaders, including my former organization, challenged the status quo while collaborating with stakeholders to better serve health plans and their members. In this environment, medical claims can include charges tens and even hundreds of times the underlying cost and exceed contractual agreements with the facilities or providers. We developed capabilities to audit those charges, identify inappropriate costs, and deliver measurable savings. Over time, challenging our engagement evolved into collaboration with key carrier stakeholders. Working together, we found alignment in improving payment accuracy and reducing unnecessary spending.
The lesson was significant: challenging an established economic model doesn't have to create an adversarial relationship. With the right approach, transparency and accountability can create value for buyers and providers alike.
Parcel Shipping Faces a Similar Inflection Point
Parcel carriers have developed sophisticated pricing structures that extend well beyond published shipping rates. Negotiated discounts, dimensional weight calculations, accessorial charges, delivery area surcharges, and changing shipment characteristics all influence what businesses ultimately pay. Add dynamic market forces including fuel costs and surcharges imposed by carriers to recover unplanned expenses, and the need for informed shipper support has never been greater.
For shippers, securing a competitive discount is not the same as achieving an optimal financial outcome. One opportunity is to bring greater contractual accountability to the relationship, including clearly established auditing rights and independent verification of billing accuracy.
In healthcare, the ability to question charges and validate payments became an important component of effective cost management. Parcel shippers should approach their carrier agreements with comparable financial discipline.
The objective isn't to undermine carrier relationships. It's to establish greater clarity around pricing and create a framework in which accuracy, transparency, and measurable outcomes benefit both parties.
AI Changes the Economics, but Expertise Determines the Outcome
Artificial intelligence creates substantial opportunities to improve the speed, scale, and precision of cost analysis. But technology alone will never guarantee better financial results.
Earlier in my career, I was part of a transformation in which we used AI to analyze complex medical bills, synthesize large volumes of information, and identify potential savings. Work that previously required a clinical expert to spend days reviewing documentation could be reduced to a fraction of that time, allowing experienced professionals to focus on the findings requiring judgment and intervention.
This approach combined AI with expert review, delivering average savings six to ten percentage points higher than those achieved by purely AI-driven models.
That distinction matters. Human capital expertise should be valued as a premium, not treated as a discount.
AI can identify anomalies, recognize patterns, and model alternatives. It cannot fully replicate decades of specialized experience, commercial judgment, or the human relationships required to negotiate and implement meaningful change.
Technology also requires governance. Without reliable data, appropriate controls, and expert oversight, automated analysis can produce conclusions that are incomplete or inaccurate.
The most effective model isn't technology versus people. It's technology enabling experienced professionals to deliver better outcomes at scale.
Why Parcel Costs Belong on the CFO's Agenda
For many businesses, parcel shipping is treated as an unavoidable operating expense. But
even necessary costs should be regularly evaluated and optimized.
I’ve previously written about the importance of the CFO’s role in major spending decisions, like the cost of healthcare. For shippers, freight expense can rank among the top three line items of expense on their P&L. CFOs understand the importance of evaluating major cost categories relative to revenue. Reducing significant operating expenses can improve profitability, strengthen cash flow, and free up capital for reinvestment.
For a company generating $10 million to $25 million in annual revenue, reducing expenses by five to ten percentage points of revenue represents $500,000 to $2.5 million in annual savings, assuming no offsetting costs.
That capital can support technology investments, hiring, expansion, or increased shareholder returns. Conversely, allowing unnecessary expenses to persist can constrain future investment and increase dependence on external financing.
The financial implications extend well beyond the next carrier contract renewal.
A More Strategic Approach to Cost Management
Healthcare taught me that meaningful, sustainable change requires more than improved pricing. It requires reliable information, rigorous auditing, specialized expertise, and continuous evaluation.
Parcel shipping deserves the same approach. Businesses should move beyond periodic contract negotiations toward an ongoing discipline of validating charges, assessing their shipping economics, and adjusting strategies as operating conditions change. In a dynamic market, an ongoing audit and assessment model is essential.
For CEOs and CFOs, the question isn't simply whether shipping costs can be reduced. It's whether the organization has the clarity to understand its true costs, the confidence to make informed decisions, and the control to sustain improvements over time.
The financial impact extends well beyond lower shipping rates. Meaningful, sustained cost savings strengthen margins, improve cash flow, and create greater capacity to invest in the future.
Rob Gelb is CEO, LJM.
