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3 Practical Tips to Eliminate Hidden Shipping Costs

Many companies have significantly reduced their parcel shipping costs by implementing multi-carrier shipping software that allows them to compare carrier rates and automate labels and document production.  However, you can realize even greater savings by ensuring your multi-carrier shipping software is configured to preempt many common issues that result in hidden shipping costs.

Here are three practical improvements to increase profits per parcel:

1. Correct Shipping Addresses

When is the last time you checked your carrier invoice to review charges related to incorrect shipping addresses?  Address inaccuracies rarely get the attention they deserve, and left unattended, the dollars can quickly add up.

Costs related to incorrect delivery addresses can be huge and accumulate in several ways:

  • Incorrect delivery addresses: Say, for example, a customer accidentally types an incorrect street address for his or her ship-to address. Generally, the carrier will fix the issue with the delivery address, but you’ll pay for this service.
  • Residential delivery erroneously classified as commercial: A common and costly error occurs when residential deliveries are erroneously classified as commercial deliveries. Again, the carrier may fix it, but at a cost per package.
  • Increased customer service costs: Besides carrier surcharges, you as the shipper bear additional internal labor costs every time your customer service and shipping department employees interrupt their daily routine to resolve address-related problems.
  • Unhappy customers and canceled orders: Delivery address problems also lead to frustrated customers, order cancellations, and even the loss of a customer. An interruption or delay makes it too easy for the impulse shopper to decide they don’t really need the product after all.

Solution: Ensure your Multi-Carrier Shipping Software Includes Address Verification Functionality

The easiest way to prevent additional charges and lost customers is to leverage the address verification functionality in multi-carrier shipping software.  A shipping system specialist can help you evaluate your current shipping system and determine which multi-carrier shipping software best fits your needs, asking questions such as:

  • Does your current shipping system allow you to designate shipments as residential or commercial?
  • Does your current shipping system validate addresses at the street level, city, and/or zip code level?
  • Does your current shipping system detect multiple or near duplicate address matches?
  • Does your current shipping system allow the user to view and/or choose address details?
  • What is the address validation source used by your current shipping system?
  • Does your current shipping system require Delivery Point Validation (DPV)? DPV enables you to verify an address actually exists.

The bottom line?  This seemingly small problem adds up to huge costs for many companies.  If you are absorbing extra shipping costs due to incorrect delivery addresses, the right multi-carrier shipping software can eliminate the problems.

2. Add the U.S. Postal Service to your Multi-Carrier Shipping System

As many shippers know, postal shipping via the U.S. Postal Service can be an extremely cost-effective solution for small parcel deliveries.  The U.S. Postal Service also offers several cost-cutting benefits for small parcel shippers:

  • Flat-rate products to simplify shipping: Priority Mail Flat Rate service can be a simple, timesaving alternative for both domestic and international shipments. Designed for shipments up to 70 pounds, there’s no weighing, no researching zones, and no calculating postage.  Multiple box sizes are available to accommodate a wide range of products.
  • No fuel surcharges: Given the volatility of fuel charges, business shippers have a strong interest in this USPS advantage.  The USPS does not add fuel surcharges.
  • Saturday and residential delivery at no extra charge: Currently, the USPS delivers packages on Saturday at no additional cost, giving you up to 52 extra surcharge-free delivery days a year.
  • The USPS doesn’t charge extra for residential delivery: Compared to carriers who charge extra per residential delivery, the savings can really add up.
  • Largest delivery network in the U.S.: The USPS has the largest delivery network in the U.S. and is the only carrier that delivers to P.O. Box and APO/FPO military addresses.
  • Comprehensive delivery tracking: The USPS has significantly enhanced its delivery tracking capabilities for postal shipping. Shipments are now scanned more frequently to track package movements, providing a high level of visibility to the shipper and their customer.

Solution: Add the USPS to your Multi-Carrier System

Your shipping system vendor should be able to help you assess the cost savings you may achieve.  The U.S. Postal Service also provides consulting services for shippers.

3. Leverage Regional Carriers to Reduce Parcel Shipping Costs

Consider using regional carriers to handle some of your deliveries.  This can be extremely cost-effective for companies with a concentration of customers in certain geographic areas.

Regional carriers can be categorized in a number of ways.  Some focus on small parcel delivery, while others offer less-than-truckload (LTL) services for heavier shipping.

Certain regional carriers provide multi-state solutions, while others are couriers or “micro-regionals” that cover smaller geographic regions such as cities or a partial state.  There are hundreds of regional carriers operating in the U.S., providing shippers with plenty of opportunities to find those who offer the right rates, services, and technology.  Regional carriers offer numerous benefits:

  • Lower shipping rates: As a result of lower operating costs, regionals can often pass significant savings to customers compared to some of the major carriers’ pricing. How?  Most regional carriers transport packages via truck hubs instead of airlines, and trucking can be as little as 10% of airline costs.
  • Fewer surcharges: Many regional carriers don’t assess the same delivery surcharges that national carriers do.
  • Negotiating power: Adding regional carriers places shippers in a better negotiating position with their national carriers.
  • Responsive service: Regional carriers may be willing to take on special shipping requirements and have more flexibility in terms of the kinds of services they can offer.

Comparing and Choosing Regional Carriers

ebook logistyx quadrant Choosing a TMS for Parcel ShippingIt’s important to make sure your multi-carrier shipping system will accommodate the addition of regional carriers.  Some vendors already include a wide range of regional carrier integrations.  Perform a carrier cost/service analysis to determine if/where it makes sense to add regionals to your delivery network.  It’s important to assess the carrier’s financial stability, service territory, rate structure, etc.  Your shipping solution vendor should have the expertise to help you with this analysis.

Take Advantage of the Benefits of Multi-Carrier Shipping Software to Address Hidden Shipping Costs

By taking advantage of the benefits of multi-carrier shipping software, you can take advantage of tremendous opportunities to reduce shipping costs.  Of course, you achieve the greatest benefit by 1) ensuring all of the data input into your shipping process is accurately maintained and 2) optimizing your carrier portfolio to include the most cost-effective rates/service to accommodate your customers.

Contact us today to learn more about how multi-carrier shipping software is designed to manage a wide range of shipping scenarios.