Top 8 Ways to Cut Parcel Shipping Costs

Posted on Dec 1, 2020 By tpawelka Share:

Saving on shipping doesn’t have to mean disappointing your customers or limiting their delivery options

In a recent post, we looked at why shipping costs are costing you customers.

In a nutshell, the customer experience (CX) and customer expectations have changed, even more so recently considering logistical challenges and customer demands brought on by the pandemic. Now more than ever, customer experience is inextricably linked to your supply chain, and especially to shipping.

So what can you do to cut your shipping costs while at the same time accommodating your customers' new shopping habits and exceeding their expectations?

8 of the Best Ways to Slash Your Parcel Shipping Costs

Cutting your parcel shipping costs doesn't have to be a huge, time-consuming or complicated process. You may realize significant benefits from making a few relatively simple changes. But if you choose to go all-in and do a bigger project, like adding multi-carrier parcel shipping software or switching shipping software vendors, you may be pleasantly surprised at the ease of implementation, the quick ROI, the ongoing savings, and happier, more loyal customers.

Here’s how to get started.

1. Don't ship air.

Make sure that you're using the correct box sizing and right-size everything you ship. Shippers walk a fine line to balance packing in the smallest dim weights possible while also ensuring the safety of the product — which is of course essential to a good customer experience.

For example, if you're shipping a hard drive in a box, it will have a certain dim weight. Dim weight is defined as the amount of space a package occupies in relation to its actual weight. Carriers calculate both the dim weight and the actual weight of your packages and charge you for the higher of the two. If you can ship the drive in a smaller box that still fits the drive and protects it from damage, you will pay less in shipping.

2. Use third party insurance.

Carriers offer insurance, but you can often save significantly by skipping their standard options and insuring through a third-party instead.

Third-party insurers cover any damage, loss, or shortages you may experience while shipping with any carrier, worldwide. Their rates can be up to 90% less than standard carrier options, and they provide reimbursement for the total replacement cost of the product as well as the shipping cost.

3. Don't be afraid to negotiate.

Negotiating with carriers can be both tough and intimidating. After all, they are trained negotiators who strike deals every day. They are also backed by the power of data (including all your own shipping data as well as overall market trends).

Your company, on the other hand, may only have to enter these discussions a few times a year. That doesn't mean you have to be at a disadvantage. You can successfully work out more favorable terms.

Carriers expect you to haggle. You can improve your chances of a positive outcome by being as prepared as possible. Know exactly what your company needs today and how you expect those needs to evolve in the future.

Here's how:

  • Have powerful reporting and BI capabilities in place so you can quickly access and be confident in your own data.
  • Talk to multiple carriers so you can be sure you're getting the best terms.
  • Do your due diligence and review new contracts thoroughly.
  • Seek education and advice from experts if you don't yet have sufficient knowledge in-house.

4. Check your invoices.

Invoicing mistakes can cost you big time. Plus, carriers don't necessarily make it easy to check your invoices against your agreements. It can be a time-consuming process, but any time you can spend will likely be well worth it.

Some of the most common problems shippers face include duplicate invoices, missed late delivery refunds, tax complications, charges for the wrong levels of service (ground vs. overnight, for example), and incorrect charges added after the fact.

If you don't have the internal resources, you may want to consider utilizing third-party vendor technology to stay on top of this.

5. Go multi-carrier.

It's time to realize that single-carrier parcel strategies are dead.

There are many compelling reasons to add regional carriers along with your current national carrier mix if you haven't done so already. These include minimizing carrier surcharges, managing capacity restrictions, giving yourself more power in negotiations, and more. When you only work with one or two carriers, your bargaining power is limited. The more competition you can tap into, the more money you'll save.

ProShip multi-carrier shipping software allows you to shop rates, fast, and all within one system.

6. Utilize the best rate shopping functionality available.

Once you’ve onboarded multiple carriers, utilize the most advanced rate shopping functionality in the industry.

Advanced Date Shopping is ProShip's proprietary rate shopping algorithm. It helps you look beyond shipping costs to determine which carrier you should use to meet your customer's delivery requirements.

Advanced date shopping lets you plan for delivery by a specific target date. The algorithm uses 9 data sets to maximize the ability for your shipment to be delivered on the promised date, such as total transit time, whether labels have been printed in time for the day's cutoff, when the trailer is expected to leave your dock, and more. It's one of the best ways to save on shipping while reducing risk and error and satisfying your customers every time.

7. Leverage omnichannel fulfillment.

Omnichannel is more than the hottest recent buzzword in the parcel shipping world. It's an essential fulfillment strategy for online retailers, e-commerce sellers, and manufacturers who want to both thrive in today's chaotic business environment and meet customers' growing delivery expectations at the same time.

If you're not yet considering adding and/or changing fulfillment locations, you should. That could include repurposing your current brick-and-mortar stores (see Dark Stores), adding DCs, using third party vendors like 3PLs, or drop shipping DTC from your manufacturing locations.

The closer you can get to your end customer, the more you'll save in shipping costs and the happier your customers will be.

8. Empower good data flow.

Does your enterprise technology stack allow for more automation (more packages per unit time with less corrections)? If not, you'll want to make sure that all the pieces in your tech stack are compatible and integrated successfully so that data flows quickly and in the right way. Otherwise you may experience more downtime or be forced to deal with more manual processes and corrections.

ProShip software is platform agnostic. We can easily integrate with your WMS, OMS or other essential systems. Plus, all our integrations are built in-house — we don't outsource this process. We have built solid partnerships with the top technology providers, allowing for better connections. Finally, our experts test thoroughly to make sure everything is working and we won't "flip the switch" until we're certain the changeover will be seamless.

With ProShip, you can also be certain that your software is always up to date. You won't experience surprise downtime or unexpected bill-backs from surcharges because carriers' policies have changed and your software hasn't been updated.

Updates are automatic and never require downtime. Our competitors don't provide updates unless you ask. This can issues with other integrations and carrier compliance, if you're not completely on top of software updates at all times.

Start Saving On Parcel Shipping Today

Saving on shipping doesn’t have to mean disappointing your customers or limiting their delivery options. With the right knowledge, tools, and focus, you can have the best of both worlds. Reach out to our experts and let ProShip help.

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