Thanks to the e-commerce boom of the 21st century, the demand for small parcel shipping has continued to grow at a rate faster than any other mode of transportation. This increase in parcel volume has effectively swayed the economic model of Supply and Demand in favor of the two carriers that most shippers utilize (UPS & FedEx).
Over the last decade, UPS and FedEx have both increased their shipping rates by upwards of 75% and continue to add new fees, surcharges, and rules designed to increase their bottom line. With shipping costs on the rise, it can be easy to lose track of how heavily these fees might be eating into your profit margin.
You’re likely already aware of these rising costs and looking for a way to generate savings for your company.
Listed below are three easy-to-implement steps for reducing your parcel spend by 25%.
Audit Carrier Invoices | Avg. Savings Generated: 1 to 2%
Auditing your UPS and FedEx invoices is a simple way to generate immediate savings for your business. Carrier charges such as Address Correction Fees, Residential Surcharges, Saturday Surcharges, and Duplicate Charges are often erroneously applied to shipper invoices. Another reason to audit your parcel invoices is to identify and recover charges associated with any manifest errors that may have been applied to your account. A manifest error occurs whenever a shipment is manifested (i.e. you create a shipping label), but never actually goes out the door. Whenever this happens, UPS and FedEx will still charge you for the full cost of that shipment unless you proactively cancel the created shipment.
File Refunds for Late Deliveries | Avg. Savings Generated: 2 to 4%
This may come as a surprise to you, but almost all UPS and FedEx shipments are guaranteed to deliver by a certain day and time. If you send out a package and it delivers even one minute late, you’re actually eligible for a full refund of the charges associated with that shipment.
In order to receive a full refund for your shipment, you must file a claim with UPS or FedEx within 14 days of delivery. Unfortunately, neither carrier is going to tell you which of your shipments delivered late, so this can be a difficult program for high-volume shippers to manually take advantage of due to the labor requirements involved.
The good news is that there are several 3rd party providers, such as Empact Parcel, that have developed technology which automates the claim filing and refund process. Most of these providers operate off of gainshare pricing, so there’s really nothing to lose by signing up for this service.
Negotiate Competitive Pricing | Avg. Savings Generated: 10 to 30%
The most impactful way to generate additional savings is almost always through carrier contract negotiations. UPS and FedEx have done a fantastic job at building substantial margin into their shipping rates, but with the right amount of knowledge and knowhow, you too can negotiate your pricing down to ensure that you’re receiving best-in-class pricing that aligns with your shipment volume and shipping profile.
While there are several different ways to approach negotiations with UPS and FedEx, I’d recommend reaching out to a 3rd party provider, such as Empact Parcel, to gain insight on how competitive your current rates are when compared to other companies with similar volume and shipment characteristics. From there, you’ll have a solid foundation to open up the pricing conversation with your carrier rep.
If you’re unsure about negotiating your own pricing contract, feel like an expert could do a better job, or simply don’t have time to focus on this, Empact Parcel offers a Full Negotiation Support service that would streamline the entire process for you and ensure that you’re receiving best-in-class pricing.