Understandably, logistics managers stop thinking about shipping rates once their negotiations are over. This holds especially true with small parcel contracts, since there are so few carrier options.
Yet while your rates may be “what they are” when you are under contract, that’s no reason to stop taking steps to minimize your overall small parcel spend. There are plenty of tactics every shipper can employ to maximize their savings on small parcel shipping that don’t require a new contract.
Here are five ways to maximize the savings on your shipping, even after you’ve signed a new parcel contract.
1 – Audit Your Invoices
All contracts come with pricing and service guarantees. This means you are only obligated to pay for the service your carrier provides that meets the obligations they’ve committed to in the contract. Unfortunately, most shippers do not have a way to audit every shipment and ensure those service and rate guarantees are met. When you consider that most shippers are overpaying by up to 10% for unclaimed refunds they are entitled to, it’s obvious what a significant lost opportunity this is — so audit your invoices.
2 – Make Sure to Optimize Mode Selection
A lot of companies don’t have a reliable process for determining if the modes selected for their shipments are optimal from a cost or service perspective. For example, it’s common for companies to ship packages at a premium cost for 2 Day Air when Ground would get it there in the same time but at less cost. Many routing decisions are made out of habit or without consideration of costs, so a regular review of your company’s routing guides is important. It is vital to ensure the proper rate and service information are always considered at the time of routing to minimize shipping costs while still meeting service expectations.
3 – Optimize Between Carriers
Taking the idea of making better decisions a step further, it’s wrong to assume any one carrier will have the best rates for every lane or type of shipment. It’s possible that any one provider — UPS, USPS, or FedEx — can offer cost and service advantages depending on the specifics of a given shipment. Again, it’s important to ensure that complete cost and service information is available when routing decisions are made.
4 – Find Ways to Consolidate
While shipping rate contracts are complex, they usually operate on a simple principle — as weight goes up, per unit shipping costs go down. The way to leverage this from a shipper’s perspective is to look for opportunities to consolidate shipments going to the same location. In simple terms, two 10 lb. boxes shipped as two separate orders will cost more than if those same two boxes are shipped together. Shippers who can step back and consider all their volume together can often find opportunities to consolidate orders in this way and save money.
5 – Renegotiate Parcel Contracts as Your Business Changes
Rate contracts are usually negotiated based on the here and now of your business. But things, like your shipping volumes, can change. Opening a new distribution center or shifting customer demographics are two good examples. Anything that changes your shipping patterns is an excellent opportunity to reopen rate negotiations, regardless of how recently you may have signed your last contract. Actively managing your contracts based on what your company needs now is essential to make sure your rates stay up to date and are optimized for your business’s needs.