Parcel Insights Digest: In this blog, Pierbridge takes an in-depth look at the ways shippers are saving money by using a multi-carrier shipping strategy, and how the right multi-carrier management solution can help them automate the process.
Almost all retailers felt the sting when the most significant eCommerce player began offering free, two-day shipping in 2005. Brick-and-mortar, as well as online retailers, have since then struggled to meet heightened customer delivery expectations while ensuring they don’t cut too far into their profit margins. Multi-carrier shipping solutions have allowed retailers to incorporate more delivery options into their online sales portal, leaving the choice of shipping cost and delivery speed up to customers. However, not all retailers offer this and find it hard to manage the cost of free shipping.
Multi-Carrier Surcharges - Is There Any Way Around Them?
Despite the economic savings of multi-carrier shipping, there are still hidden costs to be aware of as a retailer, especially if you are shipping for free, as that can eat up your profits. Unlike the big guys, you probably can’t afford to lose over 7 billion dollars in shipping losses just to satisfy customers, so it’s best to find ways to reduce these shipping costs by finding ways to cut costs through technology.
Here are the 5 most common fees associated with shipping, and how you can reduce them:
- Residential Surcharge: Shipping to homes is more expensive than shipping to a building where multiple packages are often delivered. Homes are usually spread out and involve single-destination drop-offs. Speak to your shipping provider(s) to see whether you can negotiate this cost or incorporate parcel pick up at your retail location as an option for your customers to save on shipping costs entirely. If you’re unable to use these options, this may be a cost that you’ll need to accept and take steps to adjust your shipping prices or roll it into your inventory costs.
- Fuel Surcharge: Delivering packages comes at a price, and while fuel prices have dropped significantly, it isn’t free. Omnichannel fulfillment can help reduce this cost by giving retailers better flexibility over pick-up/drop-off destinations. Instead of using one channel to fulfill an order, it allows for more options such as in-store pick up, warehouse to store, or other combinations.
- Third-Party Billing: Using a third-party logistics (3PL) service provider or drop shipping can cause you to incur higher transportation costs than you would if you used your own hard-fought negotiated pricing. Consider using your own carrier billing accounts or add to a master account.
- Address Correction Fees: The hope is that customers know their address, but sometimes the smallest error, such as a missed apartment address, can cause extra hassle and fees during delivery. To solve this problem, utilizing parcel shipping software, such as Transtream, can help ensure the correct address and avoid excess costs.
- Dimensional Weight (DIM) Fees: The dimensional weight of a package is calculated by a formula that measures how much room the carton will take up as it’s being shipped, relative to its weight. This encourages retailers to either pack multiple products into one package, or ship in smaller packages based on its contents. Still, DIM fees can eat your profits if you let them, which is why using an automated cartonization algorithm can help you ensure proper packing for each order and reduce DIM fees.
Are Multi-Carrier Shipping Companies Using Automation to Reduce Costs?
Software-as-a-service (SaaS) parcel shipping was once only a solution for small businesses shipping 50 parcels or less per day. That’s because the tedious entry of weight and printing of labels were manual process that weren’t very scalable. Since the integration of the Internet of Things (IoT), automating the shipping process has created scalable solutions for any-sized business. Through secure channels, IoT devices interface with one another, as well as other devices, solving the problem of communicating with scanners, printers, and scales.
“The IoT has made parcel shipping system deployments a reality for medium to large global enterprises who want to avoid on-premise implementations,” notes Bob Malley, Managing Director, Pierbridge.
How Can Multi-Carrier Shipping Benefit from Better Planning Strategies?
Parcel shipping rates are increasing faster than inflation, yet many customers expect free shipping or flexible shipping options such as pick-up locations or kiosks to save money. Multi-carrier shipping point solutions have morphed into multi-carrier shipping platforms, or, when freight is added, an enterprise-class Transportation Management Solution (TMS), with parcel shipment planning. Here are two useful planning strategies:
- Ordering & Fulfillment: Load optimization isn’t always an option since customers expect expedited delivery. Using a TMS can help with planning upstream through the ordering and fulfillment process. Cartonization can be used to plan the most economical way to pack SKUs in a carton, cartons on a pallet, and prevent excess packaging from increasing DIM fees.
- Parcel Shipping Execution: Parcel execution should include:
- Rating and delivery estimates during the ordering process via a single API
- Alternate pick-up locations that can reduce customer costs
- Drop shipping across an extended supply chain
- Ship-from-store for brick-and-mortar locations
- Warehouse shipping connectivity to scales, scanners, thermal printers, and material and handling equipment in multiple locations
- Office shipping
- International compliance in global eCommerce, cross-border documentation, and postal facility consolidation
- Streamlined returns policies for customers
What Can Retailers Do to Cut Multi-Carrier Shipping Charges Even Further?
Multi-carrier shipping from hundreds of locations can further complicate matters. Here are some ways to further minimize overpayment during the shipping process:
- Implement a routing process that selects carrier services based on an analysis of delivery performance to specific zip codes. Otherwise, you may incur additional residential surcharges. Parcel shipping tracking software can provide these insights and offer smarter routes without sacrificing customer delivery expectations.
- Algorithmically calculated packaging helps retailers pack parcels with transportation costs in mind. Instead of leaving your staff to guess how to pack each order, automatically calculated packaging algorithms find the most economical way of packaging and palletizing, based on SKUs, dimensions, weight, and the container holding sizes.
- Monitor carrier delivery performance to ensure the guaranteed delivery promise you make to your customers is carried out by the carrier. In this area, you, as a retailer, can reduce costs by ensuring the shipping carrier offers guaranteed refunds in cases of lost packages. Another consideration is that damages can be hard to claim reimbursement for and can spike insurance premiums.
- Ensuring address correctness can fill the gap between expected prices of shipment and reality. That’s because carriers charge over $16 for address corrections plus additional charges for residential addresses outside standard delivery areas. Using a Parcel TMS can automatically monitor and correct addresses, ensuring no overages.
- Optimize your rates by capturing data at the point of shipment and carrier invoices. Analytics can guide you, along with expertise from consultants who can help you find ways to optimize transportation costs and reduce delivery costs.
How Do Analytics Help Retailers Make Shipping Decisions When Sending Parcels Via Multi-Carrier Management Solutions
Shipping can be streamlined by reviewing historical data to make more informed decisions in the future. Businesses that use carrier-provided shipping software are left with fragmented views of costs locked up in data silos. Using a multi-carrier shipping solution to ship orders from all locations can provide a valuable data repository. Adding business analytic tools on top of that data can help identify issues and offer insights to develop future strategies.
Doing so requires a top-down view and a micro-level look at:
- Transportation spending patterns
- Productivity
- Carrier performance
- Cost center reporting
- Audited invoice data mapping
- Exception reporting and reconciliations
- Dashboard reports & trends
Enterprise shipping relies on these analyticsto dictate what can be done now and in the future to improve parcel shipments. And, by recognizing the needs of those shipping packages by creating role-specific workflows that connect to data sources and devices, and further adapting business roles to support these cost-saving measures, shipping success is achievable.
Multi-Carrier Shipping in 2020 and Beyond
No one could have predicted the events leading up to the COVID-19 crisis this year. With employees working from home, companies have faced new challenges, including economical, efficient shipping management. Many TMS companies have reported an increase in less-than-truckload (LTL) shipments, and according to Pierbridge’s Managing Director, Bob Malley, more parcels have been processed using Transtream, Pierbridge’s cloud-based shipping platform. Another challenge has been to implement contactless delivery by waiving signature requirements at the door to promote health and safety.
As social distancing continues, shipping delays have been noted by customers and businesses alike since online orders have drastically spiked. Adaptations have been made and will continue as companies shift to home or remote work, and parcel shipping becomes a means of communication. As this situation plays out, more companies are going to need to prepare for long-term remote workers rather than merely temporary disruptions.
As far as business continuity is concerned, an enterprise-class multi-carrier management solution that can support thousands of remote workers is a high priority. With higher carrier website delays and wait times, retailers and their staff need an efficient way to navigate transportation and logistics, without having to risk a trip to the post office or shipment center. For these reasons, Pierbridge is offering a free, one-year subscription to its Transtream enterprise ship-from-home-office platform to help businesses and employees throughout 2020.
Founded in 2004, Pierbridge has helped to transform the industry of shipping and logistics. Now as part of the WiseTech Global family of companies, Pierbridge’s innovative technology is used worldwide by manufacturers, retailers, distributors, and offices who rely on simple, multi-carrier management solutions. To learn more, contact us or view the additional resources below to see how Pierbridge’s Transtream and WiseTech Global can transform your customer’s delivery experience.
- Multi-Carrier APIs Can Help You Control the Cost of ‘Free’ Shipping in These 5 Areas
- To Minimize Shipping Costs, Your Packing Strategy Needs to Consider Destination
- Don't Think You Need Parcel as Part of Your TMS? Think Again