Increasing complexity in parcel

It’s time to understand your parcel characteristics as well as how the carriers will view your business. If you can position yourself—and partners—to be a shipper that parcel carriers can serve profitably, you will be rewarded with better discounts and have stronger negotiating leverage.

By ·

The major parcel carriers continue to experience growth supported by upward trends in consumer on-line shopping as well as B2B on-line catalog buying. In the meantime, service promises of two-day and even same-day fulfillment for shippers and buyers is proving to be addictive. And if past practice holds, we’re about to get simultaneous “independent” price increase announcements this spring by the parcel carrier oligarchy.

It’s important for buyers of these services to step up their game in four key areas in order to ring out as much value as possible from the premium highway and air charges the few providers insist upon.

First, shippers need to understand their parcel profile with respect to package “dimensional” rate scales. It’s best to get on the same page with manufacturing and make any necessary/possible packaging adjustments to minimize cube before tendering to the carrier.

Keep the following top of mind:

  • Know the dimensions and weight (density) of your packages before they get to the carrier.
  • Understand dimensional/weight breaks of each carrier’s contract so that you can optimize the splitting of shipments, timing and consolidation of shipments for the lowest total cost.
  • Shippers should have teams working to reduce the cube below the carrier’s threshold if possible.

Remember that the charges for excess dimensional weight will come back to you after the shipment as a part of your invoice, and you will have a dilemma if you have already charged your customer for a shipment based upon an incorrect dimension.

Second, use technology to store and analyze your contract parcel freight rates so you can do some advanced planning and budgeting. When reviewing proposals, anticipate carrier rules and rates for oversized parcels or secure a time-phased rate change to give you time to modify packaging or make other changes.

If your distances are limited, try smaller regional carriers that may have different scales for dimensional/weight of your freight. It’s important to know your various package densities in order to get discounts in the areas most important to you. The carrier will be using sophisticated analytics to study your freight spend—so you need to ramp up the analysis.

Third, auditing services for parcel freight moves have proven to be cost justified for many companies, particularly as parcel spend and complexity rise. Auditing of freight bills in all modes is a common practice and has been done for many years with good results.

Arrange to have digital transaction records from parcel shipments sent to your auditing firm and have them check both rates and delivery performance for the requested service type.

And fourth, once you have the tactical things done, it’s time to think more strategically. For starters, get an understanding if you’re in a great location for service by the selected carriers—because experience has shown that companies with good shipping locations and a well designed routing guide for every parcel ship point can expect better service. In fact, the only way to ensure that the right service levels are being selected to serve your customer is to enforce the use of a routing guide.

Remember that other options may be available. For example, you may want to consider less-than-truckload and truckload shipments, zone skipping, cooperative shipping or the use of a third-party logistics provider that might enjoy better discounts or perhaps freight consolidation opportunities in your area.

In summary, it’s time to understand your parcel characteristics as well as how the carriers will view your business. If you can position yourself—and partners—to be a shipper that parcel carriers can serve profitably, you will be rewarded with better discounts and have stronger negotiating leverage.

About the Author

Peter Moore
Peter Moore is Adjunct Professor of Supply Chain at Georgia College EMBA Program, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at [ protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
How to Manage Increasing Labeling Demands
Download the report to learn best practices for managing those increasing label demands.
Download Today!
From the August 2019 Logistics Management Magazine
The staff of Logistics Management (LM) is honored to present the logistics and transportation community with the results of our 36th Annual Quest for Quality Survey
Ocean: Protecting margins in a soft market
Warehouse Voice Technology Speaks for Itself
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly newsletter!
Latest Webcast
Creating the ROI for Multi-Carrier Parcel Shipping Solutions
This webinar will reveal how manufacturers, retailers, and 3PLs can utilize their own data to identify and demonstrate ROI for multi-carrier parcel shipping by leveraging state-of-the art business intelligence to increase performance.
Register Today!
36th Annual Quest for Quality Awards: Winners in the spotlight
Which carriers, third-party logistics (3PL) providers and U.S. ports have reached the pinnacle of...
State of Logistics in 2019: What’s next?
Tight capacity, high rates, rapid e-commerce growth and a booming economy fueled an 11.45% rise in...

Got labor? How supply chain companies are recruiting talent during a labor crunch
How are companies faring in the race to recruit and train high-level supply chain talent in a market...
35th Annual Salary Survey: Compensation matters more than ever
While job satisfaction remains the primary reason for today’s logistics managers to stay with one...
анализатор качества зерна цена