In this video you will see a real life example of a package that I received where the cost of shipping was at least 10 times more! As a customer that was charged $7.95 for shipping something that could have been shipped with via USPS First Class Mail for $.61, I was unhappy. Not only did it cost more, it took twice as long to get to me from California–4 days instead of 2. And, on top of that, it was more costly to the environment. It cost more to ship, cost more packaging, and contained plastic filler.
I don’t work for the Post Office or get a commission. I just hate it when I see waste.
When it comes to getting a discount from UPS or FedEx for shipping parcels, there is a dirty secret that most companies don’t know. I learned this secret almost by accident.
I founded TAYLOR Systems Engineering Corporation (TSE) from the living room of my home in 1989 after 13 years of working at Pitney Bowes. I was one of the launch managers for their first computerized shipping system and at TSE we became one of the fastest growing companies in the State of Michigan through integrating hundreds of shipping systems with our clients order entry and accounting systems. When we were in the process of implementing a system, we would program the client’s UPS or FedEx rates and discounts so that the client could reconcile their bills. It was then that I noticed a great disparity in the rates that our customers paid. We put systems in for companies as big as GM and in small to medium size distributors/manufacturers. While the carriers would have you believe that rates are based on a scientific formula that is not based on shipping volume, the difference in the discounts between significantly varying volumes amazed me.
Here is the dirty secret stated perfectly by Chester Karrass,
“You don’t get what you deserve, you get what you negotiate.”
A few weeks ago, a colleague of mine and I met with a New York based company that had negotiated their UPS agreement three months earlier. The controller said, “I guarantee you won’t be able to save a penny on this contract.” We said that we may not but would be happy to look and see if he was getting the rates that he deserved. After a detailed examination and an in-depth analysis of his services, accessorial charges, and volume, we discovered some anomalies. We benchmarked his data and used that information to renegotiate his contract with UPS. The result was that we saved him $243,000 or 15% of his annual spend.
Are you getting the rates that you deserve? How do you know? We know. If you’re not sure, let me know and we will help you to find out.
I just got back from the PARCEL forum in Chicago. I had the opportunity to facilitate the PARCEL Key Executive Forum where a group of peers in the parcel industry met for the sole purpose of helping one another tackle the most challenging issues they face in running and growing their operations. One of the key issues was reducing transportation costs; the collective wisdom of this group of experienced parcel and logistics managers came up with 25 actionable ideas. Here are 8 of the suggestions:
Evaluate parcel consolidators, like FedEx SmartPost, which offer a low cost way to ship high volumes of low-weight packages to residential customers. FedEx will pick up, sort, line haul, track and deliver packages by leveraging the delivery network and capabilities of the USPS for the last mile.
Ship express packages with a hold for pickup option instead of First Overnight to substantially reduce express costs. The recipient can pick up the package at a nearby location.
Charge customers for freight and shipping. Even if the cost is distributed internally it will increase awareness about the cost of shipping and choosing express options.
Compare ground delivery guaranteed times to second day and third day air; many times ground will get it there faster for 25% of the cost. Use day definite instead of time definite services.
Re-negotiate parcel contracts; hire a third party negotiator that works on a gain share basis.
Use the US Postal service for brochures sent to sales people working out of their homes rather than UPS or FedEx. Check out the pricing for Priority Mail and First-Class Packages. It could be significantly less than the discounted rates with the residential surcharges.
Create a global routing guide; compare Less-than-Truckload (LTL) to parcel and specify which mode shipments should utilize.
Rather than importing shipments into the distribution center, investigate consolidated clearance for shipments coming to the United States. Manifest and label the packages overseas and have them sent directly to the carrier’s hub to reduce the cost of bringing them to the distribution center and re-shipping to customers.
We have formed a group on LinkedIn for PARCEL and I invite you to join and get feedback for your shipping challenges.
Posted by mtaylortec 
Posted by mtaylortec 
Posted by mtaylortec 
