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.