Reduce Parcel Shipping Costs; Get Your Money Back for Service Failures

December 28, 2009

In today’s fast-paced world of e-commerce, instantaneous communications and unscrupulous deadlines, demands on the shipping industry have never been greater. At the same time, customer expectations, fueled by the promises of the major carriers, continue to grow. Bottom line: Packages have to get there; on time; every time.

In PARCEL
magazine’s 2009 Best Practices Survey, service failures were one of the top five complaints that shippers had about their primary carrier.

UPS and FedEx dominate the industry to the tune of nearly $100 billion annually in combined net sales by promising to absolutely, positively deliver packages on time for their customers. But, are they holding true to their word? While the carriers guarantee every package will be delivered on time, in reality they are actually late 3% of the time for no verifiable reason at all; they don’t fall within the “beyond our control” exceptions such as bad weather or shut down airports. Moreover, the carriers make it both complicated and time-intensive to claim refunds, especially for companies shipping dozens of packages a day. As a result, a mind-boggling $2 billion of guaranteed refunds go unclaimed each year!

This money represents a failure to meet a performance bond; it is supposed to be returned to the customer, as recompense for the shipping customer¹s inability to meet a delivery promise to its own customer. But how many of you have ever seen a carrier “volunteer” a credit on your shipping invoice for any late-delivered packages?

The only means by which shippers can actually confirm on-time deliveries is to track their packages; and despite first impressions, that is the last thing the carriers want you doing.

Worse, in practice, the carriers are imposing an expensive, time consuming, intricate claims gauntlet in order to secure an allowable refund. Try it sometime. It isn’t easy. The drill goes something like this:

  1. You must supply full shipping information, not just the tracking number, but the consignee’s name and address; city, state and zip; date package was shipped out; and package weight.
  2. Next, you must determine the actual promised delivery for the class of service you purchased, then match it against actual delivery. This takes a search of disjointed sources and the ability to interpret color-coded ground maps, the carrier¹s service guide or information accessed through the Internet. You supply the time and money and staffing for this not as easy as it sounds exercise.
  3. Now, you present your claim through the carrier¹s 1-800 number, which typically takes from 5 to 15 minutes per package.
  4. Sit back, relax, you’ve earned it. If the refund shows up on your next weekly invoice.

What can you do about this?

  1. Track your packages and call manually for late deliveries.
  2. Invest in computerized shipping software that can track your packages for on-time delivery.
  3. Hire a third party to get refunds on your behalf (they typically charge half).
  4. Re-negotiate your contract and ask for a better discount based on your percentage of service failures.

Shippers should hold small parcel carriers to their word, namely, their guarantees that: “your packages will arrive on time or your money back.”


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