I did my due diligence by checking flights at Kayak.com. Then I booked with the least costly airline to Ft. Lauderdale, which also happened to be my preferred carrier, and at that time I thought I had paid for my flights in full. Little did I know…when I checked in months later, I would get hit with $212 in fees for the first checked bag per-passenger. That amount represented 15.4% of my total travel expense! It “fees” like I’m getting screwed!
I say, what’s the difference between what the airlines are doing vs. what UPS/FedEx are doing to their customers? Answer – not a thing. “Fees” like you’re getting screwed too? You don’t have to take it.
Here’s an example; Last week I met with one of my best customers who discovered from an audit report that I prepared, his company is paying around $2,000 per month just for address correction fees with UPS. This is a fee that penalizes a shipper for not providing the correct information on their shipping labels. Many of these fees were incorrect addresses for shipments sent to the same customers repeatedly while others are for incorrectly spelled street names. This prompted further investigation and more analytics. He quickly realized his undisclosed fees for items such as; dimensional, oversize, delivery surcharges, residential, Saturday delivery etc. totaled 13.7% of a 3m total transportation spend. That means they we’re paying $411,000 extra to the carrier without knowing. Within months we cut this number in half and saved over $200,000 per year in unrecoverable fees. This is not an isolated incident. What’s puzzling is why so many companies either don’t care enough to do anything about it or simply think there’s nothing they can do.
What can be done about big businesses tricking their customers into paying more?
When it comes to flying, from now on I recommend you travel wearing one layer of clothing for each day you will be away, i.e. seven layers of clothing for a one-week trip, and avoid checking bags. Simply remove one layer each day. I admit this solution may be a bit flawed, as it may be slightly difficult to move about the cabin, it can only be used during extremely cold winter travel but it may help the goal of reducing fees.
As you can probably tell I may not know much about reducing fees for air travel but when it comes to UPS/FedEx, there’s plenty I know and a lot you can do!
Here are five simple suggestions to lower or eliminate carrier fees…
Get a reputable auditing company auditing your UPS/FedEx invoices immediately! You will get reports every month. Analyze the monthly reports so you can identify the overcharges. Overall my customers report the value of the information in these reports far exceeds the money saved from the actual refunds the auditors get for your company. You have to realize you have a problem before you can fix it and there’s no better way to identify the areas of overpayment then by using a 3rd party auditor.
Get new shipping technology (Transportation Management System – TMS) deployed at your company that will disclose these fees prior to shipping and help you save money in other areas. The free stuff such as: UPS Worldship / CampusShip / FedEx Ship Manager etc. aren’t designed to help you spend less – that’s why they are free. Today’s TMS systems can save 15% or more on your annual UPS/FedEx spend.
Get started using the USPS for residential shipments and/or low weight items. Their service has vastly improved and you may not know this but FedEx airlifts freight for Priority service.
Get an accurate shipping cost exposed in your shopping cart. You must be able to expose the final cost of shipping in the cart so you don’t get whacked with unrecoverable charges later.
Get a professional to help you negotiate lower fees or have them completely removed from your contract. Beware carriers have just announced they will NOT cooperate with the 3rd party negotiator of your choice so you will have to work with one behind the scenes.
Check out these links to see the current list of fees charges by your carrier:
UPS makes it considerably more difficult to see their fees but you can download their daily rates file – a 163-page .pdf file, and then find them listed as “Other Charges” on page 60. Click here: http://www.ups.com/media/en/daily_rates.pdf
I hope this information helps you Ship Better and Save Money.
What is the cheapest way to ship a package? It all depends.
I received the following email from one of my readers. Thank you, you have raised some very good questions. Read my response below in blue:
I invite any of you with questions to email me at mark.taylor@myshippingcoach.com. I may not be able to get back to you for a few days, but I read all my emails and respond.
You have a 2-pound package that is shipping to a zone 2 (someplace close). If it fits into the Priority Mail Small Flat Rate Box, you can ship it for $4.95. BUT, if you put it in another box, it would only be $4.90. If you used the bigger Priority Mail Large Flat Rate Box, you could pay $14.50—way more money!
If you have a 5-pound box, the rating becomes more complex. For a Zone 5, you would pay $11.76. It would be cheaper not to use the Priority Mail Large Flat Rate Box. But the same package going to Zone 8 (cross country) would be $16.37, so it would be cheaper to the Priority Mail Large Flat Rate Box. Now, I could ship that same box with FedEx Home Delivery for $10.59 and save $5.78 with the rates I get from FedEx (email me and I will tell you how).
The bottom line is this: no carrier is the cheapest carrier for every kind of package. The USPS does a great job and is the cheapest for package shipping to residences that weigh less than 2 pounds. My advice is to compare carriers and services.
Wow! It sure does cost a lot to ship a small package. Even though I advise people on shipping packages, the truth is that I don’t personally ship that much, maybe a couple of packages a month. So, when I do ship something, like I did over the weekend, I experienced firsthand the surprise and frustration of small parcel shippers. Here is what I saw and learned when I shipped several items.
My first observation was that the retail cost to ship an envelope across the country (from New York City to Beverly Hills, CA) was exactly the same for FedEx Priority Overnight and UPS Next Day Air. I knew that the prices for ground shipments were the same but I did not realize that it was also true for express shipments.
Of course I was shocked that the price was $32.05! I can’t believe that anyone pays that much.
Of course, I was glad that I only paid $14.11 with the discounted rate that I was able to obtain because of my industry knowledge. I saved 56%!
I wondered how people that don’t know where to get a discount feel about paying so much to send an overnight letter. If you email me at mark.taylor@myshippingcoach.com, I will be happy to share with you how I received that rate.
My second package was 2.2 pounds that I was sending to my son in Texas.
I went to USPS.com to get the rates. I was surprised that this small package was going to cost me $9.95 to send Priority Mail.
I saw that I can save $.60 by shipping it online and get Delivery Confirmation for free, saving another $.70 for a total savings of 13%.
I wished that it could fit into Priority Mail® Small Flat Rate Box for only $4.85 online.
While it could have fit into the Priority Mail® Medium Flat Rate Box, that would have cost $10.20 online or $.85 more.
I wondered if people sometimes made the mistake of thinking that the Flat Rate Boxes were always the cheapest way to ship something.
I then went to FedEx.com to compare prices. The retail rate for FedEx Home Delivery was $11.50.
But my discounted rate was only $8.57, 25% less than retail!
I thought about all the people I see standing in line at Kinko’s to ship a package and pay more; I wondered how they compete with bigger companies if they were businesspeople.
The new rates for 2010 go into effect January 4, 2010. The largest increases come from surcharges and accessorials (a fancy word for add-on charges).
The single largest increase is for address correction charges. The charge for ground packages increases from $8.00 to $10.00, a 25% increase! Air goes from $10.00 to $11.00. You could pay $5 to ship the package and get charged $15 because of an incorrect address! Here are a few suggestions:
Before you ship your package, validate your addresses. UPS provides a service, called “Detailed Address Validation” which is available if you are using www.ups.com or UPS CampusShip and shipping to a US address. This feature allows you to validate the street number range and the apartment number or suite number of your address. If it does not match, you will be offered some suggestions to choose from. It is not a 100% guarantee but it is a step in the right direction. This option is on the “create a shipment” page and requires the user to check the checkbox. You can also set a preference on the “shipping preferences” page so that it always performs the address validation. By the way, FedEx offers a similar tool.
UPS also offers an online tool for Address Validation for free. This is an XML tool that will require some help from your IT department to help you but can be used on your website for customers when they place their orders.
If you are not using the www.ups.com or CampusShip, you can use third-party software for validating addresses. I Googled “address validation” and received 131,000 English pages. I would suggest software with CASS certification, which stands for “Coding Accuracy Support System”. This is a US Post Office certification that the address conforms to USPS standards. In fact, here is the list of CASS certified software vendors.
Some shipping software providers also have options for address validation available, so you can also check with your supplier.
Finally, check every invoice you get from UPS for address correction charges. Research the address and do one of two things, correct the address if it is wrong in your database or call UPS and fight the charges. Either way, you should prevent this charge from occurring again.
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.
Law offices ship differently. While all 10 of the ways offices can save on UPS and FedEx that I mentioned in my last post are valid for law firms, there are some differences. Law firms mostly ship documents but may also ship boxes filled with files. Here are some of the unique differences:
The most significant requirement that all law firms have is the capability to track and bill back clients for shipping. This means that every item must have a valid cost center code for a specific client and the case number. Law firms may be working on more than one case for a client and accuracy is paramount. If a matter is not tracked, then the firm bears the expense and it affects profitability. If an item is accidently charged to the wrong client, it can be a major problem. Not only do they look bad, but it takes an administrative effort to clean up the mistake and they probably end up eating the shipping charges. A system that validates that the correct client number and legal matter has been entered can eliminate mistakes.
Legal firms can ship locally, throughout the United States, and internationally. They need to have the ability to track couriers, local delivery companies, regional carriers, and messenger services as well as UPS, FedEx, DHL, and the US Post Office. Since some legal matters require a signature or proof of delivery, they need to be able to ship with Delivery Confirmation, Registered Mail and Certified Mail.
Large law firms typically have more than one office. The capacity to have an enterprise shipping technology that ties together all the offices is advantageous. This will allow any shipment for any carrier from any office for any client to be properly accounted for and billed back to the client.
Many law firms have outsourced or hired a third party to manage their mailrooms. They typically have “free” systems from the carriers and use a separate system for FedEx, UPS, DHL, and the US Post Office. The ability to use one multi-carrier system that has all the history and tracking in one location for all the offices minimizes time searching for information and makes it easier to consolidate reporting. This provides full visibility into the document chain-of-custody.
Most law firms have a customer relationship management system (CRM) or Microsoft Outlook where they store the contact information for their clients. The capacity to integrate these systems so that the address data does not have to be retyped saves time and eliminates mistakes.
There are two types of office shippers: corporate offices and small to medium size offices. The difference is the volume of shipments. Corporate offices that don’t have centralized mailrooms may be shipping from a few to dozens of items a day. Most small offices may only ship a few pieces a week to a couple of items a day. Regardless of volume, they have some common characteristics.
The type of shipping that is done in the office is different than the in the warehouse. The front office mostly ships proposals, samples, urgent documents, and occasionally gifts (especially for the boss). Most of the shipping is done by an office manager or an administrative assistant that is computer savvy. They typically ship with the carrier’s website, www.fedex.com or www.ups.com. I have a warning: don’t choose your carrier based on advertising or how nice the UPS driver is to you or you will get a poor discount. I can’t tell you the number of times that I have seen companies shipping as much as a $1,000 a week that have no discount but love their carrier. A few years ago the Wall Street Journal wrote an article about how thousands of office workers couldn’t wait for their UPS man to arrive. They loved their UPS man! I’m not kidding; just for the fun of it, Google “love UPS man” and you will be surprised.
Tips for Saving on Shipping
Ask the person who is requesting that you ship something for them, when the item needs to be received. Studies indicate that more than 59 percent of all overnight items are not opened the same day they arrive! Don’t ship it overnight unless it absolutely positively has to be there.
Check out other service options, such as next afternoon delivery or second day delivery; you can cut your costs from 50%-75%.
Compare the cost with the US Post Office. Priority Mail has tracking and is significantly less money.
Don’t fall in love with your UPS man. Attachment is the source of poor discounts.
If you are not on-line, set up an account. The carriers will give you better rates for an online account.
Find the nearest drop-box. If you don’t ship something every day, don’t pay for pick-up fees.
Track your costs; create a category and charge them to a specific department, person, client, job, etc… You can enter this information in a data field of the shipping application and generate reports.
Double check your address. Some carriers will charge a $10-$15 fee for an incorrect address including items like a wrong suite number.
Check your carrier invoices for errors. Some carriers will tell you what time they delivered so that you can verify if they were on time; if they weren’t, ask for your money back.
SOHO is an acronym for Small Office Home Office. This is a size of business which is generally categorized at 1-10 employees and is one notch below small business. Typically, these are professional service providers that are consultants, lawyers, architects, real estate agents and so forth that are in a small office or working from home. We can estimate the number of SOHO organizations based on statistics gathered from the IRS. They have a category called “nonemployer businesses”. According to the latest report from the US Census Bureau, “the United States added nearly 1 million nonemployer businesses between 2006 and 2007, bringing the total to 21.7 million.”
The report went on to say, “Three economic sectors made up more than 40 percent of the total receipts — real estate services ($177 billion); professional, technical and scientific services ($130 billion); and specialty trade contractors ($97 billion). These three sectors were comprised of 7.2 million businesses and represented more than 33 percent of all nonemployer businesses.”
Their shipping profile is similar to the mobile worker with a few notable exceptions:
They don’t have discounts on shipping; mobile workers use their corporate discounts
As the owners of their businesses, profitability is a great concern. Saving on shipping costs goes right their bottom line.
Saving time and convenience are important to them. Many SOHO’ers don’t have any administrative assistant to delegate shipping tasks, so they have to do it themselves.
The shipping technology to help them ship their packages and express envelopes needs to be simple and available 24/7. SOHO workers don’t have 9 to 5 jobs. They are shipping proposals, documents, drawings, and samples. They ship it at night, after they have been face to face with their clients during business hours. They are not shipping every day so software needs to be intuitive and support after hours is a plus.
Another benefit to SOHO shippers would be a tool to find the closest shipping drop-off location. Most of these shippers drop their packages off because they may not be home when a FedEx or UPS driver comes to pick up the package. And they probably don’t want to pay for a weekly pick up service because their volume is not high enough to justify the extra $9 per week and they don’t want to pay the $4 per package charge for an on-call pickup.
Most SOHO shippers use the carrier’s website, such as ups.com, usps.com, or fedex.com to ship packages. Of course, this has problems. It is difficult to compare service levels and costs amongst multiple carriers. It takes too much time and requires learning multiple software applications. Furthermore, the address book and shipping history has to be maintained in multiple carrier websites if a SOHO company does want to compare.
The second type of parcel shipper is a mobile worker—this is a person that often works for a large corporation but from home or spends a majority of their time on the road.
The number of mobile workers is significant. By year-end 2011, IDC expects nearly 75% of the U.S. workforce will be mobile.
How does a mobile shipper send an overnight letter or a package?
In conversations with managers of large corporations, this has been a serious problem. Here are some of the issues they face.
Most of the carriers offer pre-printed airbills with an account number and return address embedded in the form. The mobile worker hand writes the addressee information and drops off the envelope. The problem is that hand written addresses are often illegible and can lead to delivery errors or address validation charges. Furthermore, it is more difficult to track these packages unless the mobile worker has a good system for saving and filing their copy of the airbill. In addition, this method makes it difficult for the corporation to properly account for the shipping charges and the accounting department often has to chase down the worker to properly apply the correct general ledger code for accurately classifying the charges.
Many corporations offer access to a single carrier’s website to employees for shipping items. While this is better than an airbill, it is limited to the services offered by that specific carrier and does not compare rates or services from other carriers which can result in overspending. This is inherently a more costly method of shipping. For example, a worker will typically send an envelope using an express service which is four to five times more costly than shipping it through the US Post Office with Priority Mail.
When mobile workers are traveling they often will ask the hotel to ship an envelope for them and add the charges to their hotel bill which is reimbursed by the company. This is the most expensive way of shipping possible. The hotel typically charges retail and sometimes even adds a handling charge. This can cost two to three times more than using a corporate account number.
Are you a mobile worker? I would love to hear about some of the issues that you face in shipping envelopes or packages when you are away. Please let me know.
The largest percentage increase in ground parcel rates from both UPS and FedEx go into effect today. While they announced that the average increase is 5.9%, it is important to know that this is only an average. Certain weights and zones are much higher.
What can you do about it?
Minimize surcharges; the cost to ship to a residence is 30% more than a business. Ship your package to your recipients’ office rather than home.
Compare rates with other carriers; look at the cost to ship the package with the USPS or regional carriers. It could be as much as 50% less
Get a discount; if you have a discount, now may be the time to reassess your rates. If you want a professional analysis of whether you are getting the discounts that you deserve, let me know.
Eliminate mistakes; the cost of an address correction has increased by $2 or 33%. It will cost you $8 extra if you don’t have the address correct. Use the carrier’s website or third party software to validate the address.
Ship it with a cheaper service; ship it ground instead of express. Compare delivery times and days.
What can be done about big businesses tricking their customers into paying more?
Posted by mtaylortec 
