Save 50-75% on Parcel Shipping by Comparing Options

Last week I was working with a CEO that was concerned about the profitability of his company. As I was searching for different ways to help him, I asked to look at a month’s worth of his UPS bills. He spends about $1,000 a day; however, on one day I noticed that he did $5,000. There were 100 packages that were shipped 3 day select. He explained that he shipped a large order for one of his clients. I began to look at the places where the packages were sent and noticed that more than half of them were sent to zip codes where the packages would have been received the same day or sooner if they had selected ground service.

Please take a look at the example in the picture. This 20 pound package arrives at end of the day Friday whether it is shipped ground service or 3 day select. The only difference is the price. The 3 day select package is $27.20; the ground package is $11.93.

Why pay double for the same service?

I asked that question and the response was that 3 day select is guaranteed to get there. Ground is also guaranteed! UPS and FedEx both guarantee that the package will be delivered on time or your money back. It is the same guarantee for both services.

My tip is to compare the service levels and you will substantially reduce your shipping costs!

Cut Parcel Insurance Cost in Half

Taylor’s Tip #9, “Don’t buy parcel insurance from your carrier; save 50% with third party insurance.”

UPS, FedEx, and DHL all offer various forms of insurance if your package is lost or damaged. With these carriers a shipment is automatically protected up to $100 for loss or damage, but if you require more protection than you need to declare a higher value for protection. FedEx and UPS call it “Declared Value”. DHL calls theirs “Shipment Value Protection. The US Post Office offers insurance as well.

The formula works pretty much the same even though the rates are different if you have a retail or commercial account.
For example, UPS charges $0.90 for each $100.00 (or portion of $100.00) of the total value declared, with a minimum charge of $1.80. If you had a package that was worth $500, you would subtract the $100 that is included and have $400 or 4 units x $0.90 for a cost of $3.60.

If you did 10 packages a month, you would be paying $36 just for insurance!

Now here is a secret that many eBay sellers and online merchants don’t know. There are third party insurance companies that will insure your packages for 50% less than the carriers charge.

I had the opportunity to video Walt Moscoso, Director of Sales for U-PIC Insurance services at the National Conference on Operations and Fulfillment.

U-PIC offers discounted package insurance for packages shipped via major carriers such as UPS, U.S. Postal Service, FedEx, DHL, etc. The package is shipped by the carrier but insured by U-PIC, saving you hundreds, perhaps thousands of dollars every year. You will save 60-80% on your insurance costs. There are no minimum requirements.

Here is an Easy Way to Cut Shipping Costs by 18% or More

1+1 ≠ 2

When it comes to shipping packages, one plus one does not equal two! What I mean by this is that if you have two, 1 pound packages to send to the same address it will cost you considerably more to ship them separately.

If you combine them into one box, you will save money.

Here is a specific example. Let’s say that you want to ship a 1 pound box from New York City to Beverly Hills. The U.S. Postal Service Priority Mail rate for a 1 pound box is $4.60, so if you sent two packages, it would cost you $9.20. The rate for a 2 pound package is $7.50 or 18% less.

You will save $1.70 by combining these items into one box. You will always save money by combining items into a single box. This is always true, with all carriers.

Taylor’s Tip #8, “If you are shipping more than one box to the same address, find a way to consolidate them into one package and save on shipping.”

Flat Rate Shipping May Be Hazardous

Flat rate shipping can be the best opportunity to save on shipping and it can be hazardous to your profitability. The big mistake that many eBayers and online sellers make is to assume that it is always the best deal. eBay’s new requirement for a shipper to specify shipping costs makes flat rate shipping even more tempting.

Whether or not it is the best shipping method depends on how much your item weighs.

Here is a rule of thumb guide for you to help determine if it is a good deal or hazardous.

The US Post Office has a Priority Mail Flat Rate Box in which you can put any amount of weight for only $8.95. I have put as much as 14 pounds in this box. The same weight with another service (Parcel Post) or carrier would be twice as much. This is a GREAT deal because you don’t have to worry about fuel surcharges, residential delivery charges, or delivery area surcharges.

However, if you are shipping four pounds or less, it may not be the least cost shipping method. And with the new “Best Match” eBay functionality, it might even be hazardous to getting the sale. A four pound box could be $5 or less to ship. This is 44% less.

My advice is to compare rates amongst different services and carriers to make sure that flat rate shipping is the best deal for you.

Taylor’s Tip #7: Use Flat Rate Shipping Prudently