What is the Cheapest Way to Ship a Package?

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.

I stumbled upon your blog and I’ve got to say, it is very helpful.  I am a new Ebay seller and am new to this whole shipping business.  I was wondering if you could answer a question for me.  I use USPS for my shipping; I’ve found it to be cheaper than FedEx and UPS. Priity Mail Flat Rate Options

 

 

	Price	Size
Priority Mail Flat Rate Envelope	$4.90	12-1/2″ x 9-1/2″
Priority Mail Small Flat Rate Box	$4.95	8-5/8″ x 5-3/8″ x 1-5/8″
Priority Mail Medium Flat Rate Box (FRB1)	$10.70	11″ x 8-1/2″ x 5-1/2″
Priority Mail Medium Flat Rate Box (FRB2)	$10.70	13-5/8″ x 11-7/8″ x 3-3/8″
Priority Mail Large Flat Rate Box (Domestic Addresses)	$14.50	12″ x 12″ x 5-1/2″
Priority Mail Large Flat Rate Box (APO/FPO Destinations)	$12.50	12″ x 12″ x 5-1/2″

Here is the priority mail flat rate prices.  What if I want to use my own packaging or some of their other boxes not on the list, such as their shoe box?  How will I know how much it is going to cost?  It is based on weight?  Basically, I just want to know how USPS determines shipping costs.   And, do you have any tips to get the lowest shipping price possible? I ship mostly clothing and shoes, not anything that would be too heavy.  I would like to get them shipped at the lowest possible price.  How can I do that with USPS? Thank you so much!!!

The cost to ship a package depends on the weight, zip code, and dimensions, among other factors. For USPS you can ship in your own box, or in a Priority Mail box that you can get for free. Priority Mail Flat Rate Boxes can be the best way, but not necessarily. It all depends. Let’s look at a few examples:

• 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.

If You Ship Items Worth Over $100; This Secret Can Save You Big!

Do you ship items worth over $100?

What happens if that item is not delivered and your customer complains?

If you are an Amazon seller, you are bound by Amazon.com’s A-to-Z Guarantee and the money is automatically refunded to the customer. Most likely, you will refund the customer or ship another item, but you lose your profit and bear the costs of your product and the shipping costs.

The US Post Office, 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, for customers with Retail Rates, 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 shipped 10 packages a month of this value, you would be paying $36 just for insurance!

FedEx charges $.70 per $100 of value with a minimum charge of $2.10.

The USPS starts with the first dollar that you declare, has a minimum of $1.75. For $100 package, the cost is $2.25.

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.

Here are the rates from one third-party insurance provider: (Full Disclosure—I would receive a small referral fee if you use this service)

• UPS/FedEx Ground $.30 per $100
• USPS Priority Mail with Delivery Confirmation $.50 per $100

This is a HUGE savings. For a $200 package with FedEx, the cost would be $.60 instead of $2.10—a savings of 71%!

For USPS, that $100 package is only $.50 instead of $2.25, a savings of 78%!

How to Beat the High Cost of Parcel Shipping!

I have been working in the mailing and parcel industry since 1976—34 years! I am still surprised at what I see and hear. If you don’t know what you are doing, you can waste a ton of money. The worst part is that the carriers don’t make it easy for you, the small parcel shipper, to do it right. In fact, it almost seems like they confuse you on purpose. Let me give you an example, let’s say that you want to ship a package on Monday and get it to your customer by Wednesday. Which service would you use? Many would choose a service like UPS 2^nd Day Air or FedEx 2 Day service. Others might use US Post Office Priority Mail. What if you want to be sure that it gets there and choose the most economical service?

What is the best way to ship this package: UPS, FedEx, or US Post Office?

I went online to FedEx.com, USPS.com, and UPS.com and researched shipping a 5 pound package being shipped from Plymouth MI to a residence in Lawrence KS.

Here are the results of my analysis:

• The most expensive choice was UPS 2^nd Day Air for $27.91—guaranteed.
• FedEx 2Day would get my package there for $27.58—guaranteed. (almost the same)
• USPS Priority Mail was only $11.76. This would save me 57% but it is not guaranteed.
• But wait, if you look at the display below, you would see that FedEx Home Delivery would get it there in “2 Business Days.”
  
• Why do they have to make me figure out that 2 Business Days is Wednesday! Why do they make it so hard!
  
• I could pay $11.85 and it would be guaranteed. Looks like the best deal, but why pay retail if I could get a discount?
• I checked my discounted rates and saw that it was only $9.21, 22% less than retail. (email me and I will tell you how to get this discount)

Look at how much difference there is between rates. If I didn’t know what I was doing, I could have paid as much as $27.91!

I saved $18.70 on one package, or 67%.

Even Small Parcel Shippers Can Save 50% or More!

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.

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

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.”

Christmas Shipping Deadline is Wednesday or Thursday

A Christmas Shipping Poem

By Mark Taylor

“Tis a week before Christmas and all through the house,

not a creature was stirring, not even a mouse.

The procrastinators know that there is plenty of time,

to get their gifts shipped and everything will be fine.

If they wait until Wednesday, two days before,

they can ship via USPS Express Mail and their gift will arrive at the door.

And for those who are willing to pay $12.50 more,

The USPS will take packages for Christmas, the day before.

But procrastinators be warned that not all destinations will be served,

and you need to drop off your package before noon or you might be nerved.”

In order to be certain, make sure you call, 1 800-ASK-USPS.

For UPS and FedEx the last day for shipping is Wednesday, December 23. Make sure that you use a service that provides delivery for the next day to the zip code you are shipping to. The last day for delivery is Thursday, December 24.

Many people have asked, what is the best carrier or the best value for shipping their presents. My answer is that it depends. It is variable based on how far away the recipient is, the weight of the item, and whether or not the delivery is to a home or a business (among other factors). If you don’t have a discount with a carrier, are shipping to a residence, and your gift if less than 10 pounds, the USPS is probably your best choice. Make sure that you check out their flat rate boxes. And if you ship online using Click-N-Ship or a PC Postage provider like www.stamps.com or www.endicia.com, you can get a discount on some services like Express mail and free Delivery Confirmation with USPS Priority Mail.

To give you a sense of the difference in price, let’s say that you have a 10 pound gift that you are sending to a residence from New York NY to Beverly Hills CA.

UPS Next Day Air by 10:30 will cost $97.32

UPS Next Day AirSaver by the end of the day will cost $87.78 (source www.ups.com retail rates)

USPS Express Mail $58.40 at the Post Office or $55.48 online.

USPS Priority Mail Large Flat-Rate Box is $13.95 at the Post Office or $13.50 online (source www.usps.com)

Why Would You Pay 10X More to Ship a Package?

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.

8 Ideas from the PARCEL Forum on Reducing Transportation Costs

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:

1. 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.
2. 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.
3. 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.
4. 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.
5. Re-negotiate parcel contracts; hire a third party negotiator that works on a gain share basis.
6. 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.
7. Create a global routing guide; compare Less-than-Truckload (LTL) to parcel and specify which mode shipments should utilize.
8. 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.

http://www.linkedin.com/groups?home=&gid=2076153&trk=anet_ug_hm&goback=%2Eanh_2076153

5 Challenges Third Party Logistics (3PL) Companies Face Shipping Parcels

Many businesses today have decided to focus on their core competencies. According to Jim Collins, in his book, Good to Great: Why Some Companies Make the Leap… and Others Don’t, companies that are good-to-great companies employ the “Hedgehog Concept” which is based on an understanding of the following:

• What are you deeply passionate about?
• What can you be the best in the world at?
• What drives your economic engine?

If each of the above were circles, the Hedgehog Concept would be at the intersection.

If we bring this concept to warehousing product, fulfillment, and shipping, how many companies could claim to be the best in the world at it? Certainly, a few, like amazon.com or Zappos, are world class; however, many companies choose to outsource this function to a third party logistics company (3PL). A 3PL normally performs all the functions of our warehouse shipper but has some unique requirements. Imagine a warehouse on steroids. 3PL’s often ship thousands of packages a day for many different clients. Some have their warehouses divided for a dedicated section for each client with a separate shipping system in each area, like a mini-storage facility. Others have conveyor belts throughout the warehouse brining the packages to a central shipping area. Almost all of them have multiple shipping stations. Here are few of the problems they face:

1. Since 3PL’s are shipping packages to their customer’s customers, they often charge the freight to their customers account numbers. A 3PL could have hundreds of different account numbers and they need to make sure that packages are shipped correctly. Some do this by having business rules that receive data from the 3PL information technology system to insure that the correct account number is charged.
2. Because 3PL’s ship for a wide variety of clients, they receive their shipping files in a wide variety of formats. They may get an excel spreadsheet or a file with addresses to ship to or they may get an entire order file with line items to pick. They need a shipping system that can import orders in many formats. They could be flat files, xml, ODBC, or other formats. Flexibility is critical.
3. I once spoke to the owner of a 3PL that had over 40 free carrier provided systems. I asked him why he was willing to invest in technology when he had free systems. He told me that it was nearly impossible to keep track of all the data for shipping. Imagine running a $100 million corporation and having to ask your vendors for the data to create a monthly financial statement. He had to ask his carriers how much he was spending and try to compile all the data. He wanted consolidated reporting that would provide him with the information he needed to run his business.
4. Everything that a 3PL does is tracked so that they can bill their customers, so every shipment needs a job number. And there is no room for errors, so job numbers have to be validated.
5. Speed is critical; the fewer keystrokes the better. 3PLs want automation so they can process parcels as quickly as possible.

16 Types of Warehouses that Ship Small Parcels with UPS, FedEx, and Other Carriers

Warehouses that ship small parcels are different than the other types of shippers that I have discussed so far. They ship a much higher volume of packages, from hundreds to thousands of parcels a day. They can be manufacturers, distributors, or third-party logistics companies (3PL). A 3PL is a company that provides outsourced logistics services (more about 3PL’s in a future post).

Small parcels are packages that weigh less than 150 pounds and are typically shipped with UPS, FedEx, DHL, Regional Carriers ( Lone Star Overnight, Eastern Connection, OnTrac,), and the US Post Office. Parcel shippers may also be Less-Than-Truckload (LTL) shippers or full truckload shippers. The way parcels are processed is very different than LTL shipments. Each parcel has a separate tracking number and label. A LTL shipment is usually a pallet with many boxes and shrink-wrapped. The pallet is shipped as a single unit.

Companies that ship small packages send them directly to consumers (business to consumer or B2C) or to businesses (B2B).

Examples of B2C shippers include the following:

• books (Amazon.com)
• apparel and accessories(LandsEnd, Zappos)
• gift baskets and mail order (Harry and David)
• sporting goods (Callaway, TaylorMade)
• electronics (Best Buy)
• medical supplies (Liberty Medical)
• computers (Dell, Apple)
• drugs, vitamins (CVS,GNC)

Examples of B2B include the following:

• industrial supplies (Grainger)
• pharmaceuticals (Merk)
• automotive supplies (Michelin)
• office supplies (Staples)
• fasteners, bolts, rivets (Fastenal)
• electrical components (Westinghouse, Allied)
• industrial valves (Asco, Kingston)
• industrial chemicals (Dow, BASF)

Because of the sheer volume of packages that a typical warehouse sends, these shippers tend to be very sophisticated. Throughput and accuracy are the most important attributes that they look for in processing. Features that warehouse shippers look for include the following:

• Speed
• Multiple user processing
• Integration with Enterprise Resource Planning (ERP) or Warehouse Management Systems (WMS)
• Business rules
• Error checking
• Mode optimization
• Integration with material handling systems, such as conveyors, scales, label printers
• International processing capabilities
• Reports

I will be discussing many of these software features in future posts, so stay tuned.