It “Fees” Like I’m Getting Screwed!

July 31, 2010

By Guest Blogger, Jim LeRose, http://www.agilenycmetro.com/

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!

Wall Street investors and airline executives are laughing all the way to the bank and at you while they snatch a lot more of your money then you expect. CNN reported the airlines are getting billions from these new fees and now the US government is being asked to step in.

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…

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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:

I hope this information helps you Ship Better and Save Money.


How to Beat the High Cost of Parcel Shipping!

January 30, 2010

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 2nd 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 2nd 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!

January 17, 2010

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.

UPS 2010 Rate Increase—In-Depth Analysis, Great Links, and How to Get a 31% UPS Discount

December 1, 2009

Attention UPS Shippers: the rates will be increasing on January 4, 2010. Most of you probably know this by now, but what you may not realize is how the rates will impact your budgets for 2010. My friend and colleague, Doug Kahl, wrote a useful analysis for PARCEL magazine which I would encourage you to read, called, UPS 2010 Rates: An In-depth Look.

In a nutshell, UPS Ground UPS Ground service will increase 4.9%. Doug provides an in-depth initial analysis of the 2010 Ground Rates UPS List Rate Increase that you can download. You will see that the lower weights and zones, less than five pounds, go up a little over 6%.

UPS Air and International Services will increase 6.9% in the base rate and will reduce the Air and International Services fuel surcharge by 2%. Doug also provides an analysis of the express services that you can download.

If you would like to see how UPS will compute the fuel surcharge next year, you can download the PDF, Fuel Surcharge Calculation Changes. You can download Doug’s analysis of fuel surcharges here.

Some of the highest increases occur with the 2010 Surcharges. You can download an excel spreadsheet.

The 2010 UPS Rate and Service Guide for Daily Rates is available here for download. You can also see the Retail Rates here.

The difference between retail and daily rates is significant. Retail is $7.05 for a zone 2 one-pound package compared to $4.84 for Daily Rates. You pay 31% more for retail! Nobody that ships regularly should pay for retail. Retail rates are for what is known in the industry as “gift shippers” or consumers. (see my blog on Consumer Parcel Shippers Pay More for Shipping). These are people that only ship once or twice a year and don’t have an account with a carrier.

Here is how to get up to a 31% Discount on UPS:

Discounts are available for shippers; in fact, eBay shippers can get an account with UPS and qualify for the lower daily rates and save 31%. You can find out more about the eBay discount here. So even if you ship a few packages a month, you could save a lot of money on shipping!

 

 

 


5 Ways to Offset the Largest UPS 2010 Rate Increase

November 28, 2009

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:

  1. 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.
  2. 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.
  3. 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.
  4. Some shipping software providers also have options for address validation available, so you can also check with your supplier.
  5. 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.

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

October 27, 2009

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.


7 Best Practices for Saving Money on Shipping in the Mailroom

September 9, 2009

Corporate mailrooms are not only responsible for incoming and outgoing mail, but FedEx, UPS, USPS, DHL, and couriers. Shipping is very different in a mail center than it is in a warehouse. Shipping managers ship products in cartons or on pallets and the charges are passed on to the customers, so, generally, they don’t worry about budgets. Managers of mailing operations are often frustrated regarding their capacity to control the budget for shipping and mailing expenditures. They are often asked, especially in these economic times, to reduce costs; yet the people that make decisions about how to send an express envelope or choose the service level are not under their control. One of my readers is John Sikorski of Princeton University; he shared 7 of his best practices to save money on shipping in the mailroom. Thank you John!

  1. Education the staff in departments to know which way packages should be sent by holding a shipping seminar for anybody who deals with shipping out packages.
  2. Every time that the university signs a contract with the vendors we do a cost study to see the difference in prices between FedEx, UPS and the USPS.
  3. Establish a cost calculator where staff can go to see which vendor cost less.  We have done this for Federal Express and UPS.  The cost calculator has options that will be true for most of the departments most of time such as Next Day Morning and Afternoon, Second Day Service and Ground Service.  We do mostly commercial address and domestic packages so the shipping calculator is only for the United States.  Within the cost calculator we also put the fuel surcharge that one of the vendors charges the university.
  4. Talk to the vendors to see if there is any new programs that could save money for the university such as flat boxes or envelopes.
  5. Keep informed most vendors have newsletters that are free by e-mail.  I also look for magazine that you can get online they will give you some ideas from other companies and universities.
  6. Join the Postal Customer Council in your area and attend some of meetings that they have during the year to keep up with the changes that occur within the postal service and also networking with the other members at the PCC meet.
  7. Combine all shipments that are going to the same university or college when using UPS in order to save on the shipping cost.