3 Steps For Saving on Parcel Shipments

What is parcel shipping? Parcel shipping refers to small package shipments and due to hidden fees and complex processes, they are usually left with limited visibility of overall freight spend. Millennium Logistics Management provides us with 3 steps for saving on parcel shipments:

Parcel Shipping is Anticipated to Increase In Costs!

Due to the rapid growth of online retail, E-commerce is changing parcel shipping and delivery drastically. This growth will continue to increase over time because of convenient shopping, shipping and delivery options, which means parcel shipping will continue to grow in popularity as well. That is why it is important to take steps now to save today and in the future!

Did you know that parcel carriers apply accessorial fees and surcharges to a package’s total landed cost? That’s right, in fact, over 30 percent of a carrier’s invoice consists of additional accessorial fees or surcharges.

Accessorial fees are extra items or services needed to ensure delivery and some of these can include shrink wrapping, layovers, storage and/or after hour deliveries. Surcharges are very similar; this fee is applied to transportation services on top of the total cost and these can include seasonal charges, fuel and/or dimensional weight.

With all the rapid growth in deliveries, it is anticipated that carriers are expected to experience a rate increase of 2 to 3 percent in this year alone! Paying more is going to be inevitable therefore what are the steps that will help shippers avoid extra fees and save on costs? Let’s review those steps below:

Step #1: Negotiate to Lower Fees With Carriers

• The base rate and delivery areas are negotiable.
• Just like you would ask for lower haul rates, you can also ask for discounts on surcharges and accessorials.

Step #2: Understand The Total Landed Cost on Per-Package Basis

• Find out which surcharges or accessorials are having the biggest impact in terms of frequency and dollars spent.
• Also, find out what percentage of your cost-per-package is made of accessorial and surcharges.

Step #3: Make Changes That Will Create Cost Solutions

• Use data to improve operations and create a benchmark.
• Establish standards which will reduce re-occurring surcharges or accessorials that impact your cost-per-packages.

Shippers, take control of your transportation spend now by analyzing spend, diversifying carriers and changing optimizing operations! Also, remember that when partnering with a logistics expert (such as Millennium Logistics Management) you are able to measure performance, discover correctable shipping mistakes, gain shipment visibility and identify transportation solutions. We formulate a customized solution for your unique needs! For more information, please contact Millennium Logistics Management.