With every new year comes personal resolutions. Spend more time with family and friends, lose weight, invest for retirement, quit smoking and get better organized are all annual favorites. Individuals who have the desire and commitment to stick to their plan are always well rewarded. The same thing holds true in the business world. Do you have business resolutions for this year? Maybe or maybe not. Well, it’s not too late if you don’t! I’m here to help you out with some suggestions. As always, my suggestions are geared toward reducing shipping expenses with a direct impact on the bottom line. Let’s take a look.
- Review your use of air/express service to ensure it’s necessary. Low zone “air” parcels never see an airplane. They travel in the same trailer as your ground parcels. Save your company some money; stop using air service for low zone parcels. Compare the cost of next day air versus ground and you’ll see the impact.
- Negotiate a new parcel agreement based upon your unique shipping characteristics. Whatever you do, don’t benchmark incentive rates. Emphasize your average parcel size, weight, zone distribution, and parcels per delivery stop.
- Go ahead and bundle your parcels. Don’t believe the carriers; it is well worth your time! Bundling parcels going to the same consignee will dramatically reduce your total shipping expense. Bundle if you can and save!
- Understand what impact the recent rate increase has on your business. I’ll give you a jump start – don’t believe the carrier press release, it’s not 3.5%. This annual hoax is better than the Sunday funnies. Once you understand the impact, use it as leverage during rate negotiations.
- Get a handle on address corrections. Institute a program to correct wrong addresses so fees are not paid to the carriers on an ongoing basis.
- Review your oversize packages and calculate your annual oversize expense. Then brainstorm to reconfigure the packaging to eliminate the charge, if possible.
- Clearly determine and communicate the associated costs for all shipping activity down to package level detail. With the dramatic increases in service specific fees (e.g., residential), it has become increasingly important to properly associate the real cost of all shipments.
- Ensure your products are properly packaged. Improper packaging will result in damaged product or enroute repackaging by the carrier. At best, this slows transit time and adds cost to the carrier, and often the goods never arrive to the consignee. Just because a carrier picks up your package doesn’t mean it is properly packaged. So the onus falls upon your shoulders to ensure proper packaging surrounds your products.
- Don’t overpay for inbound transportation. Meet with your carrier to set up an inbound collect billing program. While you’re at it, ask them to provide a new discount program that incorporates your inbound shipments. Be sure to discuss your intentions with all your suppliers so they clearly understand your plan.
Understanding savings opportunities is the first step toward profit improvement for the New Year. Once you calculate the dollars you can add to your company’s bottom line, I am sure you will be as enthusiastic as I am about business resolutions for the new year. Best of success and Happy New Year!
Joe Loughran is President of Parcel Rate Solutions and an expert in the parcel industry. Parcel Rate Solutions is a transportation consulting company offering services in Carrier Rate Analysis and Carrier Agreement Analysis. Joe can be reached by phone at (724) 934-0626 or email: email@example.com.