Do your shipping operations feel like they're too expensive? They actually may be. Have you stayed on top of price floors and surcharges? Are you getting the promised refunds on late deliveries? Or did you just "set it and forget it?"
The biggest mistake can be taking carriers at their word and not actually thinking of shipping as a strategy. The top carriers have so much business these days that they have little to no incentive to go out of their way to help you by proactively bringing inaccuracies or discounts to your attention. Being actively engaged also shows carriers you're a good partner - something they value over those unengaged in the process.
Today’s companies are built on speed and multitasking, which means that tasks like reviewing a shipping bill can quickly fall by the wayside. Add that to trying to keep up with the frenetic pace of e-commerce, the ever increasing volume of packages being shipped, and the regular rate surcharges and increases being added almost monthly by carriers, and you have a very advantageous situation for carriers.
Where to Start
You cannot just assume that your shipping contract “is fine” and write-off a regular review of it. With the aforementioned changes in rates, and expanding volume size, there are any number of price increases you may have to deal with, and reductions and discounts you could be taking advantage of. Establishing a strong shipping strategy requires you to take the time to fully understand what you’re dealing with.
As you start re-educating yourself about what you're spending and if it lines up with what you should be spending, there are a few key areas you can concentrate on at the start. The below are common mistakes, but ones that are also commonly overlooked by shippers and carriers both, and that can be corrected quickly for an immediate improvement:
- Invalid Address Issues. Invalid addresses that have to be corrected are slapped with an additional charge by the major carriers. By definition, the surcharge can only be applied if the mistaken address affects drivers’ ability to deliver the packages; otherwise, it shouldn’t be charged. The fees are large, and if you’re not paying attention, can quickly add up. For example, FedEx charges $15 for each correction. It’s simply impossible to know whether or not a driver truly found an address undeliverable, but you should review them often to see whether your carrier is in the wrong.
- Unshipped Packages. Some carriers charge for labels created and packages manifested, instead of packages actually delivered. This means it’s easy for companies to be charged for packages whose labels were printed but not delivered. Comparing data to make sure everything that went into the system was actually delivered is another way to identify errors and see an instant improvement.
- Weight Adjustments. There are two types of errors possible here. First, the carrier calculates dimensional weight incorrectly. Second, the carrier uses dimensional weight when they should’ve used actual weight. Every time rates change you should review your dimensional weight calculations so you know how much each parcel should cost. Then you can easily spot any errors as well and get them fixed.
- Late Deliveries. Packages delivered outside of the promised delivery window are eligible for a full or partial refund. With three to five percent of packages delivered late every day, carriers aren’t going to offer you the discount unless you call them on it. There can be thousands of dollars of savings in this area each year for shippers - as long as you have the data to discover the issues, take the time to review it, and follow the procedures carriers have for claiming refunds (there are often complex processes with a specific timeframe listed to make claims).
Unfortunately, the responsibility for spotting invoice errors and claiming refunds lies squarely with shippers. Carriers aren’t going to take it upon themselves to audit the service they’re delivering, find errors and issue refunds. Especially during the current business climate where e-commerce has grown to unforeseen levels of volume and complexity, and carriers assume shippers don’t have the time to check and double-check their work. Carriers are simply not in the business of competing on service because of the amount of business that’s available.
The potential to correct errors and save your organization thousands of dollars off the bottom line is one of the most basic arguments for why establishing an organization-wide shipping strategy is so necessary.