In the world of small package shipping solid shipment data analysis can help you reduce costs and increase efficiency of your shipping. Here are a few things you might want to look for:

Dimensional charges: What percentage of your shipments are moving at actual weight versus dimensional weight? If a large percentage of your shipments have a higher billed weight than actual weight, then you might want to review the way your shipments are packaged, and negotiate with your small package carrier for a customized dimensional weight factor. Packaging engineers may be able to reduce the physical size of your packages while still maintaining their strength and integrity. Both US small package carriers offer package engineering services. Since integrated carriers generally move your shipments on their own transportation, you may be able to negotiate a different higher dimensional factor than the published “166 rule” currently in use for domestic US shipments. 

Declared value surcharge: Some shippers are not aware that checking the declared value box is actually authorizing the carrier to bill you for additional insurance coverage. If you have Inbound shipments, make sure you closely monitor those shipments as well. It’s pretty easy to check the box when you’re not paying the bill! In addition, the carriers’ published rates (currently $0.85 per $100 DV, with a minimum charge of $2.55), are considerably higher than third party insurance providers. 

Weight characteristics: If you analyze your shipment weight characteristics, what percent of your shipments fall between one and five pounds, six to twenty pounds or twenty one to fifty pounds for example? Your rates may be very competitive at certain lower weight breaks but not as competitive at higher weights. You may be using a small package carrier for shipments above 150 lbs and paying a premium, when these heavier shipments could move with an LTL carrier at a more competitive price. 

Service levels: Are you using express services when ground could save you money and still meet customer expectations? A number of the accessorial charges, including Fuel, DAS, Address Correction and Residential surcharges are lower on ground shipments compared to express. Are you shipping air express freight with a small package carrier to save one day when you could ship that large freight shipment with an air freight forwarder consolidation at as low as half the price? 

Zone characteristics: What is the average zones your shipments? If a large percentage of your shipments are zones 4 or higher (zone 4 is 301-600 miles), you may want to consider creating a second point of distribution or moving your current distribution point closer to your customers. In today’s world of improved warehouse management software, scanning, RFID devices and real-time reporting, offsite third party warehousing becomes more manageable. Amazon, an acknowledged early adopter of supply chain trends, has added nine new DC’s just since 2012, in order to be “be closer to their customers.”

Summary: These five areas, dimensional weight, declared value, weight characteristics, service levels and zone characteristics are not the only things to look for but they are can make a big difference to your bottom line costs. 

Tom Stanton

Doug Caldwell