A company’s shipping costs, whether it’s parcel or freight, usually comprise of at least 10% of their overall expenses. It is therefore imperative for shippers to be more knowledgeable in various cost reducing methods that will increase the company’s bottom line. Shipping with FedEx and UPS can be very expensive, so here are a few ways to reduce those costs.
Did you know that 3% of packages delivered by UPS/FedEx arrive late? Their Money-Back Guarantee policy states that you are entitled to a full refund on that shipment, even if it’s only minutes late! However, the catch is that they make you initiate the refund process, and don’t do it automatically. Requesting credits for service failures, overcharges, weight discrepancies, etc. can definitely add up and will significantly reduce your costs. However, you do have to be knowledgeable in the 40+ parameters for refunds (service failures are just one of those parameters) to claim them and constantly be monitoring your account which can prove to be very time consuming. Furthermore, the carriers only give you a window of 15 days from the date of invoice to claim those refunds. Using a 3rd party parcel and freight auditor is recommended to both increase your refunds and save you time.
If you are a high volume shipper of either ground, domestic express, or international, then most likely you can negotiate with your carrier for better rates. Don’t be ashamed to ask for it. You are the customer who is spending hundreds, if not thousands of dollars every month and therefore have the right to obtain higher discounts. To effectively negotiate with UPS/FedEx, shipping managers need to be very knowledgeable in their shipping needs, volume, and projections. If one isn’t up to date on this, it is recommended to consult with a 3rd party auditing firm.
Another way that UPS & FedEx make their money is by overcharging the customer on insurance costs. While UPS/FedEx charge $0.70 for every $100 of Declared Value, a 3rd party will charge significantly less, usually around $0.30 per $100 of Declared Value. So for a shipment that has a declared value of $5,000, UPS/FedEx will charge you $34.30 (the first $100 of declared value is free) and the 3rd party will charge you only $14.70. So that equals to a 57% discount by using a 3rd party! Multiply this amount by hundreds of packages that you might insure a month and you are greatly decreasing your insurance costs.
By taking a close look at these couple of freight bill items, you might find that you’re able to save quite a bit of money each month. As is usually the case in business – inspect your freight bills and regularly commit time to performing an analysis of the numbers so that this often ignored area gets the attention it needs.
This article is a guest post written by Eytan Sebag, President of Betachon Freight Auditing, a company that specializes in auditing Fedex UPS accounts, negotiating carrier contracts, and LTL Brokerage services.This entry was posted on Wednesday, February 13th, 2013 at 12:56 pm and is filed under Shipping Resources.