Pushing Back on Parcel Shipping Costs

Articles

Final Mile

July 15, 2022

Even though parcel shipping is scaling back from the pandemic surge, demand is still strong. And parcel shipping costs are soaring.  

Fuel prices are a major factor. Labor costs are another. And, as online consumers replace store visits with parcel shipping but still want to try on merchandise or compare similar items, the cost of returns has jumped.  

But shippers have more control over costs than they may realize.    

More Options

Among these low-cost carriers is the United States Postal Service (USPS). This is an obvious choice for relatively low-cost service to hard-to-reach destinations. In addition to working directly with the postal service, consider postal consolidators. These companies provide sorting consolidation to enter further into the USPS network, for which the USPS provides more competitive pricing.

Depending on your service area and the goods to be shipped, there are actually more carriers than just the big ones. Local and regional parcel carriers offer alternatives on price or service or both. Consider these options instead of the big guys, or as additional capacity . 

Among these low-cost carriers is the United States Postal Service (USPS). This is an obvious choice for relatively low-cost service to hard-to-reach destinations. In addition to working directly with the postal service, consider postal consolidators. These companies buy postal capacity in volume. They then resell it at a discount or attach services that might be of special value to your business. 

Meeting Expectations 

The current parcel shipping disruption has impacted both costs and service levels. This has changed end-customers’ expectations for deliveries. Two-day delivery is no longer the norm. Lower-cost carriers with longer transit times may now be a viable option. The important factor is communicating delivery dates clearly and meeting them. Reliability is the key. Get packages delivered which the customer expects them. 

Depending on your shipping volume and patterns, it might be possible to treat the middle miles between origin and destination points as less-than-truckload (LTL) freight. Consolidated parcels on a single pallet travel at a lower rate than individual packages. Adding a step in transit takes a lot more planning but can also offer considerable savings. Redefining where small package ends and LTL begins can be worth the exercise.

Mitigating Costs Even More 

The most dramatic savings may come from reducing or eliminating residential deliveries completely. BOPIS (Buy Online, Pickup In Store) is gaining popularity among omnichannel retailers who can leverage physical locations. This cuts the expense of home deliveries and any concerns about “porch pirates” or other complications that come with residential delivery. BOPIS also allows shoppers to pick up merchandise on their schedule and reduces returns. 

Which of these techniques will work for you? Every business has its own challenges. A parcel shipping audit will identify the potential savings for your specific needs. A baseline audit with regular follow-ups will produce any savings to be had in your parcel shipping operations. You can do the audit yourself or engage an outside consultant who brings a fresh perspective and a range of experience. 

Either way, you can push back on parcel shipping costs to move your business ahead. 

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