Many business face an end of year shipping rush, a time when execution trumps planning as very busy warehouse teams focus on pick-pack-ship speed, efficiency, and precision. Unfortunately, less time on decisions and monitoring can mean a greater opportunity for shipping gotchas to sneak in and drain profit from all those extra orders as they head out the door.
What can you do to make an impact on shipping expenses and help hold the line on profits? We'd recommend prioritizing your focus on these top 5 gotchas, measure them through the end of the year, and look for why, when, and how-often they might be happening in your business.
Faster Service But Twice the Price
Sometimes speed and service are the most important factor and it makes perfect sense to use that Next Day Air service class. But expedited services are not only more expensive but waaaay more expensive, often costing 2x-4x or more than their slower-speed brethren. One way to handle this situation is use a real-time freight quoting tool to view all the carriers/service prices in one step, perhaps not for every order but only those where expedited services is being requested. Done right, real-time freight quoting gives you a "one click number" for each service class which includes all the pesky details of service-level, fuel surcharges, extra fees, and even your own pricing logic, helping you can make quick decisions on those extra costs.
Charging to Invalid Carrier Accounts
If customers are willing to give you their UPS, FedEx or other carrier account numbers, it's a great way to avoid having the cash flow through your business as you pay-for, charge-for, and then collect shipping fees in your AR process. But beware that older shipping software systems can sometimes make it look like you're actually using a carrier account for a shipment but you are later "charged back" for the cost because the account failed validation. Newer cloud-based shipping solutions use real-time validation of account numbers against carrier systems as shipment transactions occur. For some businesses it's a tough transition as the shipping team encounters more "invalid account" messages from real-time validation of accounts. During the rush-time, keep in mind and communicate that every one of those errors is a time when you might have "had to eat shipping costs" in the past. After the rush, look for ERP integration that includes built-in carrier account management features so your customer service team can help make account use a standard and easy part of customer setup.
Simple But Expensive Addressing Errors
Addressing errors sound like an obvious problem with an obviously solution --- make sure the address is right the first time to avoid all the downstream headaches. Unfortunately in practice address errors can creep into your ordering process in various flavors, such as an invalid zip code entered by a customer on an e-commerce website. During the rush this year, try to spend some time weekly or monthly looking at carrier invoices for charge-back correction fees, those pesky little "we'll fix it and deliver it for you" fees. After the rush, take a closer look at ERP-integrated or shipping-integrated address correction features that can automatically check, correct, and add-value to your address data as it flows through your fulfillment process to save you money without human intervention.
Residential Delivery Surcharges
Sometimes it's hard to know whether your customer is a small business operating out of a home or a business in a strip mall or office building. Unfortunately, the USPS and carriers know and categorize addresses as either requiring "residential" service or not and those fees will most likely get added automatically into your shipping costs as part of processing. Many businesses make an "all residential or no residential" delivery service decision and simply process all shipments one way or the other to try to minimize charge-backs. After the rush, take a closer look at your charge-backs and the total cost from this extra $2-$3 service fee and consider ERP-integrated or shipping-integrated address correction features which can also be used to automatically detect and mark addresses only when residential service is required.
Extra Charges for Dimension or Weight
While you can use some practical steps to prevent packing inefficiencies that result in extra shipping surcharges, it's hard to compete with the automated laser-dimension and weight capture systems that most carriers use to precisely apply rating surcharges. During the rush, users can try to take extra care to avoid major package size mismatches and use shipping software tools to look for consolidation opportunities as a way to help lower extra costs. After the rush, consider using occurrence data to help you evaluate automated packing rule tools which can help users select better packaging and can also be used in upfront quoting processes to give more shipping cost commitments to customers.