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Let’s face it every company wants the best shipping rates as it can offer a competitive advantage or just better your bottom line. In general, when most people approach carrier negotiations, they are primarily concerned with their discount level. However here are some other major ways you drive down your overall small parcel, and ground shipping costs with fedex, ups, dhl, and even in some cases USPS.
discount percentage is the primary item most companies are focused on when negotiating
small parcel shipping discounts. But
there are lots of other ways fedex, ups, dhl, and usps make their money and its
important to understand them and negotiate these points below as well.
Pick up Fees.
a small part of your overall cost. However if you are shipping daily or close
to there is no reason you should be paying pick up fees.
Dim Divisors can make a big difference in
your overall drive to get better fedex, ups, dhl, and usps shipping discounts. Generally, most parcel shipping companies
will bill you by the greater of your actually weight or dimensional weight. As an example, lets assume you have a 33lb
package with dimensions 32inx 35inx 50inches.
Lets also assume your current dimension divisor with fedex is 139. Multiple 32x35x50=56000 divided by your dim
divisor of 139= 402 lbs. Obviously fedex
and their friends would much rather charge you for 402lbs than 33lbs for your
large light package. Dim divisor in
most cases, can go up to 250 so this is another point you should always seek to
negotiate for better overall rates.
Over-length charges are another major way fedex, ups, dhl, and even usps make more money. Its understandable that big packages that are hard for drivers and machines to sort, carry, and deliver should probably cost more. However, there is no reason for you to let them charge you rack rate for these services. Oversize charges can range from $50-100 or more depending on how big the packages are and even the shipping season we are in. Like anything else in life everything is negotiable, and If you ship larger products that could go ground or LTL freight it pays to negotiate. You can also sometimes ask for an exemption if you are right on the cusp of oversize and just can’t reconfigure your packaging or products.
Additional Handling Charges
Additional handling charges are another way for parcel companies to charge you additional fees. Generally, there are some size and weight cut-offs per carrier where these additional fees come into play. Its important to know what they are and ask for a reduction or flat-out exemption from them. Remember again, if you don’t ask they have already said no!
Some key Additional Handling Fees to be aware with FedEX
Some Key Oversize Charges and Others to be aware of FedEX
And the additional fees just go up each year!
Internal things your company can also do, packaging design, manufacturing reconfiguration
Asking for discounts and exemptions on the key cost drivers of parcel shipping from fedex, ups, dhl, and usps is a great way to start. However, sometimes also looking at how your products are manufactured and packaged can yield big shipping savings too. Not all products may lend themselves to this. However, we have seen smart companies reconfigure their packaging, time and time again, to get around these large additional parcel shipping costs.
Ultimately if your packages are just too large, you might be better suited by shipping your products LTL freight. There are several Transportation Management Systems now on the market that can compare your parcel shipping rates side by side with your LTL shipping rates. Thus, allowing you to know exactly when it is most advantageous to ship your package either mode.