All right, let’s get into this. Happy Monday. Y’all. This is Jeremy from Easy Logistics. Today we’re going to dive into FedEx and Ups, parcel shipping, ground shipping, and the different service levels that they offer and how the price and the rates are constructed and how to drill in and maybe self negotiate, in large part better rate rates with these carriers.
And what are the primary driving factors to drive down your overall price? Because it’s not just discount. There are a lot of factors at play that maybe most people don’t think about. This is something that we deal with a lot, with our FedEx rates and Ups rates. So to add value, I’m going to drill into all of it, and hopefully it’ll help you.
And if you have any questions, definitely let us know and get in touch. So, to begin with, we’re talking about FedEx and Ups shipping primarily. It could apply to DHL shipping, too, but primarily we’re using FedEx and Ups for North America. The main way that the rates are constructed or the drivers of the rates, are the dimensions of the packages, the overall weight of the packages, the length of haul, or the length that the shipment is actually traveling. Because if it’s traveling a longer distance, it’s going to cost more, if it’s heavier, it’s going to cost more, and if it’s larger dimensionally, it’s going to cost more as well.
The service level needed, whether that be ground, second day overnight or overnight express, and then the assessorial fees, that can be varied, and it just depends on what you’re shipping. Obviously, you would probably want to focus this more on the assessorials that you use most. Not there’s a wide array of them, but if you’re shipping a lot of residential signature required hazmat, as is the case with a lot of our electric battery and electric motorcycle and electric bike clients, those all drive up the price if not negotiated well. So to take the opposite side of this, really probably why you’re here, is to talk about what drives your discount down. And most people focus on the number one thing, which I call the discount level.
Or if you’re getting 20% off versus 80% off a standard shipment, that can make a huge difference. And you can drive that all down, some of it’s based on volume and negotiating skill and personal relationship with your sales rep or whoever you’re dealing with. But it’s all negotiable. So it’s not just one thing that drives the price down. It’s, as you can see, seven to eight things that come to my mind.
So the discount level driving that down, what’s the percentage off rack rate that you can get for the volume of the air shipping and continuously pushing on that a little bit to get a better price? Because obviously people who ship a ton get better pricing than those that ship a few packages here and there, because there’s money to be made in the volume, too. Number two, and probably a large driver, is the dem divisor. So, generally speaking, FedEx and Ups take the larger of either the total weight or the dimensional weight of the package, which is derived by multiplying the length times the weight times the height, and dividing it by a standard dim factor, which I think rack rate is one and goes up to 166 at least, if not higher. I think it can go into the 180s.
Actually, I have to double check that. But with our old Ups rates, I think it would go as high as that. So the higher that dim factor, the lower the dimensional weight would be to help you drive that price down. So you want to try and get a higher dim factor to drive your overall price down. So discount level, dim factor, overweight fees because it’s charged based on weight, but at certain thresholds, like above 100 pounds, 150 pounds, you start getting these oversized charges and over dimensional charges that can add up really quick.
Fifty dollars to one hundred dollars in some cases. So if you shop bigger items that are hitting those oversized thresholds, you want to negotiate on that to get those prices down as low as possible. Handling fees again for generally large package surcharge, because most of these systems, as you would assume, are set up to be automated so they can be as efficient as possible. And if your packages are so big that they won’t go through an auto sorter and they have to be hand carried, there’s a charge for that because that involves personal labor and it’s not as efficient because it can’t go through automated you can negotiate that. Everything’s negotiable.
Number five, accessorial charges. So residential signature required. Hazmat adult signature required. Anything that’s driving that price up on your particular shipping needs can generally be negotiated down. I mean, it may have a flat baseline cost, but they do tack margin on all of this.
So you want to try and attack each thing to drive those costs down a little bit better for you, especially if it’s like something that’s large and is standing out and getting in the way of you running a profitable business compared to your competitors. Like an oversized charge for a large box that can make a huge difference. Number six, holiday surcharges. They’re negotiable.
I think there’s a bit of a flat baseline for holiday surcharge, but it’s negotiable. Number seven, daily pickup charges probably doesn’t make a huge difference. And if you’re shipping at any volume, they’ll probably throw it in for free, but it’s negotiable. As a bonus, I would say if you want to take it a step further, there’s potential to use brokers like our company to get bulk discounted rates or dovetail off of somebody who’s doing a high volume of shipping already their discounts using a multi carrier transportation management system to shop and ship. There are a handful of these systems on the Internet where you can plug in Ups, FedEx, DHL rates, USPS rates, ShipStation.
We have a proprietary TMS that does this, but there’s a few different ones. I may cover that in another video, but that would be helpful. Kind of like what we do in the freight world, where you can see multiple carriers and their best rates in each lane and then pick the one that makes the most sense. And then if none of that works well, all of that will work to some extent. But positioning the material closer to your end customer using a third party fulfillment center or your own facility, if the distance and length of the haul is shorter, the overall cost is going to be lower.
It’s going to be faster to market, it’s going to get touched less, there’s going to be less transit related damage. The overall cost should look drastically lower. So that was primarily what I came up with, and I think those are the main ways to drive pricing down. If you’re struggling with this, or if some of this doesn’t make any sense, I’d be happy to have a quick meeting with you. These are things that we grapple with every day for our clients.
And we do have access to bulk negotiated rates based off of $40 million from our bigger warehousing partners that we can leverage to get you better overall FedEx and Ups rates. So I’d happy to drill into your current pricing, see if we can offer you value. I think most of the ones we’re looking at, we’re driving their prices down 20% to 40% in most cases because of our discount levels, and then because we’re a full supply chain company and not just a shipping company. We do have regional fulfillment centers. So if you’re shipping opposite coast, we can receive that material in our opposite coast warehouse and ship it out regionally for you to drive those prices drastically down.
Generally, if leveraged correctly, it should cut close to 40% to 50% off your overall shipping costs and deliver two to three times faster. So there’s a lot of efficiency in just having the material closer to your end customer. So again, my name is Jeremy Curran. My company is Easy Logistics Management. Feel free to reach out to me anytime.
866-854-5341, extension three. And if you like this material and you think it adds value, give it a thumbs up, like it or pass it on to a friend that it might help. And feel free to reach out to me anytime. I hope you’re having a great day, and give me a call anytime. Talk to you soon.
All right, let’s get into this. Happy Monday. Y’all. This is Jeremy from Easy Logistics. Today we’re going to dive into FedEx and Ups, parcel shipping, ground shipping, and the different service levels that they offer and how the price and the rates are constructed and how to drill in and maybe self negotiate, in large part better rate rates with these carriers.
And what are the primary driving factors to drive down your overall price? Because it’s not just discount. There are a lot of factors at play that maybe most people don’t think about. This is something that we deal with a lot, with our FedEx rates and Ups rates. So to add value, I’m going to drill into all of it, and hopefully it’ll help you.
And if you have any questions, definitely let us know and get in touch. So, to begin with, we’re talking about FedEx and Ups shipping primarily. It could apply to DHL shipping, too, but primarily we’re using FedEx and Ups for North America. The main way that the rates are constructed or the drivers of the rates, are the dimensions of the packages, the overall weight of the packages, the length of haul, or the length that the shipment is actually traveling. Because if it’s traveling a longer distance, it’s going to cost more, if it’s heavier, it’s going to cost more, and if it’s larger dimensionally, it’s going to cost more as well.
The service level needed, whether that be ground, second day overnight or overnight express, and then the assessorial fees, that can be varied, and it just depends on what you’re shipping. Obviously, you would probably want to focus this more on the assessorials that you use most. Not there’s a wide array of them, but if you’re shipping a lot of residential signature required hazmat, as is the case with a lot of our electric battery and electric motorcycle and electric bike clients, those all drive up the price if not negotiated well. So to take the opposite side of this, really probably why you’re here, is to talk about what drives your discount down. And most people focus on the number one thing, which I call the discount level.
Or if you’re getting 20% off versus 80% off a standard shipment, that can make a huge difference. And you can drive that all down, some of it’s based on volume and negotiating skill and personal relationship with your sales rep or whoever you’re dealing with. But it’s all negotiable. So it’s not just one thing that drives the price down. It’s, as you can see, seven to eight things that come to my mind.
So the discount level driving that down, what’s the percentage off rack rate that you can get for the volume of the air shipping and continuously pushing on that a little bit to get a better price? Because obviously people who ship a ton get better pricing than those that ship a few packages here and there, because there’s money to be made in the volume, too. Number two, and probably a large driver, is the dem divisor. So, generally speaking, FedEx and Ups take the larger of either the total weight or the dimensional weight of the package, which is derived by multiplying the length times the weight times the height, and dividing it by a standard dim factor, which I think rack rate is one and goes up to 166 at least, if not higher. I think it can go into the 180s.
Actually, I have to double check that. But with our old Ups rates, I think it would go as high as that. So the higher that dim factor, the lower the dimensional weight would be to help you drive that price down. So you want to try and get a higher dim factor to drive your overall price down. So discount level, dim factor, overweight fees because it’s charged based on weight, but at certain thresholds, like above 100 pounds, 150 pounds, you start getting these oversized charges and over dimensional charges that can add up really quick.
Fifty dollars to one hundred dollars in some cases. So if you shop bigger items that are hitting those oversized thresholds, you want to negotiate on that to get those prices down as low as possible. Handling fees again for generally large package surcharge, because most of these systems, as you would assume, are set up to be automated so they can be as efficient as possible. And if your packages are so big that they won’t go through an auto sorter and they have to be hand carried, there’s a charge for that because that involves personal labor and it’s not as efficient because it can’t go through automated you can negotiate that. Everything’s negotiable.
Number five, accessorial charges. So residential signature required. Hazmat adult signature required. Anything that’s driving that price up on your particular shipping needs can generally be negotiated down. I mean, it may have a flat baseline cost, but they do tack margin on all of this.
So you want to try and attack each thing to drive those costs down a little bit better for you, especially if it’s like something that’s large and is standing out and getting in the way of you running a profitable business compared to your competitors. Like an oversized charge for a large box that can make a huge difference. Number six, holiday surcharges. They’re negotiable.
I think there’s a bit of a flat baseline for holiday surcharge, but it’s negotiable. Number seven, daily pickup charges probably doesn’t make a huge difference. And if you’re shipping at any volume, they’ll probably throw it in for free, but it’s negotiable. As a bonus, I would say if you want to take it a step further, there’s potential to use brokers like our company to get bulk discounted rates or dovetail off of somebody who’s doing a high volume of shipping already their discounts using a multi carrier transportation management system to shop and ship. There are a handful of these systems on the Internet where you can plug in Ups, FedEx, DHL rates, USPS rates, ShipStation.
We have a proprietary TMS that does this, but there’s a few different ones. I may cover that in another video, but that would be helpful. Kind of like what we do in the freight world, where you can see multiple carriers and their best rates in each lane and then pick the one that makes the most sense. And then if none of that works well, all of that will work to some extent. But positioning the material closer to your end customer using a third party fulfillment center or your own facility, if the distance and length of the haul is shorter, the overall cost is going to be lower.
It’s going to be faster to market, it’s going to get touched less, there’s going to be less transit related damage. The overall cost should look drastically lower. So that was primarily what I came up with, and I think those are the main ways to drive pricing down. If you’re struggling with this, or if some of this doesn’t make any sense, I’d be happy to have a quick meeting with you. These are things that we grapple with every day for our clients.
And we do have access to bulk negotiated rates based off of $40 million from our bigger warehousing partners that we can leverage to get you better overall FedEx and Ups rates. So I’d happy to drill into your current pricing, see if we can offer you value. I think most of the ones we’re looking at, we’re driving their prices down 20% to 40% in most cases because of our discount levels, and then because we’re a full supply chain company and not just a shipping company. We do have regional fulfillment centers. So if you’re shipping opposite coast, we can receive that material in our opposite coast warehouse and ship it out regionally for you to drive those prices drastically down.
Generally, if leveraged correctly, it should cut close to 40% to 50% off your overall shipping costs and deliver two to three times faster. So there’s a lot of efficiency in just having the material closer to your end customer. So again, my name is Jeremy Curran. My company is Easy Logistics Management. Feel free to reach out to me anytime.
866-854-5341, extension three. And if you like this material and you think it adds value, give it a thumbs up, like it or pass it on to a friend that it might help. And feel free to reach out to me anytime. I hope you’re having a great day, and give me a call anytime. Talk to you soon.