Be Proactive – Five Tips to Minimize Dimensional Rating Costs
Tips to Minimize the Impact of National Carriers’ New Dimensional Rating Programs
It seems that everyone is talking about the new FedEx and UPS expanded dimensional rating programs. The general consensus appears to be that most companies, particularly B-to-C shippers, are bracing themselves for higher – in some cases, much higher – freight bills.
Unfortunately, there is no foolproof way to completely avoid the higher shipping costs these dimensional rating programs will incur. However, you can start taking steps now to minimize the impact as much as possible.
Following are five recommendations that may help reduce the impact:
1. Eliminate manual packaging decisions.
When the packing decision is left up to the staff on the fulfillment lines, it can be tough to make sure every order is consistently packed in the most cost-efficient carton or box. Whether an order is packed in a larger box than necessary or stuffed so full that the carton bulges – you run the risk of incurring higher freight charges. One way get control over packaging costs is to add cartonization software to your fulfillment center. This will ensure the most cost effective packaging decision is consistently applied, and also accelerate workflow.
It’s also wise to re-evaluate the information exchange between your order entry, warehouse management and shipping system to determine if the collective systems share enough decision data to automate the carton decision process. We’ve seen numerous companies create an integration plan that allows them to automate and embed business rules into the fulfillment process to ensure the right packaging decision every time, based on the customers’ shipping preferences, product details and delivery options.
2. Consider adding regional carriers to your portfolio.
Is a national carrier really the only option for every order you fulfill? Or is possible to meet certain customers’ delivery requirements via a regional carrier? Savvy shippers are already exploring the benefits of using regional carriers.[i] Mikel Mobley, Director of Sales for OnTrac, a regional carrier serving the eight Western States, noted “Shippers are looking for delivery alternatives. Since our rate structure remains unchanged, we are able to offer a significant discount over the national carriers’ expanded dimensional programs. If every shipper evaluated their customer concentration and their options for regional carriers, they would find the savings can be considerable.”
The optimal foundation for an expanded carrier portfolio is a carrier-agnostic shipping system that enables you to add national, regional, local and international carriers onto the same platform. Without this, it is virtually impossible to ensure that you’re choosing the lowest-cost carrier service that can meet your customers’ delivery requirements.
“The reality is that a multi-carrier shipping system is more important than ever,” said Rick Jones, president and CEO of regional carrier Lone Star Overnight (LSO), “But too often, legacy or standalone shipping systems offering just a single carrier are left in place because the warehouse staff is most familiar with them and thus perpetuating the status quo. Meanwhile, thousands of dollars are left on the table because the shipper lacks the ability to compare multiple carrier services and rates at once and select the best service and cost option for each and every shipment.”
Jones is also an expert on comparing the benefits to be weighed in considering regional versus national carriers. To learn more, download our whitepaper, “Regional Carriers: A Sound Shipping Strategy for Competitive Advantage.”
3. Shipment consolidation – is it more possible than you presumed?
This question goes out to the B-to-B shippers who may be facing shipping cost increases as a result of the new dimensional rating program. “We’ve been analyzing our customer delivery network, and we’ve found that a portion of B-to-B shippers may also be caught in this net,” said Jones.
If this is the case, reevaluate your fulfillment systems to ensure that you’re able to consolidate shipments wherever possible. If your shipping system does not have freight consolidation capabilities, this may be a red flag. Having the ability to consolidate your shipments and also simultaneously rate multiple carriers’ dimensional weights rules to your shipment can help reduce the impact the new dimensional rules will have on your business.
4. Will shipping minimums help?
Many companies have implemented incentives such as “free shipping for orders over $75.” For orders below a certain limit, the customer pays for the shipping. Has your organization run the numbers to see if this is a viable option to controlling costs? One of our clients, Craft Supply, implemented this program as a customer incentive program and control shipping costs and it worked very well. Download the case study here.
5. Consider other options to shipping.
Many retailers are considering other options to shipping as well. For example, some retailers with brick-and-mortar presence are offering in-store pickup and/or ship-from-store. This is more convenient for customers as they don’t have to wait to receive their goods and also reduces shipping costs for merchants. However, a successful ship-from-store or in-store pickup system requires integrated eCommerce software that can consolidate the order management function.[ii]
Be Proactive – Develop a Dimensional Rating Strategy Now
The new dimensional rating programs are going to cause tremendous change in the way shippers manage their small parcel deliveries. The best way to prepare for this ‘brave new world’ in parcel shipping is to be proactive. Begin now. As you analyze your customer delivery network, your carrier portfolio and your technology platforms, chances are good that you’ll uncover new alternatives that will yield significant savings, without compromising service.
As a leading provider of carrier-agnostic shipping solutions, ADSI’s Ship-IT™ solution includes a large carrier library of national, regional, postal and international carriers. Please contact us today to explore how a carrier-agnostic shipping system can help you combat rising shipping charges.
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[i] Read our blog post: “Factors to consider in Evaluating Regional Carriers.”
[ii] See more at the saleswarp.com blog: http://www.saleswarp.com/order-management/working-around-shipping-costs/#sthash.LzBcMyuB.dpuf