Don't Let Address Errors Break the Bank

When it comes to small parcel shipping, one small mistake can yield big consequences, especially when it comes to incorrect addresses. Shipping to the wrong address can result in lost packages, frustrated customers, and significant address correction fees.

Carrier Address Correction Fees

UPS and FedEx, two of the largest small parcel carriers, offer address correction services for an additional fee. The fees for these address corrections vary depending on the carrier, service type, and the correction that is needed.

To help you better understand the importance, here are some details to consider:

• For UPS, the address correction fee is $19.50 per package for both UPS air and ground shipments, with a maximum correction fee of $136.50 per shipment.
• FedEx, on the other hand, charges $21.00 per package for both air and ground shipments, with a maximum correction fee of $147.00 for their express service and $63.00 for their ground service.

The Cost of Address Corrections

 These fees may seem small, but they can add up quickly for companies that ship a high volume of packages. At ShipMatrix, we have seen larger organizations spend over $100,000 per year on address correction fees alone. More than 64% of the total address correction fees were incurred due to repeated shipping to the same incorrect address. Shockingly, some companies have had to bear a cost of up to $6,500 for a single incorrect address.

Impact on Shipping Costs

 In addition to the actual address correction fee, it is important for companies to consider the impact of this fee on their overall shipping costs.

For example: if a shipper has an average shipment cost of $12-$13 and they have to pay an address correction fee of $20, then the unexpected cost is 60%-69% higher than the original shipment cost.

This can have a significant impact on a company’s bottom line, especially for small businesses or companies with tight profit margins.

Taking Preventative Measures

 To prevent the need for address corrections, it is crucial for companies to take proactive measures whenever possible. This can include:

Implementing Front-End Address Validation and Classification to Avoid Costly Address Corrections

Step 1: Assess your current address verification process

• Determine your current process for verifying and classifying shipping addresses
• Evaluate the effectiveness of your current process and identify areas for improvement

Step 2: Research and select an address validation software

• Conduct research on software solutions that offer real-time address validation and classification
• Evaluate the cost and features of each solution
• Select the software that best meets your business needs and budget

Step 3: Integrate the software into your existing systems

• Work with your IT team to integrate the address validation software into your shipping systems
• Train your staff on how to use the software effectively
• Ensure that all shipping employees understand the importance of valid and accurate shipping addresses

Step 4: Standardize and classify shipping addresses

• Develop a standard format for all shipping addresses to ensure consistency
• Classify addresses based on their type: residential or commercial
• Ensure that address classifications are accurate to avoid unnecessary fees and invoice adjustments

Step 5: Encourage customers to verify and update their shipping address

• Add prompts during the checkout process to encourage customers to verify and update their address
• Implement a regular communication process with customers to remind them of the importance of accurate address information

Step 6: Monitor and track errors and costs

• Continuously monitor the effectiveness of your front-end address validation and classification process
• Track the number of corrections and associated costs before and after implementing the software
• Evaluate the impact of the software on your bottom line and customer satisfaction

Ensuring address accuracy is crucial in small parcel shipping. This helps avoid costly address correction fees, prevent potential loss of customers to competitors, and maintain customer satisfaction. By implementing proactive measures such as front-end address validation and classification, companies can prevent the need for address corrections, improve the accuracy of their shipping addresses, and save on shipping costs. By following the steps provided and integrating an address validation software into your existing shipping systems, you can be confident in the accuracy of your shipping addresses and improve your bottom line while keeping your customers happy. Don't let address errors break the bank or damage your reputation, take action now to prioritize address accuracy and improve your address validation and classification processes.

Alternative Delivery Points: Enhancing Customer Experience

Alternative delivery points are alternate delivery locations other than the recipient's home, where a package can be delivered. This service is currently being offered by carriers such as FedEx and UPS, which help businesses save on shipping costs and improve the overall customer experience. In this report, we will take a look at how to educate and encourage receivers to utilize alternative delivery points for their small parcel orders. We will cover the following areas:

1. The benefits of alternative delivery points
2. Educating customers about alternative delivery points
3. Encouraging customers to utilize alternative delivery points

The Benefits of Alternative Delivery Points

There are several benefits to utilizing alternative delivery points for small parcel orders. Here are a few of the most significant benefits:

1. Cost Savings: One of the most significant benefits is cost savings. Commercial locations cost less to deliver to than residential locations. By utilizing alternative delivery points such as retail stores, customers can have their packages delivered to a commercial location, saving on shipping costs.
2. Increased Security: Another benefit is increased security. Packages delivered to a residential location are at risk of being stolen or lost. Delivering packages to a physical location, such as a store or locker, can help prevent package theft.
3. Increased Customer Experience: Finally, alternative delivery points can improve the overall customer experience by providing additional flexibility and convenience. Customers can have their packages delivered to a location that is more convenient for them, such as a location closer to their work or on their way home.

Educating Customers about Alternative Delivery Options

Before customers can start utilizing alternative delivery points, they need to understand what they are and the benefits. Here are some steps that businesses can take to help educate their customers:

1. Include Information on the Website: The businesses can include information about alternative delivery points on their website and product pages. This information should be easy to find and include all of the benefits.
2. Send Email Campaigns: An effective way to educate customers is through email campaigns. They can send emails to their customer list, explaining how alternative delivery points work and encouraging them to utilize the service.
3. Display Promotions: Another way to educate customers about alternative delivery points is by displaying promotions on the website or store. These promotions can include discounts or other incentives for using alternative delivery points.

Encouraging Customers to Utilize Alternative Delivery Points

After businesses have educated their customers about alternative delivery points, they need to encourage them to utilize the service. Here are some ways to help encourage customers to utilize alternative delivery points:

1. Offer Free or Discounted Deliveries: Customers are more likely to utilize alternative delivery points if there is a financial incentive to do so. Offering free or discounted deliveries to alternative delivery locations can help encourage customers to take advantage of the service.
2. Utilize Clear Messaging: The messaging should be clear and concise. Customers should understand the benefits and how to utilize the service. Clear messaging can help alleviate any confusion and encourage customers to try the service.
3. Make it Easy and Simple: Finally, businesses should make it simple and easy for customers to utilize alternative delivery points. The process should be seamless and easy to navigate. This can help encourage customers to continue to use the service.

Conclusion:

Educating and encouraging customers to utilize alternative delivery points can be beneficial for both businesses and customers. By understanding the benefits and how to use the service, customers can save on shipping costs, increase package security, and improve their overall experience. Businesses can benefit from cost savings and increased customer loyalty.

FedEx and UPS offer these services through FedEx Delivery Manager and UPS Access Point, respectively. For more information on these services, visit the following links:

• FedEx Delivery Manager: https://www.fedex.com/en-us/delivery-manager.html
• UPS Access Point: https://www.ups.com/us/en/business-solutions/expand-your-online-business/ups-access-point.page

By utilizing the steps outlined in this report, businesses can successfully educate and encourage their customers to utilize alternative delivery points.

How to Choose the Most Cost-Effective Parcel Carrier for Your Supply Chain Needs

As a Director of Supply Chain, you know that one of your primary responsibilities is to ensure the timely and cost-effective delivery of goods to your customers. Choosing the right parcel carrier is crucial for the success of your supply chain. One of the key factors to consider when selecting a parcel carrier is the parcel rates. In this article, we will discuss how to choose the most cost-effective parcel carrier for your supply chain needs.

Know Your Options

Before selecting a parcel carrier, it’s essential to research and compare multiple options. This will help you obtain the best rates available and ensure that you make an informed decision. Some of the most popular parcel carriers include UPS, FedEx, DHL, and USPS. However, there are also many other regional carriers that may offer more competitive rates for your particular needs.

Consider Parcel Rates Based on Various Factors

When comparing parcel rates, it’s important to understand that shipping rates depend on various factors such as weight, size, destination, and urgency. Therefore, it’s essential to gather all the necessary information about your shipment before requesting a quote from a parcel carrier. Providing accurate information about your shipment can help you obtain a more precise estimate of the cost.

Shipping rates often vary by carrier and may fluctuate based on market conditions, fuel prices, and other external factors. Therefore, it’s important to stay informed about the market dynamics and be prepared to adjust your shipping strategy accordingly.

Negotiate for Better Rates

Negotiating with parcel carriers can be another effective way to obtain better rates and save on shipping costs. However, this requires a good understanding of the market, your shipment needs, and the negotiating process.

Before entering into negotiations with a carrier, determine the volume of goods you need to transport. Typically, the more goods you ship, the more leverage you have to negotiate better rates. During negotiations, emphasize the benefits of a long-term partnership, such as reduced costs and increased efficiency for both parties.

Choose the Most Cost-Effective Option

After comparing rates and negotiating with carriers, you should have a good understanding of the various options and their pricing. When making your final decision, consider all the factors, such as service quality, reliability, and the carrier’s reputation. Remember that choosing the most cost-effective option doesn’t necessarily mean the cheapest option. It’s more about finding the right balance between the price and the value of the service provided.

Conclusion

Selecting the right carrier is an important decision for any supply chain operation. To ensure cost-effectiveness, it’s essential to research and compare multiple options, gather all necessary information about the shipment, negotiate with carriers, and choose the most cost-effective option. By following these steps, you can reduce transportation costs, improve efficiency, and enhance customer satisfaction.

Small Parcel Invoice Auditing

The Importance of Auditing your Carrier Invoices

As a business owner, you are always looking for ways to save money and cut down costs. One area that often goes overlooked is shipping costs. Shipping can take up a significant portion of a business's budget, especially if they are using small parcel carriers like FedEx and UPS. In fact, shipping can cost up to 5-10% of a business's total revenue. That's a hefty amount, which is why it's important to audit your small parcel carrier invoices.

What is Small Parcel Invoice Auditing?

Small parcel invoice auditing refers to the process of reviewing and verifying a carrier's invoice for accuracy and errors. This is done by comparing the invoice to the actual shipping data to ensure that the charges billed are correct. Small parcel carriers are known for billing errors, which can occur for a wide range of reasons such as incorrect address, wrong zip code destination, or misplaced packages.

Why is Small Parcel Invoice Auditing Important?

By auditing your small parcel carrier invoices, you can catch any of these errors and potentially save your business a substantial amount of money.  It is possible in some unique situations for businesses to save up to 10% on their small parcel shipping bills by auditing their carrier invoices.

Benefits of Small Parcel Invoice Auditing

1. Saves Money: As mentioned earlier, by auditing your carrier invoices, you can catch any billing errors. This can save your business a lot of money in the long run.
2. Increases Efficiency: Audit reports let you know where and how your small parcel carrier is performing so that you can streamline your carrier usage.
3. Provides Insight: Invoice auditing reports provide a wealth of information regarding where, when, and how you are using your carriers. This insight can be used to make informed decisions about future shipments.

How to Perform Small Parcel Invoice Auditing

Small parcel invoice auditing can be a time-consuming and tedious task, especially for businesses with a large volume of shipments. However, there is a solution available. Automation technology, such as the software offered by ShipMatrix, can take the hassle out of the auditing process by streamlining it into a single, easy-to-use platform. This technology automatically audits invoices and provides you with a comprehensive report that highlights any discrepancies.

Conclusion

Small parcel carrier invoices can be a significant expense for businesses, which is why it's important to audit them regularly. By doing so, businesses can catch billing errors and save a substantial amount of money. Not only does small parcel invoice auditing save businesses money, but it also increases efficiency and provides valuable insights into carrier usage. As a result of the benefits of small parcel invoice monitoring, businesses may want to consider implementing auditing technology like the software offered by ShipMatrix to streamline the auditing process.

Optimizing Margins: A Key Factor in Parcel Shipping Success

Margins are a crucial component of any business, and they are especially critical in the parcel shipping industry. A margin is the difference between the revenue earned from a sale and the cost of producing and delivering the product or service. For shippers, margins are essential in determining profitability and ensuring long-term sustainability.

The parcel shipping industry is highly competitive, and shippers are constantly striving to provide better service while keeping costs low. This requires a focus on optimizing margins, as even a small increase in margins can make a significant difference in profitability. Margins can be improved in many ways, including negotiating carrier contracts, optimizing packaging, and improving shipping processes.

Negotiating Carrier Contracts

Carrier contracts can have a significant impact on a shipper's margins. Negotiating better rates and terms can lower costs and improve profitability. Shippers should regularly review their carrier contracts and negotiate better terms as needed. This can include volume discounts, fuel surcharges, and accessorial charges. By taking the time to negotiate better contracts, shippers can significantly improve their margins. RFP support

Optimizing Packaging

Optimizing packaging can also have a significant impact on margins. Using the right packaging materials can reduce shipping costs while protecting products during transit. Shippers should consider the size and weight of their packages and choose the most cost-effective packaging options. This can include using lighter materials, reducing package sizes, and using more efficient packing methods. By optimizing packaging, shippers can improve margins while ensuring products are delivered safely and securely. Help with Optimizing Packaging

Improving Shipping Processes

Improving shipping processes can also help shippers improve margins. This can include streamlining operations, reducing manual processes, and automating shipping workflows. By optimizing shipping processes, shippers can reduce labor costs, improve efficiency, and increase throughput. This can help shippers deliver products faster while keeping costs low, ultimately improving margins. More Ways to Improve Processes

Taking Action

Improving margins in parcel shipping requires a focus on continuous improvement. Shippers must be proactive in identifying opportunities for cost savings and taking action to optimize margins. By negotiating better carrier contracts, optimizing packaging, and improving shipping processes, shippers can significantly improve their margins and ensure long-term sustainability.

As a shipper, it is essential to regularly review and analyze margins to identify opportunities for improvement. By taking action on the information shared in this article, shippers can optimize margins, reduce costs, and improve profitability. Don't wait until it's too late; start improving your margins today!

The Skinny on Shipping: How Density Affects the Cost of Your Parcels

When it comes to parcel shipments, one of the most important factors to consider is the density of the package. Density is defined as the weight of an object per unit of volume, and it plays a significant role in determining the shipping cost of a package. In this article, we'll explore the differences between lower density and higher density parcel shipments and how they affect the actual vs. billable weight.

Lower Density Parcel Shipments

Lower density parcels are those that occupy more space but weigh less. These types of packages may contain bulky items such as pillows, clothing, or soft toys. Because the package takes up more space but weighs less, the shipping cost is calculated based on the dimensional weight or volumetric weight.

Dimensional weight is calculated by multiplying the length, width, and height of the package, then dividing by a factor known as the dimensional weight factor, which is set by the carrier. The resulting number is the dimensional weight, which is then compared to the actual weight of the package. The higher of the two weights is used to determine the shipping cost.

For example, if a package weighs 10 pounds but has a dimensional weight of 15 pounds, the carrier will charge based on the 15-pound weight.

Higher Density Parcel Shipments

Higher density parcels, on the other hand, are those that weigh more but occupy less space. These types of packages may contain dense items such as books, electronics, or machinery parts. Because the package weighs more, the shipping cost is calculated based on the actual weight of the package.

In this case, the carrier will weigh the package and use that weight to calculate the shipping cost. There is no need to calculate the dimensional weight because the package's weight is greater than its volume.

Actual vs. Billable Weight

The difference between actual weight and billable weight is crucial in determining the shipping cost of a package. Actual weight is the weight of the package as measured on a scale. Billable weight, on the other hand, is the weight used to calculate the shipping cost, which can be either the actual weight or the dimensional weight, depending on which one is higher.

To illustrate the difference between actual and billable weight, let's look at an example. Suppose you have a package that weighs 5 pounds and has dimensions of 18 inches by 12 inches by 8 inches. The carrier's dimensional weight factor is 139. The dimensional weight of the package is calculated as follows:

(18 x 12 x 8) / 139 = 13.86 pounds

Since the dimensional weight is higher than the actual weight, the carrier will charge based on the dimensional weight of 13.86 pounds.

Conclusion

In summary, the density of a package plays a significant role in determining the shipping cost. Lower density packages are charged based on dimensional weight, while higher density packages are charged based on actual weight. Understanding the difference between actual and billable weight is also crucial in determining the shipping cost of a package. When shipping a package, it's important to consider its density and choose the appropriate shipping method to ensure the most cost-effective shipping solution.

10 Cost-Saving Strategies for Parcel Shippers

1. Negotiate with carriers: Try to negotiate shipping rates with carriers and take advantage of volume discounts or other savings opportunities.

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2. Choose the right shipping method: Select the shipping method that best fits the specific needs of each shipment. For example, ground shipping may be less expensive for heavy or bulky items, while air shipping may be more appropriate for smaller, time-sensitive packages.

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3. Use packaging efficiently: Proper packaging can help reduce shipping costs by minimizing the weight and size of packages, while also protecting the contents during transit.

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4. Optimize shipping routes: Use shipping software to determine the most efficient shipping routes and identify opportunities to consolidate shipments or use intermodal transportation.

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5. Take advantage of technology: Use technology, such as shipping software and shipping labels, to streamline the shipping process and reduce manual labor costs.

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6. Implement dimensional weight pricing: Dimensional weight pricing takes into account both the size and weight of a package, so be sure to optimize your packaging to reduce dimensional weight.

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7. Leverage shipping data: Analyze shipping data to identify patterns and opportunities for cost savings, such as shipping to certain regions during slow times or finding ways to reduce transit time.

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8. Manage returns effectively: Implement a process for managing returns efficiently, such as using pre-printed return labels or offering store credits instead of refunds.

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9. Take advantage of special services: Consider special services, such as guaranteed delivery or special handling, only when they are necessary, as these can add to shipping costs.

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10. Partner with a third-party logistics provider: Partnering with a third-party logistics provider can help reduce shipping costs by leveraging their bulk shipping discounts, optimized routing, and technology.

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What is Causing Your Parcel Spend to Exceed Budget?

The last two years have been very challenging for shippers attempting to control shipping costs and protecting their profit margins. 

 Every year parcel carriers notify you about increases to base rates and surcharges, while according to National Retail Federation study, 75% consumers are expecting you to provide “FREE” shipping even on orders under $50. 

 How do you find a balance between the two while still remaining profitable?

 In a recent survey, shippers were asked, if they know what is driving their parcel shipping costs? 

The results showed:

54% - Are closely monitoring and controlling their shipping costs

32% - Knows total dollars spent / But does not know what is driving their shipping costs

14% - Needs visibility of their shipping costs and assistance with how to control it.

 Here are a just a few examples of some areas that have controllable cost controls that we have assisted our clients with, so that they can manage their increasing transportation costs. 

 Address Corrections – There are address validation solutions and analytics to control these unnecessary costs.(For 2023 - UPS $19.50/per package FedEx $21.00/per package.)

 Air/Ground Substitutions – On average ground is delivered 2-3 days and on-time performance of mid-high 90% range. There are ways to fully leverage carrier networks and on-time performance to control costs.

 Shipping Charge Corrections – Occurs when weight and size of the package is different than what was indicated at the time of shipping and it could also trigger a shipping charge correction fee.

Residential / Delivery Area / Additional Handling Surcharges – There are solutions to control and reduce these surcharges which benefits both shipper and carrier, while improving overall customer experience. 

Carrier Pricing Agreements – Slowing demand and carrier overcapacity is now allowing shippers options to customize and renegotiate their carrier agreements. Many of our clients have benefitted by having visibility of their accessorial charges and package statistics. Which in turn assisted both them and their carrier in creating the right custom agreement for them.

Are there areas driving your shipping costs, that you would like more insight and visibility of?

 Are you looking to renegotiate your carrier agreement(s)? 

 Whichever category in the survey you identify with, ShipMatrix can assist you.

You can schedule a complimentary discovery call to see if ShipMatrix can help you.

Identifying Opportunities for Cost Savings: How Your Company Can Optimize Shipping Data

As global trade and shipping continue to expand, leveraging shipping data analytics has become increasingly important for companies looking to optimize their logistics operations. By analyzing shipping data, companies can identify patterns and opportunities for cost savings, such as finding the most efficient routes and reducing transit times.

One key area where analytics can assist is in spend optimization. For example, an electronics retailer was able to save $1 million on an $8 million total spend by switching from air shipments to ground. Similarly, an industrial manufacturer saved $750k in collect and 3rd party carrier chargebacks per year by using analytics services. By analyzing shipping data, companies can identify these kinds of cost-saving opportunities.

Analytics can also help companies with transportation metrics reporting, which can help them aggregate their entire global spend to find cost-saving opportunities. An apparel company, for example, managed to obtain a 25% RFP contract savings by utilizing this service. Furthermore, analytics can enhance the customer experience for businesses, as illustrated by a gaming third-party logistics company that doubled its shipper/client base and experienced a 30% growth in organic orders.

Proactive tracking is another area where analytics can provide valuable assistance. By actively calling or emailing customers, TV online retailers were able to reduce returns by 15%. And a global media giant uses small package rating tools daily, which promotes improved shipping decision-making within its workforce.

Lastly, full audit suites can assist companies in catching errors before they turn into expensive mistakes. For instance, in one scenario, an early identification of a carrier rate loading error led to a $250k reimbursement and appreciation from the account representative.

In summary, shipping data analytics provides a range of opportunities for companies to optimize their logistics operations, including spend optimization, transportation metrics reporting, proactive tracking, and complete audit suites. By leveraging these tools, companies can identify patterns and opportunities for cost savings, make data-driven decisions, and improve their overall logistics operations. For more information contact the ShipMatrix team.