Parcel freight shipping refers to small package shipments. Parcel shippers face hidden fees and complex processes, leaving them with limited visibility of overall freight spend.
E-commerce is changing parcel shipping and delivery. Online retail is growing 4x faster than US GDP. It’s anticipated that B2C deliveries will grow 30% over the next 6 years. Parcel shipping will continue to grow in popularity due to convenient shopping, shipping and delivery options. So, shippers, take control of your transportation spend now.
Why Will Parcel Shipping Cost More?
Parcel carriers apply accessorial fees and surcharges to a package’s total landed cost. On average, 31% of a carrier’s invoice is additional accessorial fees or surcharges. An accessorial is defined as an extra service or extra items required to ensure delivery. Common accessorial charges include layovers, shrink wrapping, after hour deliveries and storage. Similarly, a surcharge is applied to transportation services as an additional charge to the total cost. Common surcharges include fuel, dimensional weight and seasonal surcharges.
In 2015, both FedEx and UPS raised fuel surcharges, twice, then in June 2016 changed rules to apply an additional handling fee to more ground packages. Carriers are expected to increase rates 2-3% in 2016. With base prices and accessorial charges increasing, you’re going to pay more. Plus, the formula for the fuel surcharge has been re-engineered so that you pay more based on the price of the barrel.
3 Steps for Shippers to Avoid Extra Fees
- Understand the total landed cost on a per-package basis
- What percentage of your cost-per-package is made of accessorials and surcharges?
- Which accessorials or surcharges are having the biggest impact in terms of frequency and dollars spent?
- Create change that brings cost solutions
- Set standards that will reduce a reoccurring surcharge or accessorial that is impacting your cost-per-package
- Create a benchmark and use data to improve operations
- Negotiate with the carrier to lower fees
- Ask for discounts on accessorials and surcharges like you would ask for lower haul rates
- The base tariff, and delivery area are negotiable
Parcel shippers are achieving 10-40% cost savings by analyzing spend, changing and optimizing operations, and diversifying carriers.
When you partner with PLS Logistics, you can quickly gain shipment visibility, discover correctable shipping errors, measure performance, eliminate zero-value charges, and identify new transportation solutions. We have parcel management technology that will optimize your shipment network and minimize costs.
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