Shipping data drives business decisions, unlocks insights and can lead to an increase in overall business performance. However, drilling down and slicing that supply chain data can be daunting. As a shipper, you might be wondering what data should you narrow in on to begin understanding your shipping profile. The data available is complex and challenging to decipher, but there are some key metrics to pay attention to.
If you are just beginning to wade through shipping data, there are four areas to focus on at first to shape your understanding of your shipping profile.
Shipping location
Each carrier organizes their shipping locations by zones. The zone is one component used to determine the cost of shipping, meaning the zones you ship to will be a major influence on your total costs. If you ship to Alaska and Hawaii, a host of additional fees accompany those territories. For example, the delivery area surcharge for FedEx Ground being delivered to a residential address in Alaska is $30 per package and a residential address in Hawaii is $12 per package.
Package weight and size
Weight and size are contributing factors when determining costs. Normally, the heavier the shipment the more expensive it will be. While that is true, shippers must factor in dimensional weight now too. Dimensional weight pricing is based on volume versus actual weight of the package. It’s calculated by determining the cubic size of a package which means multiplying its length by width by height, dividing by the carrier’s dim factor and then rounding up. Businesses that send less dense, large packages definitely feel the sting of this surcharge. Both FedEx and UPS will charge you for the higher calculation when comparing dim weight to actual weight.
Learn more: Everything you need to know about dimensional weight
Accessorial fees
Accessorial fees, also referred to as surcharges or value-add services, are harder to accurately project. Most shippers are startled to see what surcharges have been applied when they receive their invoices. Shippers will find delivery area surcharges, fuel surcharges, address correction fees, additional handling charges and a host of other fees tacked on to their invoices. Carriers implement surcharges to increase their revenue and each year.
The important key is to know how the carriers structure extra fees, avoid these charges wherever possible, and budget for the ones that are necessary so that you eliminate surprises on your bill at the end of the month. Carriers are hoping to cash in on your carelessness. Measure boxes accurately, weigh all shipments and make traceable adjustments to eliminate the possibilities of accessorials. Increasing efficiency in these areas will give you the leverage to dispute inaccurate accessorials. Of course, there are less predictable accessorials like the fluctuating fuel surcharge and delivery area surcharges in rural locations.
View FedEx accessorials: 2018 FedEx fees for value-added services
Package minimums
Minimums are tucked within the fine print of carrier contracts and can keep earned discounts from being applied, keeping high-volume shippers from serious savings. In writing you might have a 5% discount, but if it’s applied 0% of the time that leaves you with a 0% discount. The initial discount looks attractive until you realize the package minimum negates the discount completely.
The best solution to this problem is to negotiate a better-discounted price on the minimum, not a better discount. If you walk away from carrier negotiation with a better package minimum then the discount will have a greater probability of being applied.
Read more: Understanding minimum charges in carrier agreements
Share A Refund focuses on metrics that matter
Share A Refund carrier agreement optimization experts take a deep dive into your shipping profile, categorizing each transportation charge by service type, weight, zone distribution, number of packages shipped, list rate, observed rate, net cost per pound and net cost per package. These transportation charges are analyzed and compared to industry averages to showcase ways to improve your current carrier pricing agreement. Score more savings and slash your transportation costs.
