More Focus on Reducing Parcel Surcharges Can Equal Big Savings

January 14, 2020 by Amware Fulfillment

When you’re trying to reduce parcel shipping costs, it’s easy to get hyper-focused on parcel carriers’ published rates and negotiating the largest discounts possible. 

Just be sure you’re not overlooking some other equally significant parcel saving opportunities in the process, because research shows that as much as 35% of most companies’ shipping expenses are connected to something else:  parcel surcharges. And according to a new eBook from Amware, there’s plenty you can do to reduce these accessorial charges.

Don’t Go “Home” Quite So Often, Unless You’re Using USPS

For instance, it often costs extra to get parcels delivered to customers’ doorsteps (and even more if those customers happen to live in rural areas). In fact, the impact of residential delivery and rural delivery surcharges could total anywhere from $1.40–$4.65 in additional parcel delivery expense, and these surcharges usually increase annually.

Download the Free eBook,  10 Ways to Reduce Parcel Shipping Costs

Using the United States Postal Service (USPS) to deliver packages avoids extra home delivery surcharges for smaller, lighter-weight items (less than 15 pounds). It’s a strategy that can work even if you prefer to work with UPS, FedEx, or DHL eCommerce. UPS and FedEx offer hybrid programs that involves having these carriers handle your parcels most of the way while relying on USPS’s network for the final-mile delivery. DHL uses the USPS for all of its final-mile deliveries. 

parcel surchargesAnother way to avoid those parcel surcharges is to offer online buyers a greater variety of non-residential shipping destination options during checkout, including: 

  • Delivery to a work address
  • Pick up at store
  • Hold at location – a method that involves carriers aligning with various retailers’ locations to use those locations as drop-off and pick-up points

More and more customers find such options to be appealing because they allow faster delivery and make parcels less susceptible to theft than deliveries that are left at the front door.

At the end of the day, minimizing residential delivery surcharges could allow your company to save anywhere from 20 to 40% on your total delivery expense, which is certainly nothing to sneeze at.

Don’t Be a ‘DIM’wit

Dimensional (aka “DIM”) weight surcharges can also pack a serious financial punch.

Ever since 2015, when parcel carriers recognized that they were losing money on larger, lightweight packages that ate up truck space, they’ve managed to capture more revenue by giving themselves the option of charging shippers based on what they think packages should weigh (based on their overall dimensions), rather than on what those packages actually weigh. Dim weight pricing has increased expenses for many shippers, often by as much as 30%. 

As a result, there’s usually a lot to be gained from rightsizing your packages, because it may be possible to use considerably smaller (read: less expensive) boxes than you previously thought you needed – and to drive Dim Weight surcharges down accordingly. 

Additionally, you may want to eliminate shipping boxes altogether and shift to lighter-weight polybags or jiffy mailers. If your products’ size and weight allow it, this packaging change could be an easy and effective way to shave several ounces off your overall package weight – and as much as 5-10% off your overall parcel costs – while still safely accommodating products.   

Wrapping Up (for Now)

Naturally, there’s a lot more to the parcel cost-cutting discussion – and not just in the area of parcel surcharges – which is why we hope you’ll return to this blog often throughout 2020. We’ll be sharing more suggestions from the eBook, as well as new cost-cutting data we uncover in the course of our research. 

Until then, give Amware a call if you’d like to discuss how we can help you improve your fulfillment bottom line – because it’s never too late to start saving more. 

Looking to Reduce Fulfillment Costs?  Start with Parcel Shipping.  Here’s How. Download our eBrochure.

 

Filed Under: B2C Fulfillment, eCommerce Fulfillment