It is hard to believe but true, the US Post Office has announced that effective January 4, 2010 that it will reduce the price of a domestic Priority Mail Flat Rate Envelope from $4.95 to $4.90! Now a nickel is not a lot of money but it is better than an increase. Sure, some prices are going up—an average of 3.3% for Priority Mail; however, let me highlight some areas that you can save on shipping that are unique bargains in this upcoming change.

The USPS has three pricing levels: retail, commercial, and commercial plus. The first thing that everyone should know about the shipping industry is this: never pay retail. Retail pricing is for people that don’t know how to qualify for a discount. My objective of this blog is to educate so that you can save. With the USPS, you can get the first level of discount by simply using your computer to ship a package. You can do this for free at www.usps.com by simply signing up for Click-N-Ship. The savings are significant. Instead of $4.95, you pay only $4.75 for a Flat-Rate Envelope AND you get Delivery Confirmation for FREE, saving you $.70 compared to buying it at the Post Office. That is a savings of 16%. Online prices, on average, are 5 percent less than retail for Express Mail and 5.7 percent less for Priority Mail. Online savings for international shipping is 10 percent less than retail for Global Express Guaranteed, 8 percent less for Express Mail International and 5 percent less for Priority Mail International.

If you ship higher volumes, you can qualify as a commercial shipper by using PC Postage with through any other qualified PC Postage provider such as stamps.com or endicia.com for a monthly fee. Many other third-party providers embed PC Postage in their solutions.

If you are a high volume shipper, shipping over 100,000 pieces a year or 420 a day, the rates are even better and there are a couple of new bargains: a Priority Mail half-pound price, starting at $4.22 for a Zone 2 delivery and a new Priority Mail Flat Rate padded envelope for $4.95, measuring 9.5 x 12.5 inches will be available exclusively for Commercial Plus shippers.

Knowledge is power!

In this video you will see a real life example of a package that I received where the cost of shipping was at least 10 times more! As a customer that was charged $7.95 for shipping something that could have been shipped with via USPS First Class Mail for $.61, I was unhappy. Not only did it cost more, it took twice as long to get to me from California–4 days instead of 2. And, on top of that, it was more costly to the environment. It cost more to ship, cost more packaging, and contained plastic filler.

I don’t work for the Post Office or get a commission. I just hate it when I see waste.

When it comes to getting a discount from UPS or FedEx for shipping parcels, there is a dirty secret that most companies don’t know. I learned this secret almost by accident. 

I founded TAYLOR Systems Engineering Corporation (TSE) from the living room of my home in 1989 after 13 years of working at Pitney Bowes. I was one of the launch managers for their first computerized shipping system and at TSE we became one of the fastest growing companies in the State of Michigan through integrating hundreds of shipping systems with our clients order entry and accounting systems. When we were in the process of implementing a system, we would program the client’s UPS or FedEx rates and discounts so that the client could reconcile their bills. It was then that I noticed a great disparity in the rates that our customers paid. We put systems in for companies as big as GM and in small to medium size distributors/manufacturers. While the carriers would have you believe that rates are based on a scientific formula that is not based on shipping volume, the difference in the discounts between significantly varying volumes amazed me. 

Here is the dirty secret stated perfectly by Chester Karrass,

“You don’t get what you deserve, you get what you negotiate.”

A few weeks ago, a colleague of mine and I met with a New York based company that had negotiated their UPS agreement three months earlier. The controller said, “I guarantee you won’t be able to save a penny on this contract.” We said that we may not but would be happy to look and see if he was getting the rates that he deserved. After a detailed examination and an in-depth analysis of his services, accessorial charges, and volume, we discovered some anomalies. We benchmarked his data and used that information to renegotiate his contract with UPS. The result was that we saved him $243,000 or 15% of his annual spend.

Are you getting the rates that you deserve? How do you know? We know. If you’re not sure, let me know and we will help you to find out.

I just got back from the PARCEL forum in Chicago. I had the opportunity to facilitate the PARCEL Key Executive Forum where a group of peers in the parcel industry met for the sole purpose of helping one another tackle the most challenging issues they face in running and growing their operations. One of the key issues was reducing transportation costs; the collective wisdom of this group of experienced parcel and logistics managers came up with 25 actionable ideas. Here are 8 of the suggestions:

1. Evaluate parcel consolidators, like FedEx SmartPost, which offer a low cost way to ship high volumes of low-weight packages to residential customers. FedEx will pick up, sort, line haul, track and deliver packages by leveraging the delivery network and capabilities of the USPS for the last mile.
2. Ship express packages with a hold for pickup option instead of First Overnight to substantially reduce express costs. The recipient can pick up the package at a nearby location.
3. Charge customers for freight and shipping. Even if the cost is distributed internally it will increase awareness about the cost of shipping and choosing express options.
4. Compare ground delivery guaranteed times to second day and third day air; many times ground will get it there faster for 25% of the cost. Use day definite instead of time definite services.
5. Re-negotiate parcel contracts; hire a third party negotiator that works on a gain share basis.
6. Use the US Postal service for brochures sent to sales people working out of their homes rather than UPS or FedEx. Check out the pricing for Priority Mail and First-Class Packages. It could be significantly less than the discounted rates with the residential surcharges.
7. Create a global routing guide; compare Less-than-Truckload (LTL) to parcel and specify which mode shipments should utilize.
8. Rather than importing shipments into the distribution center, investigate consolidated clearance for shipments coming to the United States. Manifest and label the packages overseas and have them sent directly to the carrier’s hub to reduce the cost of bringing them to the distribution center and re-shipping to customers.

We have formed a group on LinkedIn for PARCEL and I invite you to join and get feedback for your shipping challenges.

http://www.linkedin.com/groups?home=&gid=2076153&trk=anet_ug_hm&goback=%2Eanh_2076153

Many businesses today have decided to focus on their core competencies. According to Jim Collins, in his book, Good to Great: Why Some Companies Make the Leap… and Others Don’t, companies that are good-to-great companies employ the “Hedgehog Concept” which is based on an understanding of the following:

• What are you deeply passionate about?
• What can you be the best in the world at?
• What drives your economic engine?

If each of the above were circles, the Hedgehog Concept would be at the intersection.

If we bring this concept to warehousing product, fulfillment, and shipping, how many companies could claim to be the best in the world at it? Certainly, a few, like amazon.com or Zappos, are world class; however, many companies choose to outsource this function to a third party logistics company (3PL). A 3PL normally performs all the functions of our warehouse shipper but has some unique requirements. Imagine a warehouse on steroids. 3PL’s often ship thousands of packages a day for many different clients. Some have their warehouses divided for a dedicated section for each client with a separate shipping system in each area, like a mini-storage facility. Others have conveyor belts throughout the warehouse brining the packages to a central shipping area. Almost all of them have multiple shipping stations. Here are few of the problems they face:

1. Since 3PL’s are shipping packages to their customer’s customers, they often charge the freight to their customers account numbers. A 3PL could have hundreds of different account numbers and they need to make sure that packages are shipped correctly. Some do this by having business rules that receive data from the 3PL information technology system to insure that the correct account number is charged.
2. Because 3PL’s ship for a wide variety of clients, they receive their shipping files in a wide variety of formats. They may get an excel spreadsheet or a file with addresses to ship to or they may get an entire order file with line items to pick. They need a shipping system that can import orders in many formats. They could be flat files, xml, ODBC, or other formats. Flexibility is critical.
3. I once spoke to the owner of a 3PL that had over 40 free carrier provided systems. I asked him why he was willing to invest in technology when he had free systems. He told me that it was nearly impossible to keep track of all the data for shipping. Imagine running a $100 million corporation and having to ask your vendors for the data to create a monthly financial statement. He had to ask his carriers how much he was spending and try to compile all the data. He wanted consolidated reporting that would provide him with the information he needed to run his business.
4. Everything that a 3PL does is tracked so that they can bill their customers, so every shipment needs a job number. And there is no room for errors, so job numbers have to be validated.
5. Speed is critical; the fewer keystrokes the better. 3PLs want automation so they can process parcels as quickly as possible.

Warehouses that ship small parcels are different than the other types of shippers that I have discussed so far. They ship a much higher volume of packages, from hundreds to thousands of parcels a day. They can be manufacturers, distributors, or third-party logistics companies (3PL). A 3PL is a company that provides outsourced logistics services (more about 3PL’s in a future post).

Small parcels are packages that weigh less than 150 pounds and are typically shipped with UPS, FedEx, DHL, Regional Carriers ( Lone Star Overnight, Eastern Connection, OnTrac,), and the US Post Office. Parcel shippers may also be Less-Than-Truckload (LTL) shippers or full truckload shippers. The way parcels are processed is very different than LTL shipments. Each parcel has a separate tracking number and label. A LTL shipment is usually a pallet with many boxes and shrink-wrapped. The pallet is shipped as a single unit.

Companies that ship small packages send them directly to consumers (business to consumer or B2C) or to businesses (B2B).

Examples of B2C shippers include the following:

• books (Amazon.com)
• apparel and accessories(LandsEnd, Zappos)
• gift baskets and mail order (Harry and David)
• sporting goods (Callaway, TaylorMade)
• electronics (Best Buy)
• medical supplies (Liberty Medical)
• computers (Dell, Apple)
• drugs, vitamins (CVS,GNC)

Examples of B2B include the following:

• industrial supplies (Grainger)
• pharmaceuticals (Merk)
• automotive supplies (Michelin)
• office supplies (Staples)
• fasteners, bolts, rivets (Fastenal)
• electrical components (Westinghouse, Allied)
• industrial valves (Asco, Kingston)
• industrial chemicals (Dow, BASF)

Because of the sheer volume of packages that a typical warehouse sends, these shippers tend to be very sophisticated. Throughput and accuracy are the most important attributes that they look for in processing. Features that warehouse shippers look for include the following:

• Speed
• Multiple user processing
• Integration with Enterprise Resource Planning (ERP) or Warehouse Management Systems (WMS)
• Business rules
• Error checking
• Mode optimization
• Integration with material handling systems, such as conveyors, scales, label printers
• International processing capabilities
• Reports

I will be discussing many of these software features in future posts, so stay tuned.

One new idea can pay for this conference and save your firm thousands in shipping costs. The PARCEL Forum, October 5-7th at the Hyatt Regency O’Hare, Chicago, is the only conference and exposition dedicated to serving parcel shipping and logistics professionals of all sizes.

If you haven’t had a chance to check out the entire Conference Program, Click Here. You can also download our Conference Brochure which includes a registration form if you prefer to register via mail or fax.

Many of you are dealing with shrinking (if any) educational budgets. But, we’re all in this together! That’s why PARCEL has expanded the industry-first; Conference Travel Rebate Program. You make the commitment to attend the conference, and PARCEL will make the commitment to help cover some of your travel costs ($150 airfare or $50 drive-in rebate). On top of that, your conference registration includes admission to all of our Special Event food and beverage functions such as; Opening Day Keynote Luncheon, Opening Night Networking Reception,
Carrier Roundtable Luncheon and Conference Refreshment Breaks over the three day event.

Lastly, in keeping with the theme of adding more value, PARCEL Forum has strategically co-located with DOCUMENT Strategy Forum
and Mailing Systems Technology Conference. Register for PARCEL Forum, and you are given free access to any of the conference sessions taking place at these two events as well as the DOCUMENT Strategy Forum exhibit hall which is located right next door.

Advanced Registration ends on Friday, September 18th. This is your last chance to save up to $200 on your conference registration or receive a Free Exhibit Hall Pass to meet with 60 industry-leading companies.

Oh yeah, I almost forgot one more important thing. PARCEL will be giving away a $5,000 to one lucky attendee on Wednesday, October 7th in the exhibit hall between 11am -12pm. To qualify, you must participate in an on-site program and be present in the exhibit hall at that time.

I look forward to seeing you in Chicago!

Corporate mailrooms are not only responsible for incoming and outgoing mail, but FedEx, UPS, USPS, DHL, and couriers. Shipping is very different in a mail center than it is in a warehouse. Shipping managers ship products in cartons or on pallets and the charges are passed on to the customers, so, generally, they don’t worry about budgets. Managers of mailing operations are often frustrated regarding their capacity to control the budget for shipping and mailing expenditures. They are often asked, especially in these economic times, to reduce costs; yet the people that make decisions about how to send an express envelope or choose the service level are not under their control. One of my readers is John Sikorski of Princeton University; he shared 7 of his best practices to save money on shipping in the mailroom. Thank you John!

1. Education the staff in departments to know which way packages should be sent by holding a shipping seminar for anybody who deals with shipping out packages.
2. Every time that the university signs a contract with the vendors we do a cost study to see the difference in prices between FedEx, UPS and the USPS.
3. Establish a cost calculator where staff can go to see which vendor cost less.  We have done this for Federal Express and UPS.  The cost calculator has options that will be true for most of the departments most of time such as Next Day Morning and Afternoon, Second Day Service and Ground Service.  We do mostly commercial address and domestic packages so the shipping calculator is only for the United States.  Within the cost calculator we also put the fuel surcharge that one of the vendors charges the university.
4. Talk to the vendors to see if there is any new programs that could save money for the university such as flat boxes or envelopes.
5. Keep informed most vendors have newsletters that are free by e-mail.  I also look for magazine that you can get online they will give you some ideas from other companies and universities.
6. Join the Postal Customer Council in your area and attend some of meetings that they have during the year to keep up with the changes that occur within the postal service and also networking with the other members at the PCC meet.
7. Combine all shipments that are going to the same university or college when using UPS in order to save on the shipping cost.

Law offices ship differently. While all 10 of the ways offices can save on UPS and FedEx that I mentioned in my last post are valid for law firms, there are some differences. Law firms mostly ship documents but may also ship boxes filled with files. Here are some of the unique differences:

• The most significant requirement that all law firms have is the capability to track and bill back clients for shipping. This means that every item must have a valid cost center code for a specific client and the case number. Law firms may be working on more than one case for a client and accuracy is paramount. If a matter is not tracked, then the firm bears the expense and it affects profitability. If an item is accidently charged to the wrong client, it can be a major problem. Not only do they look bad, but it takes an administrative effort to clean up the mistake and they probably end up eating the shipping charges. A system that validates that the correct client number and legal matter has been entered can eliminate mistakes.
• Legal firms can ship locally, throughout the United States, and internationally. They need to have the ability to track couriers, local delivery companies, regional carriers, and messenger services as well as UPS, FedEx, DHL, and the US Post Office. Since some legal matters require a signature or proof of delivery, they need to be able to ship with Delivery Confirmation, Registered Mail and Certified Mail.
• Large law firms typically have more than one office. The capacity to have an enterprise shipping technology that ties together all the offices is advantageous. This will allow any shipment for any carrier from any office for any client to be properly accounted for and billed back to the client.
• Many law firms have outsourced or hired a third party to manage their mailrooms. They typically have “free” systems from the carriers and use a separate system for FedEx, UPS, DHL, and the US Post Office. The ability to use one multi-carrier system that has all the history and tracking in one location for all the offices minimizes time searching for information and makes it easier to consolidate reporting. This provides full visibility into the document chain-of-custody.
• Most law firms have a customer relationship management system (CRM) or Microsoft Outlook where they store the contact information for their clients. The capacity to integrate these systems so that the address data does not have to be retyped saves time and eliminates mistakes.

There are two types of office shippers: corporate offices and small to medium size offices. The difference is the volume of shipments. Corporate offices that don’t have centralized mailrooms may be shipping from a few to dozens of items a day. Most small offices may only ship a few pieces a week to a couple of items a day. Regardless of volume, they have some common characteristics.

The type of shipping that is done in the office is different than the in the warehouse. The front office mostly ships proposals, samples, urgent documents, and occasionally gifts (especially for the boss). Most of the shipping is done by an office manager or an administrative assistant that is computer savvy. They typically ship with the carrier’s website, www.fedex.com or www.ups.com. I have a warning: don’t choose your carrier based on advertising or how nice the UPS driver is to you or you will get a poor discount. I can’t tell you the number of times that I have seen companies shipping as much as a $1,000 a week that have no discount but love their carrier. A few years ago the Wall Street Journal wrote an article about how thousands of office workers couldn’t wait for their UPS man to arrive. They loved their UPS man! I’m not kidding; just for the fun of it, Google “love UPS man” and you will be surprised.

Tips for Saving on Shipping

1. Ask the person who is requesting that you ship something for them, when the item needs to be received. Studies indicate that more than 59 percent of all overnight items are not opened the same day they arrive! Don’t ship it overnight unless it absolutely positively has to be there.
2. Check out other service options, such as next afternoon delivery or second day delivery; you can cut your costs from 50%-75%.
3. Compare the cost with the US Post Office. Priority Mail has tracking and is significantly less money.
4. If you don’t have a discount, research your industry’s trade association and see if they offer one. See my other tips on getting a better discount.
5. Don’t fall in love with your UPS man. Attachment is the source of poor discounts.
6. If you are not on-line, set up an account. The carriers will give you better rates for an online account.
7. Find the nearest drop-box. If you don’t ship something every day, don’t pay for pick-up fees.
8. Track your costs; create a category and charge them to a specific department, person, client, job, etc… You can enter this information in a data field of the shipping application and generate reports.
9. Double check your address. Some carriers will charge a $10-$15 fee for an incorrect address including items like a wrong suite number.
10. Check your carrier invoices for errors. Some carriers will tell you what time they delivered so that you can verify if they were on time; if they weren’t, ask for your money back.