5 effective ways to reduce parcel shipping costs

Pieter Kinds

Pieter Kinds

October 7, 2015 - 12:55

In this 2-minute blog I would like to share 5 quick and useful tips for shippers considering parcel transportation cost control.

Before firing off the handful of bullets, I'd like to raise the awareness that Shippers must realize that the amount of effort put into carrier (performance) management is related to the ability and success rate of (parcel) transportation cost control.
Knowing your shipments and their costs to the finest detail will almost always help to deduct a substantial amount of your parcel transportation costs.

5 important points to consider for parcel cost management

1. Carrier selection- Select your carrier based on clear historical data, meanwhile, keep in mind how future changes can possibly impact the efficiency of carriers. Expected volume increases should lead to cost reductions. Review parcel pricing and contract terms to maximize pricing agreements with your parcel carriers.
2. Consolidate shipments - The larger the weight of the shipment, the lower the cost per KG. Place multiple packages on one waybill and negotiate carrier rates by total weight rather than box weight. (*If not, is your freight audit provider able to consolidate shipments in their system?)
3. Calculate shipping cost and cross charge it to your customer - Keep in mind that associated shipment charges often appear on your invoice, several weeks after the shipment was conducted. (Is your freight audit provider instantly able to provide the exact costs to you via an interface re-billing message?)
4. Design a standardized format for RFP's - This way you are able to compare responses (pricing & information) from your carriers. A digital solution for RFP / Tenders is recommendable.
5. Audit your parcel invoices - Make sure that your organization has a solid freight audit and payment solutioninstalled. Parcel Shipping invoices often contain errors, especially when your parcel volume reaches (over) thousands of shipments per month. Overlooked or ignored mistakes can cost you a fortune.

Here are 5 quick parcel invoice checkpoints:

• Is the correct zone applied?
• Are the fuel costs included into the rate, or excluded from the rate?
• Is the correct fuel discount applied?
• Is the remote area surcharge and extended area surcharge correctly applied?
• Is the correct service level applied as booked & performed?

There are more than 100 of accessorial charges that make up to 30% of overall shipping costs. Only a fully automated freight audit process guarantees a 100% cost control.

About ControlPay - The Largest Freight Audit Provider in Europe

Not just Fortune 500 companies with freight budgets from 100 million to 1 billion EUR are typically interested in the freight audit services of ControlPay, also smaller companies with a freight spend of 5 million EUR and up are realizing there is money to be saved in logistics via freight audit outsourcing services.

ControlPay does not only audit the invoices from your logistic service providers, but also enhances the business processes around freight costs settling. From contract implementation to cost calculation, issue resolution, invoice reception, registration, audit, automatic cost allocation and automatic posting of the invoice, ControlPay serves the full trail from Shipment Booking to Final Payment.