So you think you have a good deal on shipping, huh? You’re a real numbers geek and you’ve studied your shipping data backward and forward and you just know you’ve got the best deal.
Or maybe you aren’t really into crunching the numbers, but you and your carrier rep are super good friends, so you know he’s given you the best rates he can.
Most shippers I talk with fall into one of these two categories, and, unfortunately, they’re seldom right about the deals they’re getting. Very seldom.
Change is the name of the game
Just like your business, carriers want to maximize their profits, so they’re continuously monitoring their data and yours to keep their bottom line healthy. The e-commerce explosion has presented new challenges for carriers, but they strive to stay on top of industry changes. And so should you.
Between 2014 and 2018, the number of parcels shipped per person globally nearly doubled. In addition to that increase in volume, carriers are now shipping larger, more oddly shaped items to a wider area than ever before.
When they see these factors starting to take a bite out of profits, they adjust. Sometimes they cut services or offer new ones and, of course, they can implement new surcharges or raise rates at any time.
How to win the shipping game
With powerful data analytics on their side, are carriers bound to win every time? Nope. There are steps you can take to get ahead.
- Be careful what you ask for. As my colleague Nick told us a few weeks ago, you have to keep the net impact of your carrier optimizations in mind. Don’t get so stuck on moving into the next pricing tier or getting a discount on your DIM weight that you overlook the big picture.The carrier has data scientists working overtime to make sure every deal is good for them, so they’re happy to give you that discount and raise rates in other areas. I’ve worked with companies that are convinced they’ve optimized wisely but don’t realize that they’re actually paying more year over year on the whole because of the always-changing carrier rates.
- Don’t be afraid to make a change. Switching carriers is tough for any company. For medium-sized and large shippers, changing carriers is an epic pain, requiring time and effort it might not feel like you have. But there are plenty of shipping options outside of the big-name carriers, like regional services and postal induction for last-mile delivery. But you’ll never know if your current carrier is really the best one for you until you dig into your data, which brings us to…
- Know your own shipping profile. We can’t emphasize this enough. You should have a solid handle on your service types, package weights, package dimensions, pick-up locations and delivery locations — solid enough to knowledgeably optimize the best rates and keep your carrier contracts in check. You can be sure that your carrier rep will have all this information and more in hand when they talk pricing with you.But you have a trick up your sleeve you might not even realize: You know what your future plans are. Are you releasing a new product soon? Opening a new distribution center? Acquiring another business? All of these factors weigh heavily on your shipping profile, so don’t neglect to use them to your advantage.If you want to make the most of this secret weapon, you need tools and expertise that help you model what your business looks like today, where it’s headed, and how any changes to carrier rates will affect your costs. Seek out solutions that help you know as much about the complexities of your shipping as your carrier does.
They say knowledge is power, and that’s certainly true in the shipping game. The next time you sit down for the chess match that is carrier optimization, make sure you know the playbook as well as your rep.
Did you budget for the General Rate Increase last year and find yourself way over budget? It’s not just you — carrier rates affect every company differently and the GRI isn’t an accurate predictor for most shippers. Don’t make the same mistake this year — check out our GRI Guide for tips and tricks.