News
"How to beat shipping-rate hikes" By Mark Taylor
Crain's Small Business
A little-known secret is that United Parcel Service and FedEx offer discounts on their ground- and air-shipping rates. You don't have to be a huge shipper to qualify.
Here they come again — more shipping price increases. Is your business a helpless victim? Are these rate hikes going to eat into your profit margins? Here are some areas where I see that your business can offset these increases — and actually boost profit.
- Depending on your volume and type of packages, your UPS representative can authorize discounts as high as 20 percent on ground shipments — sometimes more. These discounts are applied to your weekly UPS bill. Because it is negotiated on a business-by-business basis, only you and UPS know the exact percentage discount. Many businesses bill the freight charges back to their customers at the list price and keep the discount as a means of increasing profit.
- Second, how much do you shop around to lower your shipping costs? You may be surprised to find out that both UPS and FedEx offer discounts. Maybe you didn't know because you never have shopped around or don't have a computerized shipping system that can provide you with rate and service comparisons of different carriers. Your leverage in negotiating a discount increases when you request bids from several vendors. Airborne and FedEx would be happy to provide you with competitive quotations on air shipping. On ground shipments, many local and regional carriers are highly competitive. Many carriers are offering so-called "free" systems that actually lock businesses into sole sourcing their freight services. They don't want you to shop around.
- Consolidate your shipments. If you are shipping multiple packages to the same location, you can take advantage of discount plans such as UPS' Hundredweight program, which offers discounts of up to 50 percent.
- Invest in technology to reduce costly mistakes. I've already mentioned using computers to compare rates and services. Computerized-shipping systems designed by experienced consultants can pay for themselves by reducing mistakes and taking advantage of discounts that may be too difficult to obtain through manual methods. For example, computerized-shipping systems automatically can consolidate your shipments going to the same address. Another example: With this increase, UPS has announced a fee increase for address corrections to $5. A computerized shipping system can be linked or interfaced into your accounting system so that it prints each shipping label in a legible format with the correct address. Handwritten labels and multiple databases can lead to costly mistakes.