3 Steps to Control Your Parcel Spend Management

Businesses across the board are feeling the squeeze as parcel shipping costs continue to soar. FedEx and UPS dropped a bombshell in 2024 with their 5.9% General Rate Increase, with many customers finding themselves paying 8.17% and 7.72% more, respectively. Some unlucky shippers even saw their expenses skyrocket by up to 21%, depending on their unique shipping patterns, while accessorial charges jumped over 20% from the previous year, creating a perfect storm.

Worse? It’s not slowing anytime soon — come January 6, 2025, FedEx will roll out ANOTHER 5.9% average rate increase, targeting everything from standard U.S. deliveries to international shipments! It’s anyone’s guess what UPS and other carriers do. But history tells us things could get pricey.

Savvy organizations aren't taking this lying down, though, and you can join the fight. Three tried-and-true steps can help you get a handle on your parcel spend management, and we’ll show you how. The time is now to turn the tables.

Step 1: Optimize Carrier and Contract Management

Choosing carriers involves more than rates.

Package dimensions, destination, and delivery speed all play a role. What works well for one shipment profile may not be the best option for another. 

An example — FedEx and UPS’ extra charges for oversized packages. Shipping a 1 lb parcel with USPS Ground Advantage will cost you $5.52 for Zone 2 (2-day shipping) compared to $9.06 for Zone 6 (4-day shipping).  

Meanwhile, there's also the dimensional weight effect- carriers often charge based on whichever is greater: actual weight or the space a package takes up, so even light but bulky items can cost you. A seemingly light 10-pound package measuring 20x20x20 inches? Prepare for a nasty surprise — it'll cost you as if it weighed a hefty 57.6 pounds — every little detail matters.

Smart shippers use data to match and pick carriers that not only fulfill their needs but also negotiate better deals. 

Good data changes conversations faster during carrier negotiations.

Companies with a clear picture of their transport network understand the process within it — shipping volumes, delivery patterns, and package characteristics can quickly change the negotiating table. That information can help support discussions around pricing, service levels, and contract terms.

The carrier landscape always changes. UPS represented 35% of parcel volume in 2023, while Amazon Logistics increased its share to 14%. For shippers, it's another reminder that carrier strategies aren't something you review once and forget about. 

Step 2: Technology and Automation in Shipping Processes

Technology improvement doesn’t need a major system overhaul. 

Simple tools like barcode scanners would do just fine. This hammers down manual human errors to 90%. Add that with improved accuracy across day-to-day operations. Fewer mistakes often lead to fewer returns for a smoother process overall. Essentially, less wasted shipping and more money in your pocket

Once you know your basics, let AI tackle your shipping costs. 

AI-powered tools are your digital detectives. They find, identify, and highlight all of the cost trends and saving opportunities to save you from all the hassle. That and the larger visibility with the transportation spending. Mix that with real-time shipment tracking — for more accurate forecasts, performance, and optimal decisions — you have a live blueprint for what’s going on in your network.

The goal is to give companies better information to work with, not to replace decision-making

Step 3: Implement Dynamic Pricing and Cost Analysis

Shipping costs are dynamic — and they don't stay the same for long.

That’s one reason companies are looking into dynamic pricing and ongoing cost analysis. Relying on current data instead of static pricing models, help business respond. They can anticipate to the changes in demand, transportation costs, and market conditions.

Cost analysis plays an important role. Understanding where money is rolling can help identify, uncover, and support the necessary factors for your decisions. These could be the inefficiencies, saving opportunities, and even better pricing.

The key is having enough visibility into costs and demand. Visibility makes informed adjustments when conditions change. When businesses clearly understand what’s going on with their operations, their revenue shows that. Companies that reported having improved visibility increased their revenue from 5% to 15%. 

Regular cost reviews are worth making part of the process.

Companies assume shipping invoices are accurate. But studies show that up to 80% of carrier invoices contain errors of some kind. That's one reason freight audits are still a valuable tool. Automated auditing solutions are your biggest help to scout unnoticed billing discrepancies, savings opportunities, and even recover costs.

For some businesses, those savings can add up to 2% to 5% of their total transportation spend. That’s more money in your pocket for your next transport.

Gathered data through freight audits supports stronger carrier negotiations. Having a clear understanding of your shipping activity and costs is more productive. It’s also easier to have conversations about pricing and contract terms.

Reimagining Parcel Spend Management: Your Path to Shipping Excellence

Shipping costs have become more complex over the years.

Visibility is the key to understanding it. Seeing into costs and data gives room for flexibility to any market condition changes. The three strategies discussed are aimed at helping businesses. Informed transportation decisions build stronger shipping operation. For companies looking to better understand their transportation costs, additional visibility can make a difference.

Intelligent Audit provides tools for freight audit and payment, parcel invoice audits, analysis, real-time tracking, and process improvement. These solutions help companies gain a clearer view of transportation spend and day-to-day shipping activity.

Biggest opportunities are found in the details.

Take a good look at your approach. Small changes now could lead to significant improvements down the road. 

Get started with Intelligent Audit — your future operations — and your budget — will be better for it.