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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.
Choosing the right carriers can make or break your parcel spend management. It's not just about finding the cheapest option — it's about understanding how factors like package size, destination, and delivery speed affect your bottom line.
For example, FedEx and UPS charge extra for oversized packages. Shipping a 1 lb parcel with USPS Ground Advantage also costs $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.
That’s why smart shippers are using data to not only pick carriers that match their specific needs without breaking the bank but also to negotiate better deals. Imagine walking into a meeting with a carrier armed with analytics showing exactly how your shipping patterns have changed over the past year. You can point out that you've increased your volume on certain routes or remained consistently under the dimensional weight limit. This kind of insight gives you leverage while creating a win-win situation; you get better rates, and the carrier gets a reliable partner. And with the shifting market shares we saw in 2023 — UPS down to 35%, Amazon Logistics up to 14% — carriers are more open to negotiation than ever.
Next up, let's talk about embracing technology — specifically, automation. Don't worry if you're not tech-savvy yet; start small if needed. Simple tools like barcode scanners can be transformative, reducing human errors by a whopping 90%. The result? Fewer returns, less wasted shipping, and more money staying right where it belongs: in your pocket.
Once you've got the hang of basic tech, it's time to let AI tackle your shipping costs. These smart systems are like digital detectives, uncovering hidden savings and predicting future expenses with uncanny accuracy. They'll help you pick the best carriers and smartest routes, potentially shaving a third off your shipping bills. Throw in real-time tracking (courtesy of IoT) to keep customers in the loop, mix in some AI-powered demand forecasting, and voila. You're well on your way to building a shipping operation that runs like clockwork and makes your customers and accountants break into happy dances.
Finally, it's time to supercharge your shipping strategy with dynamic pricing and razor-sharp cost analysis. Gone are the days of set-it-and-forget-it rates. Today's savvy shippers embrace systems that crunch data at warp speed, analyze everything from past trends to real-time demand, and automatically adjust your rates to maximize profits without driving customers away. It's not rocket science, but it is close and paying off big time. Some businesses have seen their revenue skyrocket by 5-15% after making the switch. Could you imagine what that extra 15% could do for you?
But don't stop there. Regular cost analysis reviews are your secret weapon in the battle against bloated shipping expenses. Think you know what you're spending? Think again. A whopping 80% of carrier invoices contain errors that could dry your profits. You could reclaim 2-5% of your total transportation spend by unleashing automated freight auditing tools on your shipping data. Plus, armed with hard data from these freight audits, you'll walk into rate negotiations like a boss — no more guessing games or settling for sub-par deals. You'll have the numbers to back up every demand for better pricing. So fire up those analysis tools.
Shipping costs can feel like a runaway train. But here's the good news — you're not just along for the ride. We've explored three practical approaches to put you back in the driver's seat and make a real difference in your operations. Remember, effective shipping isn't just about moving boxes anymore. It's about making informed choices, using data to your advantage, and staying flexible in a changing market.
So, as you look at your shipping processes, consider how these strategies might fit into your business. And don't hesitate to seek expertise. Companies like Intelligent Audit have spent decades honing their skills in this space. Their tools for freight audit and payment, parcel invoice audits, analysis, real-time tracking, and process improvement could be the support you need to turn shipping from a headache into a business strength.
Why not take a closer look at your approach today? 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.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
