Did you know that nearly all UPS and FedEx service levels have time in-transit delivery guarantees? Even ground services have a guarantee to be delivered within a certain time frame. Many shippers can significantly reduce shipping costs by improving their organization’s policies and practices related to carrier service level selection for any given shipment.
A primary goal for all shippers looking to reduce costs should be to maximize a short zone distribution model. With this goal in mind, a relatively easy strategy would be to ensure that deferred services (like ground or three-day) are used in lieu of a costly express service (like two-day or overnight) when the same time-in-transit guarantee exists. For example, for shipments originating out of southern California the entire states of California, Utah, Arizona, and most of Nevada have a guaranteed two day delivery transit time. Why would you send a shipment via a two day express air service when you can get it there just as fast via a ground service for less than half the price?!
It is important to note that all regions of the United States have similar transit time guarantees relative to a shipments origin.
BEST PRACTICE SUGGESTIONS:
• Conduct a study of your company’s outbound shipments to determine which packages can be shipped via a ground service and still accomplish the equivalent express service transit time guarantee.
• Do not ask your customer to select the carrier service level (ie. UPS Next Day Air or FedEx 2 Day Air). Instead, ask them when they want to receive their package. With your company’s transit time study and a relatively small amount of IT programming you should be able to significantly reduce shipping costs and possibly create a profit center out of your shipping department.
Lojistic can help your company implement the best practices we have suggested above…and much more. Our team thoroughly understands today’s complex carrier pricing environment and has help hundreds of companies implement solutions to reduce shipping costs. Contact us today to review the solutions we can provide for you.
Author
Rich Harkey
Rich Harkey
Senior Strategy Manager
Rich Harkey is a results-driven professional with extensive experience in the logistics and supply chain industry.
As the Senior Strategy Manager at Lojistic, Rich leverages over three decades of expertise to help businesses improve their shipping strategies and reduce costs. With a deep understanding of the requirements of shippers and the operational intricacies of carriers, he excels in everything from optimizing business rules and managing carrier invoices to negotiating carrier contracts.
Rich's comprehensive knowledge of the logistics industry, combined with his strategic insights and passion for data analysis, has enabled thousands of companies to gain visibility into their shipping expenses, driving impactful results.