Reducing Shipping Costs Through Optimizing Carrier Services Author: T Nguyen
January 13, 2012

There are many ways to reduce shipping costs.  One efficient way of accomplishing this task is by improving one’s organization policies related to carrier service level selection for shipments. Why? Because nearly all UPS and FedEx service levels have in-transit delivery guarantees, in which packages will definitely be delivered in a certain time frame.

Thus, shippers should look to maximize a short zone distribution model in order to reduce overall shipping costs. This optimization will require companies to look at their shipping methods and choose deferred services (ground, three-days) rather than express services (overnight, two-days) since the same time-in-transit guarantee is present in all regions of the United States . For instance, when shipping out of California to Nevada, there is a guarantee of a two day transit delivery time, making it more costly to ship using the two-day express service than the much cheaper ground deferred service.  Here are some suggested ways to implement this strategy:


-Study your company’s shipments to see which packages can benefit from this optimization strategy.  For instance, figure out which packages that are using express services can be shipped via a ground service that would still arrive in the same amount of time due to the guarantee.

-When you offer shipping options to your customers, do not offer the deferred or express services choices. Instead, implement a system in which the customer inputs the date they would like to get the package by. With appropriate optimization studies on your shipping and a small amount of IT programming, you can reduce your company’s shipping costs and pull in profit.

-Source Consulting is a trusted and experienced company that can help you better understand and implement these optimization strategies along with other ways to reduce your company’s shipping costs! Contact us for a free quote and discussion about how we can help.

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