Strategies for Adapting to Annual Shipping Cost Increases

DHL Carrier Truck in TransitDeath, taxes and annual shipping cost increases. Every January, most of the package carriers increase shipping prices.  For 2012, DHL has already announced their increase.  And it won’t be long before other carriers follow suit. This past January, UPS and FedEx announced average increases of 4.9 percent, and USPS wasn’t far behind at 3.6 percent. “These percentage increases can be misleading because they represent carriers’ average increases,” said Ayal Latz, “Specific rate changes by service, zone and weight and package size vary wildly as carriers respond to market demand, target market share goals and attempt to neutralize the very moves that our industry has enacted to lower shipping costs.” So what can you do as a shipper?

Yearly annual shipping cost increases are inevitable, but smart marketers know how to protect themselves and manage costs. January 2012 is just around the corner, so taking the initiative to renegotiate your shipping strategy with your fulfillment company will save you a lot of time, effort and money. Understanding the market, knowing what programs are available to you and being willing to act are your tools to deal with annual shipping cost increases. Your fulfillment partner is well versed in the industry, studying carrier rates and programs. Don’t be afraid to take advantage of this valuable resource, as fulfillment experts can make recommendations tailored to your unique needs and requirements. Your 3PL can “Leverage their volume for discounted rates and programs not readily available to lower volume shippers,” Ayal explains, “Together you can understand the advantages and disadvantages with trade-offs between costs, speed of delivery, traceability and image/customer perception.”

Here are a few other tips:

Geo-target: If a large portion of orders are being shipped to a certain geographic location, ship from there. Let your fulfillment partner analyze your national mix to provide optimum solutions.

Lighten up! Marketers know that weight is a key determinant in shipping costs. “Ongoing innovations in materials lead to lighter and stronger packaging options,” says Ayal. Shave off a few ounces and put your shipping unit into a lower price bucket.

Size matters: Carriers can and will price packages by either weight or size – whichever benefits them most, meaning, whatever costs you more. Reduce both product and package size when possible.

Discriminate: Consider using separate packages for consumer-direct and retail.  “With consumer direct, it is critical to get your package weight and size correct,” Ayal says, “For retail, packaging has an additional objective.”

Packaging optimization is a critical practice for those who wish to cut costs across the board. You may slack on contacting your tax man each April, but it’s vital to contact your fulfillment house as soon as possible to negotiate a strategy for 2012. A2B Fulfillment offers order fulfillment services, direct response fulfillment, warehousing, value added services and shipping solutions in Canada and the US. Call 866.843.3827 today for more information.