Even though pandemic-induced online shopping has slowed a bit, shippers everywhere are still feeling the effects of the crush of orders and ever-changing carrier pricing and policies. As consumers start to feel more comfortable spending again, shipping operations and carrier networks will continue to be strained.
Seeing the big picture
Keeping shipping costs down was always a complex task, and it hasn’t gotten any easier. Making sure you’re using the right carriers requires a crystal-clear view of your entire shipping operation. You need to understand issues like:
- Do your agreements really provide the value you think they do?
- Do you have a great discount, but minimums that keep you from taking full advantage of it?
- How do your package dimensions affect how much you’re paying?
- Are you paying for faster service for Zones 1 and 2 when you don’t need to?
- Would using regional carriers cut time in transit?
Analyzing it all on your own is a time-consuming, stressful, never-ending job that you probably don’t have time for. But it’s got to be done if you want to keep costs in check.
A good starting point is to dig into your shipping data for the past year and develop a 360-degree profile of your shipping needs. Then you can model alternative scenarios to find out whether you’re using the right mix of carriers to keep costs down and customers happy.
This may sound like a massive undertaking, but the latest real-time transportation visibility platforms can empower you with the clarity for optimized decision-making and the confidence to take control of your business. The right technology can track key performance indicators to give you clear visibility into your shipping operations, reveal opportunities for improvement and help you evaluate potential new strategies.
Understanding your data
Industry surveys, articles about best practices, and the never-advisable “way you’ve always done it” are no substitute for clarity about your shipping data — and how it affects what you pay for shipping. That’s where your shipping profile comes into play.
Your shipping profile can tell you a lot about your previous and future shipping strategies. It’s complex but is made up of a few basic parts, including weekly package volumes, your mix of services used, your average cost per package, common package dimensions and average weights (both actual and billed), surcharges, average time in transit, and customers' typical preferences for shipping speed.
Getting clarity on your shipping profile is an important first step, but it only gets you partway to your goal. Next up — how does it match up with your carrier agreements?
Optimizing carrier agreements
After working to understand your shipping profile, evaluate your needs against carrier offerings to find the best provider mix for your company. Examine each carrier's 2021 rate schedule and apply them to your company's major shipping requirements, focusing on how combinations of services affect total cost.
This is where predictive modeling software can prove invaluable by showing the cumulative effects of fees and surcharges. Platforms that can simplify this modeling process better enable shippers to revisit and explore their options regularly.
With a solid, 360-degree view of data and technology, you’ll be able to easily answer questions like: "Would a higher minimum charge and moving to the next tier save me money?" or "Should I be using a single carrier to handle all my shipping needs, or can I leverage regional carriers?"
Analyzing your operations
Getting your carrier agreements in order sometimes reveals opportunities to improve your internal shipping operations. For example, the number of distribution centers you have and where they’re located can have a major impact on your spend. But new warehouses aren’t something you just decide to try out on a whim — they’re a big investment.
Modeling the costs and advantages of various locations and the product mix you distribute from each is an important step that can prevent expensive, time-wasting mistakes. Using a technology that lets you play with different options and scenarios is enlightening — and cost-saving.
Empower yourself with data you can digestWith the right logistics intelligence platform, your data will be easier to understand and easier to act on, letting you make better decisions about the carriers you work with to keep costs down and provide the right customer experience. Software that uses your own shipping data to show you the right path will help you proactively future-proof your operations and improve your shipping health.