3 Steps to Manage Parcel Shipping Accessorials
When it comes to managing shipping costs, it’s often what is under the surface that can be the most damaging—and the most impactful. Left unchecked, certain surcharges and accessorials can be devastating to a budget. Companies need to manage, measure, negotiate, and change the factors that contribute to unnecessary surcharge and accessorial overspend. To do this, parcel shippers need data. With this data in hand, parcel shippers can identify weak spots, implement changes to improve weak spots, measure the effectiveness of those changes, and repeat.
In our recent e-book, The Cold Hard Truth, we outline three simple steps that any parcel shipper can follow in order to reduce unnecessary surcharges and accessorials. Combined with ongoing monitoring and analysis, these three steps can create a loop of continuous improvement—and that’s the direction every parcel shipper should be steering towards.
Surcharges and Accessorials: What You Don’t Know Can Hurt YouHow does a package with a sticker prices of $15 end up costing you $37? It's the same way my "$49 per month" phone plan becomes $72 per month. And the same way a $99 airline ticket ends up costing $127. Or the way a concert ticket cost 14% more on the invoice than it did on the website used to buy it. It's the hidden fees!
- Step 1: Manage and Measure the Impact. You can’t manage what you don’t measure, so understanding your total landed cost on a per-package basis is a key performance indicator (KPI) that every business should be monitoring weekly. In terms of accessorials, you should know everything from the percentage your accessorials make up of your cost per-package to how that information has trended over time to specific service types more impacted than others.
- Step 2: Implement Operational Changes. Once you know the total impact that accessorials are having on your parcel spend, you can begin to reduce or eliminate overspend. With initiative-driven changes, you pick an accessorial or a surcharge impacting your cost per package, use the current impact per package as your starting point, and set a goal to reduce that figure by X% over the next quarter. Having the data upfront allows you to set a smart goal with a measurable definition of success.
- Step 3: Negotiate Lower Fees with Your Carrier. There will be some accessorials you just can’t avoid. But that doesn’t mean you have to pay sticker price for them. You can negotiate discounts on your accessorials in the same manner you negotiate discounts on your service rates. And just like those service negotiations, the person with the most data is going to win. Armed with the data you uncovered in Step 1 and monitored in Step 2, you’ll be equipped to sit down with the carrier and negotiate controls around your parcel spend.
Want more steps for monitoring the accessorials under the surface that impact your parcel spend? Get The Cold Hard Truth about parcel shipping today by downloading the FREE e-book from VeriShip!