MST Nov Dec 2015 CoveWith the USPS® rates increase in effect since Sunday January 17, 2016, where the majority of the rates impacted are for shipping packages, here are some helpful tips you should consider before choosing a shipping system:

Managing shipping is not easy.  You have so many carriers, classes, surcharges, paperwork and requirements that it can get overwhelming.  Every year you are getting 3-10% increases, and with the new dimensional rating requirements, it could be much more.  Based on what you are shipping, it may or may not make sense to use free carrier provided software to process your packages.  In this article we will look at what factors you may need to consider; not only from a cost of shipment, but also from areas that may make your shipping process more efficient.

Rate Shopping

One of the main reasons that companies use third party shipping systems is because they have found significant savings by rate shopping packages based on cost and time of delivery.  There are two new developments that make this crucial to consider:

  1. Both of the major small parcel carriers announced this year that they are dimensionally rating most items. As an example, a 5LB box could be rated at a much heavier weight because of its size.  The USPS® did not follow the major carriers and may be less expensive for items under 1 cubic ft.
  2. The USPS® mandated that Priority Mail® and Priority Express Mail® would no longer receive Commercial rates when processing through a postage meter and require a 4×6 label with the destination address and barcode. At the same time, they reduced their rates for heavier items.

The most common reasons rate shopping is helpful:

  1. Comparing Rates and Delivery Times Within a Carrier – Most people who ship any significant volume have a negotiated discount with one of the private carriers. These carriers provide no cost shipping software either on their website or with customized systems they set up in your office.  The question is how easy it is to compare rates between service levels and delivery times.  They can all show you the different rates for next day to ground service levels. But will they tell you that based on a destination zip code, that the ground package may get there faster and less expensive than a two or three day shipment?  Most private party systems will do this calculation for you.
  2. Comparing Rates Between Carriers – The USPS® is having their fastest growth in the shipping market. The primary reason is that we are all buying more items that are being shipped to our homes.  Regardless of your carrier discount, the USPS® may be less expensive for less than 10LB items.  The issue is that it depends on the factors related to that particular package to determine if your negotiated private carrier rates or the USPS® will be less expensive.  This is where third party shipping systems prevail.
  3. Comparing Rates between Small Parcel and LTL – To be able to use one system to compare 100 weight shipments sent through your small parcel carrier to your LTL provider. Also, to process bills of lading from the same platform.

Who should consider carrier provided systems?

If you are primarily shipping with one carrier and your method of shipment is determined by the customer, there are a lot of benefits to using the systems provided by the carriers beyond the fact that they are free.  These include the following:

What to look for in a third party shipping system:

There are many feature sets that will be important in determining if you need a third party shipping system.  Here are some additional functions where these systems shine:

Choosing the Right Supplier

Assuming that you are now convinced that you need a third party shipping system, there are many areas that should go into your final decision.

There is nothing wrong with the systems provided by the carriers.  In some cases, based on your relationship, they will do some customization to make the system work better for you.  Third party shipping systems have a cost and should be justified with the added value from the items mentioned above.  Hopefully this article gave you a framework to better evaluate if these systems are right for you.

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This article can also be find in Mailing Systems Technology November/December 2015 issue and posted in Mailing Systems Technology enews January 8, 2016.

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