Top 5 Frustrations for Shippers
February 7, 2023 •Chase Flashman
Shipping can be a frustrating process for many businesses and individuals, as it often involves multiple complex systems, high costs, and a lack of control over delivery times and logistics. A typical list of challenges we hear from customers includes lack of transparency, contract complexity, access to discounts, and misleading incentives. All these factors contribute to the overall frustration that comes with shipping, leaving shippers feeling overwhelmed and helpless. In this blog, we will identify the top five pain points shippers face and some solutions *cough* contract analysis, negotiation, and compliance *cough* to bring relief.
1. Lack of Transparency & Visibility into Data
Lack of transparency and visibility into small parcel data is a major pain point for shippers. This can result in difficulty understanding and managing shipping costs effectively, as well as limited reporting capabilities. Without full visibility into shipping data, it becomes challenging for shippers to optimize their shipping routes and/or carriers, leading to higher costs and longer delivery times. The inability to track and analyze shipping trends and patterns also hinders shippers from identifying opportunities for cost savings and improvements in the shipping process. All these factors can have a significant impact on a shipper's bottom line and overall efficiency in managing their shipping operations.
Solution: Shipping Insights & Analytics
ShipSigma analyzes and optimizes over $1B in annual spend to provide you with a deep understanding of the excess of fees your contract has built-in and where savings exist. Our granular real-time reporting measures cost reduction for each component of every package allowing our customers to better understand where their money is going and empowering them to make more informed decisions regarding their shipping practices.
2. Rate Increases from Carriers
Like clockwork, carriers begin to announce their general rate increases for the upcoming calendar year every fall. It typically starts with FedEx, followed by UPS and USPS, ending with the smaller carriers. What was once a reliable 4.9%, has annually increased a full point for the last two years, reaching 6.9% for 2023. These increases negatively impact a shipper's bottom line, especially when they don’t have the data or technology to see the impact before it takes place.
Solution: Impact Analyses
ShipSigma offers multiple impact analyses throughout the year, including Peak Season and GRI. These reports provide more visibility into forecasting by telling you where you are now and where you should be year over year. This insight allows for planning, budgeting, and more opportunities for optimization.
3. Misleading Carrier Incentives
Carrier incentives can often be misleading, often convincing shippers to increase their spend instead of helping to reduce it. These savings incentives typically include criteria that are near impossible to reach, preventing shippers from moving up tiers or seeing expected discounts take effect.
Solution: Carrier Contract Analysis & Engineering
Through contract analysis, ShipSigma will review the current agreement to identify what the incentives actually mean to a customer's bottom line. Once we have a clear understanding, we will engineer a new contract using machine learning cost modeling, what-if scenario simulations, historical spend insights, and data at the package level to achieve the optimal discount structure.
4. Dimensional Weight
UPS and FedEx charge the greater between a package’s actual weight (measured in pounds) and its dimensional weight, which is determined by its size. The reason for this is that some packages take up a lot of space—even if they don’t weigh much. To determine the dimensional weight of your packages, use the following formula.
Dimensional Weight = (Length X Width X Height) / Divisor
Currently, both UPS and FedEx use 139 as the divisor, but did you know that was negotiable? If you have negotiated it, is the agreed upon divisor being applied? These questions ring true for so many of the discounts available. Even if you’ve negotiated a discount, is the carrier acknowledging it?
Solution: Carrier Compliance
Our ongoing contract compliance ensures that negotiated rates are by applied by tracking each charge line by line and comparing your new rates to your old rates. Our proprietary technology and ex-carrier experts analyze your real-time savings, lead discount and tier management, and surcharge mitigation.
5. Incorrect Accessorial Fees
Accessorial fees are additional charges for services outside of standard pickup and delivery. This could be administrative, equipment, or transit related. Some of these charges are anticipated, such as after-hour pickup/delivery or hazardous materials, while others are unforeseen, like address correction. The frustration comes with the latter. For example, if you provide the wrong address to the carrier, even if only one number is off, you will be charged $19.50 by UPS or $21.00 by FedEx for them to fix it. Not being able to plan for or track silly mistakes like addresses can be detrimental to a business’s budget.
Solution: Parcel Invoice Audit
Our AI-powered platform automatically performs a 50+ point audit, identifies invalid charges, and files claims for you on a weekly basis. So, while an incorrect street number or zip code is a valid charge, a misspelling of the word suite is not. Our audit will catch these mistakes and automatically file and process refunds for our customers. Our audit will also track habits, meaning that if a customer is correctly being charged for address corrections 1,000 times a month, we can identify this and work to fix the operations on the back end before the package ever gets sent.
Shipping Solutions with ShipSigma
These pain points are not unique, but they can be incredibly frustrating. ShipSigma offers parcel invoice auditing, contract engineering, and shipping reporting & analytics solutions to provide transparency & visibility into in an industry that was built to be complex and overwhelming. ShipSigma exists to unlock value in businesses by helping companies reduce their parcel shipping costs so that they have improved P&L, EBITDA, and additional savings to be allocated within their budgets. To get started, contact us today.