5 Considerations for Parcel Spend Management
BY JEAN REGAN, PRESIDENT & CEO
The parcel industry is one of the fastest changing areas of logistics. As you manage your parcel spend, here are 5 things to consider:
- Stay in tune with e-commerce growth (it’s still on the upswing).
It probably comes as no surprise to most that a recent Wall Street Journal article reported that e-commerce is continuing to grow. This has fueled profits for parcel carriers. In an uncertain economy, revenue increased 3.8% in the second quarter of 2016 for UPS and FedEx reported revenue growth of 6% for the year when they closed their 2016 fiscal year on June 21st. As these companies continue to grow, we expect to see continued investment in their parcel capabilities and efficiencies, which brings me to my next point.
- Look at the investments that parcel companies make.
We’re all hoping to see parcel carriers offer greater speed, better service, and smaller rate increases as a result of their investments. While UPS and FedEx typically copy each other, watch to see if one of them makes investments that are a greater advantage for your company than the other. For example, an article in The Motley Fool mentions that UPS is working on enhancing their services through new technology that would allow a customer to track their deliveries "using real-time maps" and expanding their Access Point locker in several major U.S. markets.
- Know the lanes and zones you’re using most.
When you’re facing negotiations, it’s important to come prepared with data on the lanes, zones, and shipping speeds that you use most. If you don’t already have this information, you’ll want to use a tool such as our Parcel Toolbox or develop a reporting tool internally so you can have the information you need to negotiate the best rates.
- Anticipate the cost of rate changes.
Another important thing to do before negotiations is to anticipate the cost of a rate change on your typical parcel activities. Again, this will take a tool such as our Parcel Toolbox or another reporting tool. It’s good practice to compare your current spend with against general rate increases, potential changes to your current contract, and to compare rates across carriers.
- Don’t pay more than you owe - audit your parcel invoices.
The purpose of a parcel audit is to first validate an invoice to make sure it’s your company’s invoice to pay and not a duplicate. Then, an invoice should then be rated and audited against your carrier pricing agreement terms for net shipping rates, absolute minimum charges, dimensional weights, and the accessorial charges in place with your carriers. Also, be sure to collect money back guarantees and identify manifested and not shipped transactions.
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