Ask AFS: How Can I Reduce Parcel Shipping Costs This Holiday Season?

Santa's warehouse with the text "Reduce holiday shipping costs" overtop

Each year, we have to charge my customers a lot more for holiday parcel delivery than we did the year before – and we’re concerned it could be costing us sales. Any practical suggestions for how to keep these expenses under control?

We feel your pain, because in addition to being logistics professionals, we’re consumers, too. We hate the fact that we practically have to take out a second mortgage each time we send a Christmas gift to our Aunt Gladys. And we’re even more frustrated because we know that since 2015, FedEx’s and UPS’ annual rate increases have almost always significantly outweighed the rate of inflation.

Glad to know you’re grumpy, too. However, we’re still looking for those cost-cutting tips…

First, offer an incentive for your customers to have their orders shipped to a store rather than their home – whether it’s one of your retail locations or a carrier’s. This will eliminate the residential surcharge that UPS and FedEx routinely tack onto home deliveries.

Second, give your customers a good reason to make their holiday purchases earlier – perhaps by offering an early bird discount or a thank you coupon that’s good for their next purchase. That way they’ll be able to take advantage of less expensive delivery options like Ground, Express Saver or SurePost, while still ensuring that their gifts arrive in time for Hanukkah or Christmas. Plus, it may enable your company to stagger your daily shipments effectively enough so that higher peaking factors won’t kick in.

Third, retrain your fulfillment professionals on the importance of product-box alignment. Make sure they fully understand why it pays to use the smallest possible box to safely ship each order – or that they’re using the more economical option of polybags when they can. They should also verify that each of your fulfillment centers has a good supply of various box sizes and polybags readily available so that your fulfillment professionals will never have to use a larger-than-needed box just to get a shipment out the door.

Fourth, wherever possible, look for ways to split single orders of super-heavy or bulky products into two or more smaller packages. (For example, could that luggage set be sent in three separate, standard-sized parcels rather than one huge box?) This could be the key to avoiding the $200+ oversize and $23-$47 additional handling surcharges that have begun sending some companies’ final shipping charges through the roof.

Finally, if you need to purchase parcel insurance, don’t assume that UPS’ and FedEx’s declared value options are the only deal in town. There are many less expensive forms of coverage available, and they often offer a better payout policy, so it pays to shop around.

We’ll have more holiday and parcel news next month, so stay tuned. Meanwhile, drop us a line if you’d like to know more. We’re always on the lookout for effective ways to reduce your parcel spend without impacting your shipping quality, and we’d love to discuss the possibilities.

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