Shipping costs can quickly add up and devour your budget, but it doesn’t have to be this way. The trick is to avoid common pitfalls that lead to inefficient processes and additional charges. In this post, we’ll explore some common mistakes that should be avoided at all costs to save money on fulfillment – equipping you with the know-how needed for sound business decisions moving forward.
Did you know that 5% of invoices contain errors and inaccuracies? The root causes of these mistakes are often common shipping issues like accessorials and late fees. When rate errors go undetected, a shipper may be overcharged an average of 3%-5% of the total invoice.
For example, if you look at the FedEx Invoice below, the total charges are $1,831.17. If 5% of those charges are riddled with inaccuracy, then you’d be paying $92 in unnecessary overages – which adds up.
These costs are not always clear-cut and can fluctuate depending on the carrier. Our in-depth article on accessorial charges outlined three key lessons businesses can use to minimize mistakes and unexpected fees.
- Know all your costs, even the hidden ones, and ask about accessorial fees upfront.
- Analyze your shipping invoices regularly to catch any billing mistakes early.
- Plan ahead for peak surcharges to save your business significant money on shipping costs.
See more details in our guide to managing accessorial charges.
Inefficient systems can often delay the clearing of invoices, which results in unnecessary late fees. For example, both UPS and FedEx have instituted late payment fees. To avoid incurring these fees, make sure that payment is received by UPS within 14 days of the invoice due date and for FedEx, within 15 days of the invoice date. If payment is not received by the due date, both carriers charge a late payment fee of 6% of the total past-due balance. FedEx places delinquent accounts on cash-only status, which could cause delays in your shipments and the loss of applicable discounts.
Shipping companies are responsible for ensuring an effective system to avoid late charges and penalties. Failure to meet the terms of the agreement can also result in carriers charging additional interest fees.
Know Where Your Charges Are Coming From
When a shipper hires a transportation company to move their goods, an invoice or bill is created for each job. These documents contain important information about the shipment, the services provided, and any additional services rendered. For carriers, it compiles all charges from every Bill of Lading associated with the shipment.
Your Bill of Lading Should Include the Following:
- Purchase order or account number
- Shipment date
- Shipper’s name and address
- Recipient’s name and address
- Number of units being shipped
- Description of what’s being shipped
- Declared value of goods being shipped
- Shipment packaging – cartons, crates, pallets, etc.
- A notation if the product in the shipment is hazardous
- Exact shipment weight
- Pickup or delivery specifications
Common Shipping Errors
Shipping errors are an unfortunate reality in the fulfillment industry. Every 3PL wants to ensure a seamless pick, pack, and ship process, but mistakes can and do happen. It’s important to be vigilant and watch for common errors.
Incorrect Measurements, Dimensions, and Packaging
Small mistakes in measurements, dimensions, and packaging can lead to expensive surcharges for shipping. Even slight errors can cause significant charges to accumulate. It’s important to remember that shipping fees are calculated based on the greater value of weight or size, which means DIM weight can also affect shipping fees. Measuring and weighing packages accurately is crucial to avoid these unnecessary expenses.
Measurements and Dimensions
UPS, for example, if your package dimensions don’t match your labels, the mislabeled packages will be subject to a shipping correction fee. If you get charged with a shipping charge correction audit fee, you’ll have to pay the greater of the following:
- $1.00 per mislabelled package during the applicable invoice period; or
- 6% of the total shipping charge corrections during that invoice period
So, invest in a reliable scale and WMS to avoid incorrect estimates and unnecessary fees. This will ensure your measurements match your carrier’s, reducing the risk of unexpected charges. Giving incorrect delivery details might seem insignificant, but it can quickly snowball into a logistical nightmare.
Rather than trying to save money by using cheap materials or skimping on protective measures, investing in better packaging will ultimately save you money in the long run by reducing re-shipping fees caused by transit damage.
Keep packages as small as possible and minimize inserts to minimize your costs further. Standardizing packaging is also important in reducing costs, helping you to streamline the process and minimize materials. Following these tips can significantly reduce your packaging costs without compromising quality. With so much at stake, taking shipping accuracy seriously is essential.
You Don’t Have a Diverse Carrier Mix
To avoid high shipping costs, diversify your carrier mix. Relying solely on one carrier may leave you vulnerable if they face capacity issues, raise prices, or go out of business. Without other options, you may have to pay expensive fees to ship your goods.
Why You Need a Multi-Carrier Platform
Cost Effective: To save on shipping costs, choose carriers that fit your budget and take advantage of available deals and discounts. Comparing rates on a single platform is easy and helps you make informed decisions. Let the software do the work for you.
Saves Time: Input package details into your WMS and let technology compare rates from various carriers. You’ll have diverse shipping options to select the most affordable and efficient.
Reduces Disruptions: Using a multi-carrier platform can prevent shipping delays by seamlessly switching to another carrier if one experiences trouble.
Handling Unique Scenarios: When you use multiple carriers, it’s possible to choose a more affordable option for free shipping and give customers the choice to upgrade for faster delivery times.
Not Using a WMS
When managing logistics operations, using a warehouse management system is not just a nice-to-have; it’s a must. Manually determining the cheapest rate based on address, weight/dimensions, and shipping speed is tedious and complex. Not to mention the risk of shipping errors and lost time.
With ShipHero’s Rate Shopping, you can access the most up-to-the-minute shipping rates from major carriers. Buy the label at the cheapest price. It’s time to take advantage of a WMS.
Utilize Technology and Automation
A WMS is not just about the convenience of having everything in one place – but the benefits of automation. By reducing the need for personnel in the shipping process, companies can save money, reduce processing time, and improve accuracy. With fewer jobs for staff, there’s also less risk of data entry errors and lower costs because you need less help to run your 3PL.
By utilizing warehouse management software, you can accomplish the following:
- Combine and streamline shipments to improve shipping efficiency.
- Reduce mistakes to cut shipping costs significantly.
- Access to numerous carriers and compare prices to find the most affordable option.
- A single dashboard provides complete visibility of all your shipments.
- Ensure real-time updates on shipment status for your customers.
- Improve service levels and reduce customer churn to achieve customer satisfaction.
From Errors to Accuracy
To manage carrier costs accurately, it’s essential to take the time to verify that invoices are correct and up-to-date and ensure that your fulfillment systems are processing payments promptly. It’s also important to consider the non-monetary shipping costs, including accurate measurements, dimensions, and packaging. This can help you avoid costly surcharges and ensure your deliveries are successful. Finally, implementing a warehouse management system can save you time, prevent shipping delays, compare prices, and reduce errors.
- Inaccurate invoices can result in overcharges of 3%-5% of total invoice values.
- Auditing invoices thoroughly and double-checking for accuracy is important to avoid invoice errors.
- In-depth knowledge of accessorial charges can minimize mistakes and unexpected fees.
- Efficient fulfillment systems are necessary to avoid late fees and interest charges.
- Avoid costly overcharges by ensuring accurate and timely payment of carrier bills.
- Accurate measurements, dimensions, and packaging are crucial to avoid expensive surcharges.
- Diversifying carrier mix can prevent shipping delays and expensive fees.
- Using a warehouse management system can save time, reduce errors, and compare prices.