Shipware LLC, in conjunction with PARCEL, recently conducted a national survey on “Parcel Pricing, Benchmarks, Trends and CostSavings Strategies.” 440 PARCEL readers completed the survey, representing a balanced mix of business sizes, industries, parcel volume and carrier mix. The results published below offer shippers an opportunity to compare market data, carrier pricing and contract terms, and cost reduction strategies with hundreds of other shippers. In Part One, we lay out survey demographics and address strategies taken by shippers to reduce parcel costs. This section
includes negative shipper sentiment on negotiating with UPS and FedEx as well as recent carrier policies regarding third party consultants. In Part Two, we report on the tactics used by shippers to negotiate parcel contracts, the use of benchmarking and other strategies to reduce cost. Shippers are able to compare their own negotiated incentives on air and ground services as well accessorial charges with other shippers surveyed. Finally, in Part Three, we draw comparisons on key survey questions between respondents based on size and carrier choice.
Strategies to Reduce Parcel Costs With general rate increases and higher dimensional costs, what strategies have shippers taken to mitigate these costs?
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Last Rate Negotiation Shippers are renegotiating carrier pricing agreements on a frequent basis. 64% of shippers have renegotiated within the last year, while only 36% reported negotiations took place at least one or more years ago.
The dimensional divisor changed from 194 to 166 for domestic services, and from 166 to 139 for international services effective January 3, 2011.
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Overall Rate Increases Due to New Dimensional Divisors
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Shippers are upset with UPS and FedEx general rate increases. Interestingly, of those respondents that feel the increases are too high, 41% don’t feel there’s anything they can do about it, while 59% have an active strategy to mitigate rising costs.
FedEx and UPS General Rate Increases
N/A or Don’t Know
Too high, active strategy
Too high, hopeless
4-6 Months 7-12 Months 1-2 Years
n’t N/A Kn or ow
9% -1 15
4% -1 10
october 2011 | www.PARCELindustry.com
Parcel October 2011