When shipping small parcel packages, you might think the costs derive simply from the size box you are shipping, time of day for delivery, and where you are shipping to. Business owners are not looking close enough to consider other drivers that can boost these expenses over 30+%. Typically, miscellaneous surcharges and ancillary fees creep in and shoot up the bill so it is most important to understand what these additional charges are, why they are being applied, and how to make changes to shipping behaviors to potentially mitigate the cost.
Below are a few supplementary parcel services and corresponding costs that should be considered prior to shipping your goods and during any supplier negotiation discussion.
- Box size and dimensional weight surcharge (DIM): this surcharge is based on the amount of space a package occupies in relation to its actual weight. When determining cost of a package in relation to weight, the greater of the actual weight or dimensional weight is used for the billable weight.
- Signature Requirement Fees: All carriers offer various services to support delivery requirements including signature requests. This includes Adult Signature (recipient of the mail item(s) is at least 21 years of age or above), Direct Signature (a signature from someone at the delivery address), Indirect Signature (signature from someone at the delivery address; from a neighbor, someone at a neighboring address, etc.) amongst a few other signature methods. Each of these requests come with a fee currently ranging in the area of $4 - $40+ depending on package type and weight classification.
- Other Surcharges – there are many miscellaneous surcharges and fees applied to shipments; some that are selected by the shipper, and some assessed based on regulatory requirements or standard supplier demands: Fuel surcharges - applied to domestic and international transportation charges and select ancillary charges - ~7-11%, Residential or Delivery area charges - ~$3+, Third Party Surcharge - charges billed to someone other than the sender or recipient - ~ 2.5% of transportation charges, surcharges and additional fees.
- A simple rule of thumb is to consider using a small package or one that is most proportional to your package. Sometimes you have a box lying around that is too big and the shipper is not mindful that the price of the package will be more costly versus a better-fit bubble mailer or envelope.
- Dimensional weight is calculated as length X width X height (in inches) multiplied by a Parcel supplier’s tariff divisor.
- Ask for discounts and incentives:
- Why not ask you parcel provider for a customized DIM divisor as part of the contract negotiations to minimize billable weight costs.
- Additionally, if there are recurring miscellaneous services used each month, consider asking for specific discounts to off-set some of the highly used services; for example if many deliveries are to residential locations, focus some of the negotiations around these charges and ask for ways to minimize costs…in addition to overall discounts and incentives.
- Supplier solutions should also be assessed against the competition through benchmarking or other sourcing activities to maximize these incentives and all cost savings opportunities...we can discuss this further in a later post!
For more support on your small parcel shipping needs or logistic spend management, read more about Source One’s Logistics category expertise.