The Parcel Shipper’s Dilemma: Cost vs. Speed
Discover if shippers are prioritizing cost over speed and the strategies to optimize both
Today’s high-volume shippers face a complex challenge: balancing the need for rapid delivery times with the desire to minimize costs. As e-commerce continues to reshape the parcel and delivery landscape, the pressure to optimize shipping operations is intensifying. Dive in as we look closer at both cost and speed to explore strategies for achieving both efficiency and affordability.
Cost Considerations
Cost is a significant factor in carrier selection, but it's not always the top priority. While 23% of respondents in our recent survey [The ProShip Report 2024] ranked cost as the most important factor, a surprising 32% ranked it as the least important. This suggests that other factors, such as speed and reliability, may be more critical for certain businesses.
To optimize shipping costs, high-volume shippers can consider several strategies:
- Carrier Selection: Many shippers are already using a multi-carrier shipping software. However, upgrading to an elite solution can offer significant benefits that a lower-grade software lacks, such as advanced rate shopping, versionless architecture for seamless updates, seamless integration with other top technology (OMS, WMS, ERP and more). This flexibility allows you to choose how you want to ship – whether that is with on-platform carrier engines or API connections.
- Negotiate favorable rates: Leverage your shipping volume to negotiate lower rates with carriers. Additionally, consider balancing your shipping volume across multiple carriers to avoid becoming overly reliant on a single carrier and potentially losing negotiating power. [Learn more about Carrier Volume Balancing]
- Consolidate shipments: By combining multiple smaller shipments into larger, consolidated shipments, shippers can often gain negotiating power with carriers. This can lead to significant cost savings, especially for shipments crossing several zones or moving long distances.
- Optimize packaging: Efficient packaging can reduce shipping costs by minimizing weight and dimensions. By using lightweight, durable materials and optimizing package size, shippers can save on shipping fees. Additionally, leveraging advanced packaging optimization software can help identify opportunities to reduce packaging waste and minimize shipping costs.
- Zone Skipping: By strategically consolidating shipments and avoiding additional handling fees at regional hubs, shippers can reduce transportation costs with zone skipping. This can be achieved by working closely with your carriers to identify optimal shipping routes and utilizing carrier-specific services. The other piece of the puzzle is a multi-carrier shipping software that can apply automated business logic to not only select the right carrier hub based on the package’s final destination, but also incorporate the cost of the line haul as part of the rate shopping comparison and produce all of the paperwork needed to execute the zone skip.
- Reverse Logistics: Implementing efficient reverse logistics processes can minimize costs associated with returns and exchanges. By streamlining the returns process and reducing handling time, shippers can reduce the financial impact of returns. Additionally, leveraging a shipping software that can automate return processing (think capabilities to implement complex business rules for your unique reverse logistics business) and generate return shipping labels can further optimize reverse logistics operations. [What other reverse logistics lessons should I learn?]
Speed Considerations
Speed is another key factor that high-volume shippers consider. With increasingly demanding customers, prompt delivery is essential. However, prioritizing speed can come at a cost. Shippers must carefully evaluate their specific needs and select carriers that can provide the desired level of service without breaking the bank.
According to the same survey of high-volume parcel shippers [The ProShip Report 2024], 18% of respondents ranked speed as the most important factor, and nearly 70% considered it somewhat important. To prioritize speed without sacrificing cost, consider the following strategies:
- Carrier Diversification & Rationalization: Choose carriers with a proven track record of delivering shipments on time. [What other factors should you consider for evaluating carriers?] Utilizing a carrier-agnostic multi-carrier shipping software with strong carrier relationships and industry-leading designations (such as FedEx Solution of the Year, FedEx Diamond Compatibility Partner, UPS Ready Partner) to access a broad parcel and LTL carrier library and negotiate preferential rates. To optimize speed and efficiency, be sure to research and rationalize the right carrier mix for your shipping profile. Incorporating last-mile, same-day, and next-day carriers can significantly improve delivery times, especially for high-value or time-sensitive shipments. Additionally, strategically locating warehouses closer to your customers can reduce transit times and improve overall delivery performance.
- Utilize expedited shipping services: While standard ground service is the most common shipping method, high-volume shippers often leverage a mix of expedited, international, and same-day services [The ProShip Report 2024]. Partner with a technology solution that can offer shipping software with advanced date shopping functionality to compare rates from multiple carriers, considering factors like time in transit, customer choice, and trailer pull time and more. This enables you to select the most cost-effective expedited service for each shipment.
- Leverage real-time tracking: Use shipment reporting technology to track shipments in real-time and proactively act on your shipping data. While your shipping software can provide some tracking information, specialized tracking solutions offer more advanced features, such as predictive analytics, exception management, and proactive notifications. It's important to choose a tracking solution that integrates seamlessly with your shipping software to provide a comprehensive view of your shipping operations.
- Inventory Management: Implement effective inventory management strategies to ensure products are readily available for shipment. Shipping software can help optimize inventory levels, reduce stockouts, and improve order fulfillment accuracy. When fully integrated with warehouse management systems (WMS), the shipping software can provide real-time visibility into inventory levels, allowing for more efficient order fulfillment. [Want to learn more about what a unified enterprise software stack looks like?] To enhance omnichannel fulfillment and improve delivery speed, consider implementing a distributed inventory strategy and utilizing stores, distribution centers, and third-party logistics (3PL) providers as fulfillment locations. By strategically placing inventory closer to your customers, you can reduce transit times and improve overall delivery performance. This can be especially beneficial for e-commerce businesses that need to fulfill orders quickly and efficiently.
Balancing Cost and Speed with ProShip
As we've explored, the delicate balance between cost and speed is a critical challenge for high-volume shippers. By carefully considering factors such as carrier selection, packaging optimization, and shipping strategies, businesses can optimize their shipping operations.
ProShip: Your Partner in Shipping Excellence
ProShip is more than just a shipping software provider; we're your partner in shipping excellence. Our multi-carrier shipping software solutions are designed to help you strike this balance, whether you are a mid-sized manufacturer, a high-volume enterprise retailer, or anywhere in-between.
Key Benefits of ProShip:
- Unmatched Flexibility: Choose how you want to ship, whether it's through a user-friendly GUI, powerful APIs, or a combination of both.
- Seamless Integration: Integrate seamlessly with your existing systems, including WMS, OMS, ERP, and more. With ProShip’s long-standing expertise in the industry, we know the top tech partners and we integrate with them.
- Advanced Rate Shopping: Utilize advanced date shopping capabilities to optimize shipping costs and delivery times. By considering factors like holiday schedules, carrier-specific conditions, and customer preferences, you can select the most cost-effective and timely shipping options.
- Real-Time Tracking and Visibility: Monitor shipments in real-time to proactively address issues and keep customers informed. Our integrated tracking and reporting solutions provide visibility into every step of the shipping process, from order placement to final delivery.
- Robust Carrier Network: Access a broad range of both parcel and LTL carriers and negotiate preferential rates. Our carrier-agnostic platform allows you to choose the best carrier for each shipment, ensuring optimal performance and cost-effectiveness.
- Scalability: Grow with your business, whether you're a mid-sized business or a large enterprise. Our scalable platform can adapt to the adapting market as well as your changing needs.
- Expert Support: Our dedicated support team filled with both supply chain and IT experts are available to assist you with any questions or issues. Our tenured and experienced group of knowledgeable professionals are ready to tackle your parcel pain points.
By leveraging ProShip's powerful features, we can partner to help you achieve your shipping goals and gain a competitive edge. As the last shipping software you'll ever need, ProShip is committed to providing innovative shipping solutions that help businesses thrive. Schedule a discovery call today to learn how ProShip can optimize your shipping operations and drive business growth.