It's not unusual to put on a little extra weight over the holidays, but some shipping companies were surprised when their invoices arrived in February looking like their packages had also put on a couple of pounds. The culprit? Increased surcharge fees levied by their parcel carriers in January plumped up the price of some packages by as much as 25%.
Shippers looking to shape up their bottom line are moving to a tried and true formula eliminate unwanted fat. Fat-conscious companies know that it's not the baked potato but the add-ons like butter, sour cream and bacon that tip the scales in the wrong direction. These companies are staying lean by identifying add-ons and cutting out back-end surcharges that bloat the bottom line. They are also exercising their shipping options where it makes sense to save a buck without sacrificing quality.
Give Your Address List a Makeover
Surcharges for address correction, return service and the cost of reshipping improperly addressed packages can quickly run up a company's monthly bill. A package destined to a business or residential customer may only lack a suite number or street directional, but parcel carrier companies often charge $5 to $10 in additional surcharges for address correction and delivery. For an undeliverable parcel, the shipper may pay for the correct address as well as the return.
"Businesses can reduce address correction and return fees as much as 50% by simply running their address lists through a Coding Accuracy Support System (CASS)-certified software program," advises Doug Caldwell, vice president of AFMS Transportation Management Group. Customers may obtain CASS software directly from the U.S. Postal Service National Customer Support Center (NCSC) in Memphis, Tennessee or may choose to purchase the software from a CASS-certified vendor. Companies may also send their mailing lists to a vendor who will clean up the mailing list for a small fee.
CASS-certified software will correct bad ZIP Codes, one of the most common causes of address correction fees and returns. A CASS cleanup will alert the shipper to multi-point addresses where an apartment or suite number is required, indicate undeliverable addresses and flag for a missing directional as well as correct improper street names.
Learn Some New Moves
Another program that is available to shippers is the U.S. Postal Service National Change of Address (NCOA) program. This program is available directly from the Postal Service NCSC or through a certified vendor. The NCOA database includes change of address information for any business or residential customer who has registered a move with the Postal Service within the past 48 months. The NCOA program will match a company's database against these changes and provide the updated corrections. Most customers run lists one to two times per year. "We are identifying customer moves at a rate of about 17% annually," according to Jeff Henke of Quad Data Services, a CASS- and NCOA-certified vendor. "Shippers benefit in cost savings, greater efficiency and customer retention."
Some CASS vendors offer additional services such as Data Overlay. "We take the company's shipping file and add business-level attributes, company name, shipping address, city, state, ZIP Code, SIC code, employee size, sales volume, ABI number, contact information and more," says Henke. "Businesses find that this adds another level of value by correcting the business address as well as providing intelligence on the customer base.
Read the Label
Another service provided by certified vendors as well as the Postal Service is Residential Delivery Indicator (RDI). This software allows shippers to run their mailing lists and determine the addresses that will incur residential surcharges. Residential surcharges by parcel carriers run from $1.40 to $3.50 per package. This includes a residential surcharge of up to $1.75 and an additional surcharge of up to $1.75 if the delivery is located in one of over 23,000 ZIP Codes nationally that qualify for an additional Delivery Area Surcharge (DAS). Many shippers are slimming down their costs simply by moving some residential-bound packages to the U.S. Postal Service.
DASs are causing many large companies to be fast on their feet when it comes to cost avoidance. Some shippers have been surprised to discover that even some business addresses are subject to surcharge. "One of my large national accounts recently acquired an out-of-state subsidiary" says Bill Lloyd, sales specialist with the U.S. Postal Service. "They believed that because their new satellite location was in an industrial area that DAS would not apply. The company moved its shipping business to the Postal Service when it found out that 100 to 150 packages a week going to the new branch office were each being surcharged an additional $1 for a business address."
Watch for Hidden Fat
Fuel surcharges are another area where companies are battling the bulge. Although most parcel carriers have dropped fuel surcharges for ground service, air surcharges have increased dramatically. Some carriers are charging as much as 6.5% or more in fuel surcharges for air parcels. For example, a five-pound overnight parcel going from Portland, Oregon to Portland, Maine is subject to an add-on fuel surcharge of as much as $2.73 by private parcel carriers.
There may not be much companies can do about these fuel surcharges. Other surcharges that companies need to be aware of are:
Saturday and Holiday Delivery This service is free with the U.S. Postal Service, but the fees are $12.50 or more with private carriers.
Invalid Account Number If a customer inadvertently misprints his account number on a package, a penalty may be charged as much as $5 to $10.
Excessive Tracking Charge Although carriers may not charge for package tracking, a surcharge of up to $3 may occur if a customer checks for tracking information more than 20% of the time.
Weekly Service Charges Customers with private carriers will pay a weekly service charge as well as additional pickup charges if volume falls below an established minimum. Saturday pickup can be an additional $12 to $15.
Late Fees Customers with late invoice payments can be charged an additional five percent by some private parcel carriers.
Now You Can Have a Great Figure
"I recommend that anyone who ships parcels should contact their U.S. Postal Service area sales representative and ask for assistance in doing a cost analysis," suggests Cathi Moriarty, U.S. Postal Service marketing specialist for Package Services. "In many cases, a company's accounting department is responsible for bill payment and does not take the time to review the bi-monthly invoice with the shipping department because it is worried about the late fee."
"Not all surcharges are easy to identify on a billing statement," says Moriarty. "That's where our Postal Service sales represen-tatives can help. Our representatives have the tools and training to make a detailed comparison between the company's bi-monthly invoice and the shipping manifest to identify hidden costs. In many cases, surcharges are applied after the discounts, and they eat away the supposed discount."
The U.S. Postal Service sales representative also has software to compare private carrier's products and services to Postal Service offerings of equal value. This enables shippers to battle the budget bulge by choosing lower-cost shipping options for some of their packages without sacrificing service, convenience or efficiency of operations.
For more information, please contact USPS Marketing Specialist Cathi Moriarty at 703-292-3835 or visit www.usps.com.
