Feb. 24 2007 08:35 PM

It's a choice that many managers have faced: Install a free, single-carrier shipping system or invest a portion of their already-tight budget in an integrated, multi-carrier system offered through a third-party. If you base your decision solely on the price tag, there's no contest "Free" beats an upfront cash outlay any day. But as economist Milton Friedman said, "There's no such thing as a free lunch." Free, single-carrier systems can end up costing you in the long run.


Why? These systems limit your ability to choose the services and rates that best suit your shipping needs. Independent, multi-carrier systems offer benefits that free, single-carrier systems can't and those benefits can save you hundreds and even thousands on shipping costs. We've seen through our customers' experiences that a well-designed, multi-carrier system can cut shipping costs from 10%-15%  every year.


Assessing the Costs and Benefits

It's important to consider what you get when you choose an integrated, multi-carrier system as well as what you give up when you install a free, single-carrier system.


Freedom to Choose With an integrated, multi-carrier system, you can select the lowest-cost service based on your delivery objectives. This is because you have access to the services of multiple carriers and because a well-designed system will allow you to make side-by-side comparisons of the rates and delivery options. Single-carrier systems offer only a limited basis for cost comparison, nor do they give you the option to choose another carrier's services. If you don't have the flexibility to compare services and make a choice based on cost, you could end up losing thousands in discounts.


Freedom to Change Competition among carriers is increasing, and it's a good idea for shipping managers to put their business out to bid periodically and evaluate the proposals from multiple carriers on the basis of cost savings and range of services. Having an independent system in place, versus a carrier system, reduces both the transaction costs of and the barrier to making a switch. You don't have to install a new shipping system or disrupt your processes just so you can use another carrier's services. An independent, multi-carrier system allows you to easily change carriers when it makes sense, without being hamstrung technology.


Insight into Surcharges To get a complete picture of the cost of shipping a package, you need a system that not only displays the shipping rate, but also any surcharges or special fees. While carrier rates have increased only moderately over the past few years, surcharges and special fees have increased substantially and now apply to more types of services. An independent, multi-carrier system is more likely to show all these charges upfront, allowing you to make informed choices on the carrier and services or at least avoid the surprise when you receive the final bill.
Surcharges you'll want to be aware of include: commercial delivery area surcharges; residential delivery area surcharges; fuel surcharges;  address correction fees; Saturday delivery charges; and dimensional rating charges.

A multi-carrier shipping system with automatic address correction will help you avoid unnecessary costs. Incorrect addresses can    result in duplicate delivery fees on a single shipment or additional fees for address correction.


Ease of Use If a single-carrier system limits savings, why not install more than one carrier's system within your mail center? On the surface, that approach might seem logical. However, it is complex and inefficient. Different systems use different applications and user interfaces, complicating integration with the order entry system and requiring more training. Shippers will have to move from one station to the next or flip between different screens and programs to process packages. Efficiency and accuracy will suffer. One system that does everything will be easier for you and your IT department to manage and maintain and will be simpler and more accurate for employees to use.


Central Deployment With a web-based multi-carrier system, you can install software once on your central server and enable access to the system from multiple locations. You'll achieve consistent accuracy and cost-efficiency. Also, you can update and maintain the system through the central server, rather than having to travel to each location.  A web-based system also enables
employees to arrange for shipments and track packages from their desktops without leaving their offices. To select a shipping system with the highest ROI, look for the following characteristics:

1.         Retrieves your carriers' up-to-the-minute
            routing and relevant shipping data

2.         Side-by-side comparisons of services from
            multiple carriers, their rates and surcharges

3.         Integrates seamlessly with your order entry
            and customer address databases

4.         Eliminates manual re-entry of order info

5.         Consolidates carrier billing

6.         Easily automates internal business rules

7.         Allows uniform address books

8.         Customizes screen views, labels, forms and
            reports within minutes


Shipping is a mission-critical business function. Whatever you're sending, shipping is the link between you and your clients, customers or vendors that completes the business cycle. Well-informed selection of the delivery services and rates yields satisfied customers and cost savings. Despite the availability of free, single-carrier systems, an independent, integrated, multi-carrier system is well worth the upfront investment. The system will pay for itself in cost savings and you'll gain respect for running your operation strategically and cost-effectively.


Johanna Boller is the VP of Enterprise Software Product Management for Pitney Bowes Global Mailstream Solutions. Visit www.pb.com.