One of the biggest concerns for any organization today is reducing expenses. An area of cost that is often overlooked is shipping. Many managers are frustrated by carrier price increases and feel hopeless in their ability to take any effective action. This article will share four strategies that large shipping operations can take to reduce their shipping costs that can also be utilized by small business.

Taylor's Tip #1: "Don't Wait in Line-Ship Online!"

Would you pay four times more to ship a package for convenience? If you're physically taking your packages to a carrier's shipping store, you are paying way too much! Many small businesses don't realize that if they are a walk-in customer who goes to a parcel carrier's store or shipping counter, they pay a premium for that convenience.

A recent Wall Street Journal article stated that several large package carriers "... have acquired retail chains to take advantage of walk-in customers who typically pay a premium because they are too small to negotiate volume discounts," (Corey Dade, January 10, 2008). I was curious about how much of a premium. I walked into a major carrier's store and was told it would cost me $18.71 to ship a one pound package from New York to Houston ($12.71 for shipping and $6 for packing). I wanted to compare the price with another carrier, so I went to the U.S. Postal Service (USPS) Web site and found out that I could ship the same package for $4.60 and use their free envelope. I saved $14 or 75 % on a single package by taking the time to compare rates.

Even the U.S. Postal Service offers discounts like Free Delivery Confirmation on Priority Mail and discounts on international service when printing postage online at www.USPS.com. You don't see big companies shipping their packages in the carrier stores; they process their packages online and arrange for the carrier to pick up the package. If you are shipping with the USPS, you can even have the packages picked up for free.

Taylor's Tip #2: "Compare Different Services from Various Carriers."

According to "The 9th Annual PARCEL Best Practices Survey," conducted by Morgan Stanley and PARCEL Magazine, "58 % of high-volume shippers have multi-carrier shipping systems." On the other end of the spectrum, the majority of smaller shippers utilize carrier-supplied shipping systems, compared to only 10 % of the high-volume shippers. These survey results made me wonder, what do the high-volume shippers know that perhaps the low-volume shippers do not?

Large companies do not put all their eggs in one basket; they have multiple carriers, while most small shippers only have a single carrier. Why do the larger shippers buy multi-carrier shipping systems and the smaller shippers use systems that the carriers provide for them? The answer is that the carrier systems are free. While the carrier software does make it convenient to ship, it has an inherent drawback; it only works with that specific carrier. The carriers provide this software because they know that it will increase their volume and revenue because it is easier to use their software than to compare rates with another carrier manually. Yet, a system that only has one carrier is not going to present the most cost-efficient choices. This is what the big shippers know.

High-volume shippers have multi-carrier shipping systems because it substantially reduces their shipping costs. Even a low-volume shipper can save money by comparing rates and services on a multi-carrier shipping system.

Taylor's Tip #3: "Get Rid of the Accessorials."

How much do you pay in accessorial add-on fees? "The 9^th Annual PARCEL Best Practices Survey" also showed that shippers are paying 10.55 % of their shipping costs in accessorial charges for such things as address corrections ($6.00 ground, $10.00 air), residential delivery points that were shipped commercial ($2.30), declared value (insurance $.60/$100) and delivery area surcharges for rural areas (55 % of all zip codes) for both commercial and residential shipments. Take a look at your weekly invoices under adjustments and other charges and you might be surprised to find these fees amounting to 10 % or more of your weekly bill.

For most shippers, address correction costs are one of the single largest add-on costs; not only are they expensive, but they can delay your shipment. To remedy this, you can transfer address information from your accounting system or your order management software to your shipping system. It is much easier to maintain one set of addresses and make sure that they are correct than having separate and multiple address books.

If you integrate your invoicing and shipping, you can also have the shipping software return the freight charges and tracking numbers. Customer information, invoices and sales orders can be updated simultaneously with shipment processing. This streamlines your shipping operations by dramatically reducing the time and effort needed to process each shipment.

Taylor's Tip #4: "Leverage the Unique Advantages of the U.S. Postal Service."

Big shippers know that the U.S. Postal Service has some niches where the national carriers can't compete on price.

Priority Mail Flat Rate Box

The USPS has Priority Mail Flat Rate Boxes in which you can put any amount of weight for only $8.95. I have put as much as 14 pounds in this box. The same weight with another carrier would be twice as much.

The Priority Mail Flat Rate Box can also be used to ship internationally. The corrugated Flat Rate Box is similar to a shoe box (11" x 8-1/2" x 5-1/2"), and you can ship up to 20 pounds internationally for a fixed price. Priority Mail International Flat Rate Boxes cost $23 when shipped to Canada and Mexico and $37 for all other countries. In addition to receiving the box for free, another benefit is that you can use the same packaging for both domestic and international shipping.

Very Light Weight Packages

If you ship packages that weigh less than 13 ounces, then you can receive the lowest rate possible for shipping a package. The USPS has a First Class Mail Package service for parcels that meet this weight requirement and are at least ¾″ thick. If your package qualifies for this niche service, you can save big. An 8-ounce package costs only $2.32 to ship compared to the Priority Mail rate of $4.60a 50% savings.

Media Mail: Books, DVDs, CDs

Media Mail is a service offered by the U.S. Postal Service for shipments of  books, films, manuscripts, printed music, printed test materials, sound recordings, play scripts, printed educational charts, loose-leaf pages and binders consisting of medical information, videotapes and computer-recorded media such as CD-ROMs and diskettes. The cost to send a one-pound box from New York to California using the USPS Media Mail rate is $2.13 compared to $4.60 using Priority Mail, a savings of 54%. The package may take up to seven days to arrive, but at that price, the delay may not matter. In addition, if you want confirmation that the package was delivered, you can purchase Delivery Confirmation.

Saturday Delivery

Saturday Delivery is an option for which most carriers charge an additional $10-$15. The U.S. Postal Service offers Saturday delivery for free. USPS charges no additional fees for Saturday Delivery on any of their services.

Residential Shipments

If you ship packages to residences, USPS does not have an additional cost. Other carriers charge more because it is more costly for them to deliver to homes. Since the mail is delivered to every home, USPS doesn't bear that expense.

In summary, the big shippers know that comparing multiple carriers to find the best option helps cut costs and gives any business a competitive advantage. You should always use the variety of information available to pick the cheapest carrier, the fastest carrier, or a combination thereof, to best suit your needs for each and every package you send. Encourage your colleagues to do the same. The results will directly affect your company's bottom line.

Mark A. Taylor, DLP, is the Chief Logistics Officer of RedRoller and President of TAYLOR Systems Engineering Corporation. He was named a Distinguished Logistics Professional (DLP) by the American Society of Transportation & Logistics in recognition of his 30 years of contributions to the field of logistics. Taylor has been featured as the industry expert in the New York Times and has been interviewed on ABC News. He is also the author of Computerized Shipping Systems: Increasing Profit and Productivity Through Technology and can be contacted at mtaylor@redroller.com.