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On January 26th, 2020 USPS rate hikes went into effect. Priority Mail Express increases 3.5% and Priority Mail by 4.1% on average. Numerous increases also were applied to Mail Services and Priority Mail Flat Rates.
Detailed information on these increases can be found in a previous article we published in early December "USPS Rate Increase effective January 26th, 2020"
Since the announcement of USPS Rate Increases and even more so since January 26th when the went into effect, Ship Watchers has been working with our current clients and numerous other inquiries from USPS shippers on how to go about mitigating the extra costs.
SMALL PARCEL AUDIT SAVINGS
There is good news if you use USPS Priority Mail Express or USPS Priority Mail International. These packages are guaranteed to be delivered by a certain day and time, so when USPS does not meet this commitment time you are eligible for a full refund of the shipping costs. Working with USPS to get your money back on these late deliveries will lead to substantial savings.
THIRD PARTY SHIPPING SOFTWARE
If you are not currently using a third party shipping software, you are missing out on savings. Be sure to look into companies such as ShippingEasy, ShipStation, Shipwire, Stamps, and Endicia to get USPS Commercial Pricing which provides significant savings off published rates. Most of these have FREE monthly subscription costs for less than 50 packages per month.
PACKAGING
Do you stuff everything in a Flat Rate Box where the cost is the same irregardless of the weight? Try Regional Rate Boxes that offer tier pricing based on the weight and size of your shipment. Depending on your product you may also consider using your own boxes or Poly Mailers (Padded Envelopes) to reduce the size of your package as a whole. Also consider the amount or type of padding you are using. Too much or heavier type stuffing will increase your package costs.
DIMENSIONAL WEIGHT
Dimensional Weight has been in place with all the Small Parcel Carriers for years while USPS implemented this charge in June 2019. Dimensional Weight is when a carrier sets the weight based on the size (L x W x H) of your package. To calculate the dimensional weight of your package, multiply the Length, the Width, and the Height, rounding to the nearest whole number (i.e. 1.00 - 1.49 = 1 and 1.50 - 1.99 = 2) and divide by the Dim Divisor, currently at 166 for USPS.
Example:
You are shipping a pillow in a 20 x 12 x 3 inch box that weighs 2lbs. The dimensional weight of this package (20 x 12 x 3 = 720 / 166 = 4.3). However, you must round up to the next whole number, so the dimensional weight for this example and what you will be charged on is 5 lbs.
Take a close look at your products, boxes, and stuffing to see how best to go about reducing the overall dimensional weight of your package which will lead to lower shipping costs.
CONSOLIDATE PACKAGES
Consolidating packages can be utilized when sending multiple packages to the same destination. Let's say you have 3 boxes that independently cost $10, $12, and $7 to ship separately to the same address. When combined in the same shipment the cost would be $15-$17, resulting in significant savings. This requires a well equipped inventory management system to insure all packages are at the same fulfillment center along with a warehouse management system that would batch the orders together. If you are currently using an outsourced 3rd party for these services and are billed per package shipped, it is essential to check and see that they are consolidating into a single shipment to avoid additional shipping costs and per package charges.
These are some of the ways that you can capitalize on reducing your USPS shipping costs. In the end, be sure to keep an eye on your shipping regularly to avoid missing areas of improvement and cost savings.
Ship Watchers is a logistics auditing company that keeps carriers compliant on rates, surcharges, incentives, and incorrect charges found within carrier invoices.
Want to stay on top of carrier increases, rate changes, and benchmark studies while insuring that your invoices are free from errors and incorrect charges? Give us a shout to learn more at oncall@shipwatchers.com or by calling us at 800.550.7217 ext 874.
No term agreements, no additional effort, and no additional fees... Just a small percentage of the savings we bring to your carrier accounts directly through our auditing process.
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