There are several significant saving opportunities present on nearly every FedEx® and UPS® invoice. They relate to guaranteed service quality and billing accuracy.
Guaranteed Service Quality
FedEx® and UPS® absolutely, positively guarantee that your package will arrive at its destination on time – or your money back! If it’s more than one-minute late, you are entitled to a 100% refund of your shipping charges. Even ground shipments are guaranteed and that’s where most of the money is. The carriers call these “guaranteed service refunds” (GSR).
To you, GSR’s are pure profit because they are a direct return of an incurred expense. The problem is that you have to know that a shipment was not delivered on time, figure out the reason, and then apply for the refund all within that very brief window of opportunity. It’s time consuming and confusing, and if your refund request is late by just one minute, your refund opportunity expires. Ironic, isn’t it?
Roughly 10% of expedited shipments are delivered late. Ground shipments are late about 5% of the time. In most cases, nobody knows or cares, but you are eligible for a full refund of your shipping charges.
If the cause of the failure was out of their control (hurricane, zombie apocalypse, etc.), they won’t pay and that’s fair. However if you know the rules, most of the time they do pay. So check those shipments, learn the tariffs, get on the phone and cut your shipping costs!
But wait, there’s more! When the carrier becomes aware that you are watching their service performance, they take better care of your packages your late shipments will actually go down. That makes happy customers and fewer hassles for you!
Billing Accuracy
There are overcharges, invalid surcharges and mistakes on many FedEx® and UPS® invoices. The carrier billing systems are extremely complicated and prone to error. Every shipping charge is comprised of a base charge plus any number of surcharges. Any time there is an opportunity to upcharge, they do – and often incorrectly. Including variations, there are over forty different types of billing errors. Not surprisingly, they all go against you. To get it right, every single cost component of a total package charge must be examined for validity. Any charges that are deemed invalid must be reconciled with the carrier. Approved credits are posted to your carrier invoice. We get to go back a full six months to get UPS® billing errors corrected, but only about two weeks for FedEx®.
We have been auditing FedEx® and UPS® accounts for GSR’s for 16+ years now and can say that over a broad base of customers in various industries, the average savings are about 4% of your annual shipping charges. Add another 1% for billing errors. So, if you spend $500 per week with the carrier, your annual savings will potentially be in the $1,300 range. That’s about 2½ weeks of free shipping
per year!
Are you keeping up with the carrier pricing and policy changes?
UPS® and FedEx® both announced price increases of 4.9% on average for 2019. Be careful though, they are sneaky about raising the price even more on surcharges that you commonly incur.
Are you incorrectly getting hit with Shipping Charge Corrections (SCC) for Dimensional Weight (DIM)? UPS® is even overcharging by calculation error when they hit you with the up charge!! You’ve got to watch the carriers like
a hawk!
Seriously, shipping is one of your largest expenses and can play havoc with your margins. Pay the minimum, get better carrier service and give yourself an advantage over
the competition.
Lawrence J. Riccitelli, MBA is the founder of Parcel Audit Partners.
They specialize in parcel shipping auditing and cost minimization.
Certified Partner: United Recyclers Group (URG)
(888) 438-7801 • larry@parcelauditpartners.com