This document provides best practices for managing outbound shipping costs and improving efficiency. It recommends accurately rating packages to avoid lost revenue, reducing package sizes to lower postage costs, and leveraging flat-rate options. It also suggests understanding carrier contracts and rates, using technology like scales and carrier-neutral shipping solutions to optimize decisions, and monitoring volumes and costs with reporting tools. Implementing these strategies can help shipping managers meet their responsibilities to cut costs while serving customers' needs.

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Issue Date: March-April 2009, Posted On: 4/1/2009
Managing Outbound Shipping
Best Practices for Managing Costs and Improving Efficiency By Elizabeth Lombard
Times are tough. The economy is in disarray, and organizations are being more challenged than ever to find
ways to meet their customers’ needs, while growing their overall revenue and reducing costs. To that end, mail
center managers have a responsibility – and great opportunity – to leverage their postal-carrier expertise to
assist their organization in meeting those difficult, but critically important, objectives.
As it relates to outbound shipping, mail center managers can take a number of steps to meet their
responsibilities of improving efficiency while reducing costs. Consider the following strategies.
Pricing and Packaging
Express and ground carrier pricing for large packages (those greater than three cubic feet) may be subject to
dimensional weight (DIM WT) rating. USPS Priority Mail packages destined to zones 5 – 8 and that measure
greater than one cubic foot may also be subject to dimensional weight rating. For example, the retail Priority
Mail price of a five-pound package going to zone 7 and measuring less than a cubic foot (1728 inches) is
$15.20. Whereas a 14” x 14” x 14” package (2744 cubic inches) would be subject to dimensional weight
pricing (i.e., the 15-pound price to zone 7 of $33.85).
Based on this type of pricing structure, there are two key strategies mail center managers can employ to help
manage costs. First, ensure that you are accurately rating your packages. Charging back shipping costs that
don’t cover your actual shipping expenses or match your carrier’s invoice could result in lost revenue. One
simple option might be that for the stock of boxes that you have on hand, proactively measure and mark them
for size. This will expedite processing when a box is used and may prevent rating mistakes. In addition,
consider investing in a scale that not only measures weight, but can also measure size and determine
dimensional weights. The accuracy and added efficiency will work towards your return on investment of the
scale.
The second strategy is to consider reducing the size of your packages. As noted in the example above,
postage would be 50% less with the package that measured two-inches less in length, height and width.
Using flat-rate Priority Mail boxes and flat-rate Priority Mail and Express Mail envelopes is also a great way to
reduce costs and ensure accurate postage as the prices are not subject to actual weight or zone. Some
express carriers offer “unlimited weight” envelopes that are priced at the eight-ounce rate.
For lightweight documents and packages, those weighing 13 ounces or less, consider using those specially-
designed parcel containers. An eight-ounce First-Class Mail parcel with electronic Delivery Confirmation will
cost only $2.54 and delivery will most likely be within a couple of days.
Contracts and Invoices
Know how your express and ground carriers bill you. Understand all elements of your carrier contracts, taking
note of the “fine print.”
Some might say that there are all sorts of “hidden charges,” but information regarding those fees is available
to you by accessing carriers’ websites and/or even meeting with your carrier representatives. A clear
understanding of how carriers determine their freight charges, and how they assess extra charges, enables
you to make informed decisions. Decisions may include which carriers to contract with, when to use one
versus the other, and which services within each carrier best meets your mailstream needs for given
applications.
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You can also leverage the expertise of a consultant. Consultants can provide rate and benchmarking services,
which can help compare costs between organizations with similar shipping needs. Consultants can also
provide an invoice analysis for you and assist in carrier agreement negotiations.
Technology
In addition to using scales that assist in measuring the dimensions of a package, savvy mailers and shippers
will want to leverage the benefits of a carrier-neutral outbound shipping solution to improve efficiencies and
mitigate costs.
Having the ability to “smart shop” enables businesses to select among carriers, as well as services levels
within those carriers, to keep costs in check while meeting important delivery deadlines. Shippers will be able
to utilize tools such as address verification and residential address indicator to make informed decisions that
reduce or avoid assessorial charges.
Business rules and conditional logic can be implemented and managed through these systems. Business
rules might include: “All overnight – especially early morning deliveries – must have management approval;”
and limit “signature required” to absolutely business-critical documents. Or, for all Thursday and Friday
shipments requiring a Monday delivery, use a carrier’s ground service or Priority Mail service. For Saturday
deliveries, use Priority Mail or Express Mail services.
The reporting features in some outbound shipping solutions also enable businesses to measure volumes
(ideal for the new USPS Commercial Plus pricing volume requirements), charge-back costs and monitor
carrier performance.
In conclusion, knowing that all carriers are reacting to economic situations, and as pricing becomes more
complex, it is more critical now than ever to thoroughly understand the carriers’ complete rate structures.
Implementing carrier-neutral solutions enables shippers to analyze rates and service levels, while benefiting
from the best negotiated pricing or incentives that the carriers and the USPS have to offer.
USPS, Priority Mail, Express Mail, First-Class Mail and Delivery Confirmation are trademarks of the United
States Postal Service.
Elizabeth Lombard CMDSM, CMDSS, MQC, EMCM is the National Postal-Carrier Manager,
Mailing Solutions Management Learning & Performance, Pitney Bowes Inc. For more information, please visit
www.pb.com.
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