Four parcel cost drivers worth understanding

A headline discount is not a complete explanation of parcel spend. Four areas are worth understanding when reviewing UPS or FedEx costs for a business shipping program.

1. Minimum charges

A minimum can limit the effect of a discount on certain shipments. Understanding which packages are affected helps explain why the effective price differs from what a headline discount suggests.

2. Dimensional weight

Package dimensions can affect billable weight. Analyze actual package measurements and the applicable agreement rules. A dimensional-weight observation is an opportunity to understand the package profile, not proof of a billing mistake.

3. Accessorials

Additional charges can contribute materially to shipment cost. Review which categories appear, how often they occur and which shipment characteristics are associated with them. Whether a particular charge is appropriate requires the relevant shipment and agreement details.

4. Service mix

Changing the mix of services can change spend even when volume is similar. Examine service selection alongside business needs and shipment characteristics before concluding that a rate increase explains the change.

Bring the factors together

These areas interact. A useful parcel review explains them against your own shipping profile and identifies where deeper analysis is warranted.