All e-retailers rely on the major parcel carriers to handle critical “last mile” delivery of packages to the customer’s doorstep. While most fulfillment operations use all the big parcel carriers to some degree, most favor one specific carrier that best suits the needs of their operation. If you’re wondering how to determine the best parcel carrier for your eCommerce shipping needs, read on.
The big-name carriers dominate the parcel space – the United States Postal Service (USPS), UPS, FedEx, and DHL. Larger online sellers may also rely on a network of smaller regional carriers to supplement last-mile delivery in bigger cities. Even if you have a 3PL providing parcel shipping services on your behalf, that 3PL uses some combination of the above to get your packages into your customers’ hands.
The services of these carriers are similar, but different enough that zeroing in on the right one for your specific requirements can enhance your customer experience and reduce parcel freight costs. Consider the following when looking at the major providers.
Dimensional weight, or DIM weight, is a technique used by parcel carriers to determine the cost of shipping parcels and incentivize customers to streamline packaging size. The height, width, and length of the package are multiplied together, and the total gets divided by a set divisor to determine its DIM weight.
Parcel carriers charge for actual weight or DIM weight rounded up the nearest whole pound (whichever is higher). If you move a lot of large packages, examine the current dimensional weight pricing models of each carrier to see if a particular carrier has more affordable rates for your most common parcels.
It’s important to note that 3PLs shipping a high volume of parcels, like Staci Americas, will negotiate a more favorable DIM factor (a higher divisor) – so the published rates from the carriers don’t tell the whole story. For instance, a 14-pound package by DIM weight could be charged at a 10-pound rate with a favorable DIM factor applied.
Let’s take a look at those published carrier rates by taking a package with 16x12x10 dimensions and putting it through the dimensional weight formula of each major carrier:
In terms of DIM weight, USPS and UPS offer a more cost-effective choice for shippers of large parcels with an actual weight lower than their DIM weight, but that’s only if customers set up daily pick-ups that allow them to pay Daily Rates rather than Retail Rates.
In terms of actual weight, most of the private carriers have a minimum parcel weight of one pound. Shippers moving high volumes of small packages that weigh less than a pound – for example, nutraceutical businesses – will benefit most from a relationship with USPS so they don’t get overcharged on low-weight packages.
Bottom line: DIM weight is a critical factor. Don’t ignore the huge savings potential of aligning with a 3PL that has negotiated a favorable DIM factor with one or more of the major parcel carriers.
Transit time expectations weigh heavily into parcel carrier selection. Some shippers put a lot of stock into shipping times, but others may not care if the package takes a week to arrive. When determining the best parcel shipping option, you have to carefully consider your time constraints and customer expectations to determine which carrier provides the most affordable service within that window.
If you’re shipping a $5 product, you can’t afford a $20 shipping charge to get it to your customer in two days. Consider your service options for each carrier. For example, if your customer is within the first few shipping zones, the package will probably arrive within the two-day window even using a cheaper standard ground delivery service, versus an expedited option.
Rates vary widely depending on the carrier and specific shipping service you choose. Here are some tips about each carrier’s costs to inform your choice:
Do you remember how your parents always told you not to put all of your eggs in one basket? That advice is also true with parcel carriers. While the above info will help you identify a primary carrier for the bulk of your shipments, keeping other major carriers and convenient regional carriers in your back pocket will help with overflow or unique shipments.
At Staci Americas, we can leverage our national distribution network and established relationships with the major parcel carriers to get you the most affordable parcel shipping options available. If you need help streamlining your parcel shipping processes, please contact us today.