Malvern's Shipping Software Blog

Endicia is a leading provider of internet postage solutions. They offer a robust application called DAZzle which manages your prepaid postage (purchasing, etc) and generates postal shipping labels.

When it comes to low-volume postal shipping, DAZzle is adequate as a stand-alone application. However, for shippers looking for more advanced functionality (such as incorporating additional carriers, batch processing, rate shopping, sophisticated integration, custom labels and more) an integrated shipping solution is necessary.

Here are some of the more common areas where a shipping system with integration to Endicia can add value:

Multiple-Carrier Rate Shopping
In addition to shipping through the postal service, many Endicia users also use UPS, FedEx, DHL and other carriers. In many cases, a primary factor in determining the carrier and service level is the price. So, in order to streamline the use of multiple carriers and to maximize the savings associated with comparing rates, a shipping system capable of automatic rate shopping is necessary.

A shipping system function (commonly referred to as) "bestway carrier selection" enables the shipping software to choose the best (cheapest) method from two or more configurable methods-- such as Priority Mail, UPS Ground and FedEx Home Delivery. Because this happens automatically, bestway solutions are ideal for medium to high volume shippers.

A multi-carrier rate shop screen is an alternative (manual) method for selecting the cheapest method. A rate shop screen is typically a grid or chart of available service levels sorted by cost.  The user can select the appropriate method (without consulting other applications, rate charts, the internet, etc).  With a single click, all of the rates appear. 

Obviously, automatic bestway carrier selection is more efficent, but in many operations, a combination of both methods are used. 

Automatic Batch Processing
Batch processing is the automatic printing of multiple shipping labels all. Batch processing is ideal when product weights are known. Since each item does not need to be weighed, multiple shipping labels can be processed all at once (instead of individually.) For example, an internet retailer might downloaded orders received in a shopping cart and print all of the shipping labels at once-- automatically.

Batch processing can be used for a single carrier (e.g., just postal shipments through Endicia) or with multiple carriers-- such as UPS and FedEx too. When combined with other functions such as integration, packing list printing and rate shopping, batch processing can offer dramatic improvements to overall efficiency.

Host Integration
Users of the stand-alone DAZzle application generally do not have any efficient means of seamlessly integrating shipping data (import and export) with their host business systems or databases.

Integration is one of the most common benefits of Integrated DAZzle partner solutions. The most basic integration involves importing shipping address based on an Order # and exporting tracking #, shipping charges, etc.

More sophisticated integration might include bestway rate shopping codes, additional reference data, package contents, package dimensions and virtually any other relevant shipping data. Integration might also include "business rules" to automatically perform decisions or steps that would normally be taken manually.

Custom Labeling
The DAZzle label designer software is very flexible in its ability to print custom fields, doc-tabs and more. However, in order to take full advantage, integration is typically necessary to pass through the additional label data automatically.

A Case Study
This online retailer of iPod accessories, batteries and chargers downloads orders from a shopping cart into a .csv file once per day. Since the weights for all products are known, the shipper uses a batch processing function in their third-party shipping system (Malvern Manifest System) to generate all labels automatically. The 4" x 8" labels include a customized Packing List section listing the SKU, quantity and description for ever line item within each order. The shipper processes about 200-300  postal shipments daily in fewer than 30 minutes. Prior to implementing batch processing, it took nearly a full day. In terms of operational improvements alone, the return on investment in their third-party shipping system was approximately 5 weeks.
 

PR: wait...  I: wait...  L: wait...  LD: wait...  I: wait... wait...  C: wait...  SD: wait...

Providing Proof-of-Delivery data is a critical challenge that many HME/DME (Home & Durable Medical Equipment) suppliers face. Proof-of-Delivery (POD) data is often required in order to receive payments for Medicare claims.

In many cases, timely claims processing depends on the HME/DME supplier's ability to provide proof that a package was delivered to a patient (or customer). The faster this process can be completed, the more quickly claim payments can be received.  So, naturally, any automation that can be applied to this process is beneficial.

Carrier provided shipping systems such as UPS Worldship and FedEx Ship Manager are not capable of automatically tracking shipments and posting proof-of-delivery results back into your database.

The two most common solutions are (1) a custom tracking solution or (2) a third-party shipping system.  In both cases, the automatic tracking must also result in either storing the results in your order management or other host system or by generating reports or export (Excel) files.

Some third-party shipping systems can automatically track every package shipped routinely until every package is delivered. As the results are updated, they should be able to automatically post the delivery date, time, signed for by, etc information back into your business system. Tracking results are generally also available from search screens within the shipping software and in reports and export files that can be generated by the shipping system.

When Medicare claims processing is problematic due to slow and manual Proof-of-Delivery processing, the cost for a third-party shipping system can be quickly and easily justified. 

There's no question that you can save money by implementing shipping software that automatically compares rates between carriers.

However, another great way to save money is by shopping around for parcel insurance. Many shippers are not aware that they do not have to insure their packages directly with the carriers (such as UPS, FedEx, Postal Service, DHL, etc.) Let's face it, these carriers are not in the insurance business. So, why should they offer competitive insurance rates?

There are many great, third-party parcel insurance carriers out there including Shipsurance (formerly DSI), U-PIC and PIP (Parcel Insurance Plan). These providers offer savings of up to 50% (or more) off the carriers' rates.

Here's how parcel insurance works...  Rates are based on $100 units. For example, if your parcel has a declared value of $400, it contains (4) $100 units. For UPS, FedEx and USPS Express Mail, up to $100 of every shipment is covered at no cost. So, parcel insurance is necessary to cover the additional $300 (or 3 units) of value above the base $100.

In 2009, UPS and FedEx charge $0.65 per unit (with a $1.95 minimum). The average third-party parcel insurance carrier rates are approximately $0.25 per unit (typically with no minimum). So, if you process 25 shipments per day valued at $300, your approximate monthly savings would be:

   UPS/FedEx = $1.95 (min) x 525 pkgs /mo = $1,024 

   3rd Party Insurance = 2 Units x 525 pkgs /mo x $0.25 /unit = $263

   Estimated Savings: $761 per month

Most shipping systems have standard support for these third-party parcel insurance providers. So, if you insure a large percentage of your shipments but your shipping system does not accommodate third-party insurance, now is the time to consider a shipping system upgrade. With a monthly savings of $761 (in the example above), the return on investment would be extremely rapid.

Generally speaking, once you activate third-party parcel insurance in a shipping system, the declared value no longer gets sent to the carrier and you begin paying the carrier for just the actual freight charges. Then, on a monthly basis, a printed report or electronic upload is transmitted to the insurance carrier to generate a bill for your discounted premiums.

In summary, if you ever insure packages for over $100 or if you insure postal packages at all, you should look into using third-party parcel insurance.

On May 11, 2009, the U.S. Postal Service will be increasing thier rates again.  Fortunately for parcel shippers, prices for most services--particularly Priority & Express Mail-- were already increased in January and will not be increasing again this May.

However, other service levels including First Class Mail (domestic & international), Parcel Post and Media Mail as well as virtually all special services for both domestic and international shipments will be increasing (including certified mail, COD, Delivery Confirmation, Insurance, etc).

The increases apply to both Retail and Commercial rates. So, whether your operation uses an internet postage provider (such as Endicia or Stamps.com) or Postal Manifesting, your rates will increase.

If you are using third-party shipping software, be sure to update your system with these new rates. This is particularly important if you use automatic rate shopping between multiple carriers (such as UPS and/or FedEx) to choose the most cost effective shipping method.  Or, if you pass along the charges calculated by your shipping system to your customers.

Here is a short list of the service levels that will be increased:

• First Class (Domestic & International)
• Parcel Post
• Media
• Library Mail
• Bound Printed Matter
• Special Service Fees (Domestic & International)

For more information about the new rates, visit here.

For a PDF of all of the rates, visit here.

One of the main purposes of shipping systems, other than printing shipping labels and maintaining records of shipments, is automating what would otherwise be an extremely laborious process of shipping packages. Automation is accomplished by integrating the shipping system with the customer's host order-entry system (or database). 

Most of the information required to ship a package resides in some sort of order management system, and by integrating the two systems, the data can be made to flow seamlessly to and from the shipping system, thereby eliminating the need for manual keyboard entry.  Not only is time and effort dramatically reduced, but transcription errors are avoided as well.

There are two primary methods for moving data from the order management system or database to the shipping system.  First, a customer-provided process is used to export data from the host system (orders database, shopping cart, etc) to an Excel, CSV, or text file with the required information.  In the second case, the shipping system is configured to connect directly to the host system's database and to import the required information automatically using ODBC, XML, tcp/ip and other "real-time" methods.

The same two methods apply to moving data from the shipping system back into the host system. The shipping system can create an export file (with tracking #s, shipping charges, etc) that gets read back into the host system in a batch.  Or, the shipping system can "push" the export data back into the host system in real-time via ODBC, etc.

The primary benefits to integrating the import process:

• Reduction in manual entry errors
• More efficient shipping process (fewer keystrokes to ship a package)
• No need to maintain an additional customer address databases on the shipping system. 

The primary benefits to inegrating the export process: 

• Reduction in manual entry errors (keying shipping charges, etc back into host system)
• Improved customer service with real-time access to shipping status, tracking #s, etc 

I recently ordered laptop memory from a MAJOR online retailer that was delivered in a half cubic foot box. [Pause while you picture this. Hint: picture a marble getting delivered inside a shoe box.]

This is a clear indication that many shipping operations have failed to adjust to the recent but significant changes in volume-based pricing. Apparently, it seems, many shippers do not realize that size does matter. 

A half cubic foot box (6" x 12" x 12") which weighs up to 1 lb gets billed at a 5 lb rate.  Sent by UPS Next Day Air® to zone 6, the 2008 list rate would have been $48.25. The 1 lb rate would have been only $32.55.  Appropriate- sized packaging would have yielded a savings of $15.70.

You should make every effort to avoid getting "dinged" after the fact for dimensional weight charges that you did not and cannot pass along to your customers.  If customers prepay for (estimated) freight charges, you should be sure to understand which products result in dim weight charges. Be sure to factor in this incremental  amount or do what you can to reduce the dim weight charges through better packaging. 

Building real-time rate shopping into your Order Entry process (taking both weight and dimensions into consideration) can eliminate this issue automatically. However, this requires that you store this data for your products, do not perform a lot of re-packing, and that you have the ability to integrate a rating engine into your Order Entry system and/or Shopping Cart.

Many shippers under estimate how significantly these charges can snowball and how easily a once-profit-generating shipping operation (or at least breakeven) can turn into a losing proposition.

Many third-party shipping systems can be configured to automatically prompt users for dimensions for express and/or ground shipments. They can also prompt the user to enter just a box code and then automatically recall dimensions for commonly used boxes. If your product dimensions are ever known, these dimensions can be imported too. Then, in all cases, dimensions can be incorporated into the rate.

Ideally, the only time you should be measuring a box during the shipping process is when it's not a standard box size.  That is, when it's not not a box that's part of your normal inventory.

As parcel carriers continue to increase the significance and pricing impact of dimensional rating, it is critical that you know when dimensions are necessary and, most importantly, to be able to enter them quickly-- if not effortlessly. 

Consider, for example, if you have to measure and then type 12, tab/click, 18, tab/click 16, Enter... to record the dimensions (12×18x16) for a specific box. In even a small to medium-sized shipping operation (50+ packages per day), you are wasting TONS of valuable time.

If your shipping process does not require any packing (combining of products), then the ideal process is to record your product dimensions in your database and to have your shipping system automatically import the dimensions.

Since that is an "ideal" solution which does not apply to many shipping operations, consider using a shipping system that stores a complete list of your commonly used box sizes. This way, instead of remember or re-entering dimensions, you can recall them very easily with a single code.

Better yet, you can create this database of box codes and then create a laminated sheet with a barcode for each box type (some boxes actually have a barcode of the box code right on the box).  Now, place the package on the scale, Scan the Order #, Scan the Box Code, hit Print...  With this streamlined approach, you can literally cut the shipping time in half.

As you may be aware, if you are not capturing dimensions for all of your boxes you could be getting hammered on rate adjustments. If you don't know, you should review the adjustments in your last few months of freight bills.

If you are entering dimensions and employing a manual process to do so as described above, you are getting equally hammered- if not more so- on unnecssary labor expenses.

So, if you are spending too much time entering dimensions or paying significant penalties for dimensional charges that were not previously calculated, you should consider shipping software than can automate this process for you.

Many B2C shippers struggle to effectively manage (let alone reduce or eliminate) residential and delivery area surcharges.

Before discussing this further, let's consider the 2009 UPS Ground rates for a 1 lb package shipped from Malvern, PA 19355 to: 

A commercial address in Yorklyn DE, 19736
Rate: $4.34 

A residential address in Townsend DE, 19734
Rate: $9.27 

The combination of the residential and extended area surcharges result in more than doubling the shipping charges here. (Neither rate includes a fuel surcharge.)

These significant surcharges commonly trigger two negative scenarios. First, abandoned shopping carts are often the result of checkout sticker shock. That is, the consumer is about to make a purchase online but ends the transaction when the shipping charges are displayed.  The alternative, is to not pass along these fees to the consumer.  However, this directly reduces or even eliminates the profit built into the sale.

One proven strategy to avoid or eliminate these fees is to use a carrier that is optimized for the last mile. (The "last mile" refers to the final stage of the delivery-- from the nearest carrier facility to the final destination.)

The United States Postal Service maintains a significant advantage for many types of shipments bound for residential, rural and remote areas. This is made possible by the sheer number of vehicles and delivery personnel. As a result, several carriers now offer service levels which leverage the vast network of postal services trucks and postal workers.

The solution is to simply include the Postal Service (which does not charge any of these fees) when comparing rates for residential shipments. However, UPS, FedEx and DHL have all teamed up with the Postal Service now to offer composite solutions called: UPS Mail Innovations, FedEx SmartPost and DHL GlobalMail.

With these shipping methods, the primary carrier (e.g., UPS) transports the package most of the way and the Postal Service performs the last leg of the delivery. The advantage to these combines methods is the advanced tracking capabilities offered by UPS, FedEx and DHL and the low cost of the final USPS delivery.

So, for any business that ships direct to consumers, it is important to be aware that under many circumstances, the Postal Service and these other methods offer considerable savings when compare to standard Ground shipping.

Now, the trick to taking advantage of these alternatives is to implement a seamless process for selecting the most cost effective carrier or service. For real efficiency, you should consider a shipping system which can automatically compare and select the cheapest method without any user interaction, whether this might be USPS or a composite method.

Your shipping software should be configured with "business rules" to accommodate simple or sophisticated logic.  For example, a simple cost-based comparison might be to automatically choose the cheaper of FedEx Home Delivery and Postal Priority.  A slightly more sophisticated comparison might take transit time into consideration by comparing UPS Ground and Priority Mail for Zones 7-8 and UPS Ground and UPS Mail Innovations for Zones 2-6. 

A final note... because the composite services often use economy postal services for the final delivery, you should clearly indicate to your customers that they are choosing an "Economy" shipping method. Shipping options labeled "Standard" or "Ground" may falsely set your customers expectations.  So, if you choose to offer one of these methods, you should consider calling it something like "Economy (3-10 business days)".