Malvern's Shipping Software Blog

In the current economy-- filled with IT spending restraints and tight cash flow, it is difficult to make a significant IT investment in hopes of a tangible return on investment. This is where the idea of SaaS (software as a service) shines.

Historically, shipping software- which often includes sophisticated integration into other business systems (as well as customized business rules)- bears a considerable, up-front cost.

However, in light of the number of businesses cutting back on IT spending, integrated, multi-carrier shipping software has now become available at modest monthly fee. In addition to avoiding the upfront cost, in many cases there is no long-term commitment required with an SaaS shipping system either. 

As a result, there is considerably less risk and upfront cost associated with implementing an SaaS Shipping System.

Now that initial cost has been eliminted as a hurdle, let's consider three of the many areas of improvement that a third-party SaaS shipping system can provide:

More Seamless Integration
The integration capabilities of free, carrier provided systems (such as UPS WorldShip and FedEx Ship Manager) have definitely improved over the years. However, they are still light years behind the capabilities of a multi-carrier shipping system with a rules-based integration engine. With a carrier system, integration typically requires creating a database table (or import file) which matches the carriers' requirements.  With the appropriate multi-carrier system, there should be no need to make any changes to your database nor any limitations on what data can be imported and exported. For example, international shipping is often a tedious, time-consuming process in a carrier-provided system.  However, with a third-party shipping system, line item data (such as product description and value) can be imported automatically. In addition, all shipping data including list and/or discounted shipping charges, tracking #s and more can be exported in real time (or batch) directly back into your database or host system.

Increased Efficiency
Since free, carrier-provided shipping systems are used by thousands of users with diverse requirements, these shipping systems are designed to do everything for everybody. This has resulted in having just about every option and input field spread out all over one busy looking screen. An ideal multi-carrier system should permit you to fine-tune the screen to eliminate unnecessary options and, most importantly, to streamline the shipping process by reducing key strokes. In addition to full access to all data, options and parameters, a multi-carrier shipping system with a rules-based integration engine can automatically perform logical functions which eliminate manual steps such as activating certain parameters including Signature services, Email Notification, Alternate Billing, Insurance, and more.

Reduction in Freight Costs
Why do UPS and FedEx give away free systems? These carriers more than recoup the cost of the system by maintaining a monopoly within many customers' businesses. While automatically rate shopping between UPS and FedEx will not always yield significant savings, there are many cases where rate shopping can yield considerable savings. With a system that can automatically compare multiple options to find the cheapest method, you can reduce your shipping charges-- increasing your profit margins and enabling you to be more competitive-- particularly when selling online. While virtually any carrier services can be compared including LTL (less than truckload), one of the most common comparisons is between UPS and Postal or FedEx and Postal. When shipping direct to consumers, the residential, delivery area or rural fees often applied by UPS and FedEx (which can be substantial) can be eliminated when using the postal service. So, by incorporating this type of comparison automatically, freight charges can be reduced effortlessly.

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.

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)".