Shipping Savings and Reduced Spending Guide

How your business can reduce shipping expenses and keep carriers accountable

At 71lbs, when we tell businesses we’d like to give them a share of $2 billion, we’re not kidding. That’s how much American companies lose in shipping refunds every single year, and there are several reasons why your shipping department may be missing out on them. Beyond lost refunds, you may also be spending more than necessary on day-to-day operations and dealing with your carrier.

This guide will break down the six major pain points where shippers lose money. Learning to recognize their impact on your operation will help streamline your shipping spend and maximize savings.

Best practices for saving

Seeking out savings isn’t just common sense — it's a necessity when big carriers raise prices every year. The good news is that a little know-how, well-placed pressure and time can create savings. Knowing which carrier is the best fit for your shipments is Best Practice 101.

You should consider leveraging the intense competition between America’s three major carriers (FedEx, UPS and USPS) to your advantage. More than 28 percent of businesses never bring their original contract up for review. Simply asking for cheaper rates can make carriers think twice about losing you. We recommend trying to renegotiate at least once a year.

It’s another common and costly mistake to use too much packaging on items and/or the wrong kind of cushioning inside. Double-checking you’re only using as much as required will prove much more economical in the long run. You can save even more money if you order the most suitable packaging materials in bulk.

This can cut down significantly on package weight and can even save on warehousing space. You can also save money by going for less-striking packaging. A plainer design can be more cost-effective by deterring parcel thieves.

Does your business belong to an industry group or trade association? If so, group terms may be another chance to save money via volume discounts (but look out for any extra costs this may require, like monthly fees or enrollment costs). You can access our savings insights for more best practice tips and, of course, you can always sign up with us free of charge.

We only get paid if you do and we save our customers an average of over 10 percent annually on their total shipping costs.

Shipping surcharges

Surcharges are one of the most difficult financial drains to put a plug in because they can be unpredictable and vary between business models. They’re typically added only after a shipment is delivered and can increase with little or no warning. Surcharges can also be hidden away in terms and definitions in such a way that many shippers pay the price for missing the changes.

Surcharges come in many forms, like residential, delivery area, signature required and declared value. They may even come from something as small as a few inches in package dimension. But they can all end up being responsible for up to 40 percent of your total shipping spend, determined by 71lbs analysis.

There are two ways a business can prepare itself for the surcharge sting — checking out our blog on the subject and using 71lbs Premium Analytics to track shipping expenses and generate the kind of data that gives you a chance to minimize costly surprises.

Late delivery

Remember that $2 billion in unclaimed refunds? A big chunk of that comes from late deliveries, and late may be a much smaller margin than your business thinks. You’ll likely want recompense if your shipment arrives a day or more late, but we’re betting you won’t be too troubled if it arrives on the scheduled day. That’s what you’re paying for, right?

In fact, the carrier owes you much better service than a simple scheduled day. If they’re even 60 seconds later than the set time for your shipment to reach its destination, the carrier owes your business a full refund of the shipping cost. Yes, that’s a single minute late. The tough thing is, how does a business know about such a small overstep?

A customer likely won’t care to inform them, and the carrier certainly won’t. Who will? 71lbs, of course. Our automated system monitors your shipments from A to Z and makes arrival times transparent. Around 5 percent of packages get there late, so let us get to work getting you those refunds back.

Shipping discounts

Has your carrier tried to impress you with offers of discounts on various services? Every shipper loves to save money, but these situations may be perks you will never need to use or will get very little financial benefit from. What’s worse is that these magic beans are often offered to companies if they give up the one thing most likely to save them money: Their rights to a refund.

A carrier may explicitly ask you to waive your rights to a late delivery refund with no qualms. They could also try to spin it as the doorway to better deals like incentives or discounts, or they may just put that waiver in the small print where you’ll need to spend time and effort rooting it out. These “deals” may seem to offer legitimate long-term savings, but often they’re not worth the paper they’re printed on.

Always be suspicious of anything presented to you as a saving. 71lbs has a wealth of experience in contract negotiations and weeding out which offers will really benefit our customers.

Lost packages

Many outcomes can contribute to a package being considered lost. The one thing they all have in common is costing your business money and probably good standing with your customers. Sometimes, “lost” just means the package was delayed due to damaged shipping labels that caused it to arrive at the wrong destination. Other times, that recipient may decide to keep the package (and then it really is lost) or parcel thieves may strike and complicate refund attempts.

A small number of shipments are still damaged beyond repair, classifying them as lost, and an even smaller percentage simply disappears. Some big carriers will investigate a lost claim 24 hours after the delivery window is missed, while others allow up to 60 days to report loss by damage.

Either way, the carrier’s underperformance means businesses lose money and must spend equally valuable time chasing the missing shipments. We help our customers by doing the hard work in fighting for lost and damaged refunds. We also provide shipping insurance, which offers a financial cushion against lost items.

Shipping refunds – to chase or not to chase

We’ve already mentioned the unscrupulous practice of carriers taking your refund rights. Now, let’s assume your business still has that right and you’re aware of it. Have you been chasing the money you’re owed? Many shippers will answer “no” and cite the time-consuming and frustrating process of getting their due.

This is a two-way financial loss. First, your business loses savings. Second, your reputation suffers with customers. When you don’t hold your carrier accountable, their performance will reflect that attitude. Poor performance will continue and only the carrier will win as you keep spending and losing.

Refunds can come from a lot more than late deliveries, loss and damage. That’s why 71lbs audits your shipping in 65 different categories to get you all the benefits of shipping refunds. You get to save and spend less while we do all the analysis and paperwork. We know it’s a lot of data to analyze, and a lot of your competition is letting refunds go because of it.

It doesn’t have to be that way for your business. Partnering with 71lbs means you can stay productive and get shipments out while our team fights in your corner.

Why 71lbs?

Reducing your shipping spend and uncovering every possible saving is why 71lbs is here. Today, we help over 5000 customers make their businesses as cost-effective as possible. As 2019 comes to an end, there will be more carrier price hikes in the works for the upcoming year and beyond. 

Connect with us to get a head start and help make next year your most profitable.