Seven Practical Tips to Eliminate Hidden Shipping Costs

ROI Tip #1: Use Address Correction Software

When is the last time you checked your freight bill to analyze up - charges related to incorrect shipping addresses?

Address inaccuracies represent an area of hidden cost that doesn’t get the attention it deserves.

Left unattended, the dollars can quickly add up.

One expert, Satish Jindel, founder and president of Pittsburgh‐based SJ Consulting Group, estimates that parcel shipping errors add 5% to 7% to a shipper’s annual freight bill.

Given that companies collectively spend some $55 billion a year on domestic parcel services, those mistakes translate into serious money.

Costs related to incorrect delivery addresses can be huge and accumulate in several ways:

• Incorrect delivery addresses – Say, for example, that a customer accidentally types in an incorrect street address for its ship‐to address. Generally, the carrier will fix the issue with the delivery address but you’ll pay for that service. We’ve seen charges that range from 11.00 per package, up to $77.00 in charges for all packages in the incorrectly addressed shipment.
• Residential deliveries erroneously classified as commercial – A common and costly error occurs when residential deliveries are erroneously classified as commercial deliveries. Again, the carrier may fix it, but at a cost of $2.50 per package. If your company pays for the freight and adds it to the customer invoice, you’ve just lost the opportunity to pass the additional cost to the customer.
• Increased customer service costs – Besides carrier charges, you as the shipper bear additional internal labor costs every time your customer service and shipping department employees interrupt their daily routine to resolve address-related problems.
• Unhappy customers and canceled orders – Delivery address problems also lead to frustrated customers, order cancellations, even the loss of a customer. An interruption or delay makes it too easy for that impulse shopper to decide that they don’t really need the product after all.

Solution: Address Verification Technology

The easiest way to prevent additional charges and lost customers is to add address verification software to your supply chain system.

It can be installed at multiple points in the workflow, on the ERP or order entry system or your multi-carrier shipping software system