Even as customers start their holiday traditions and order goods to invite the spirit of the season in, dealing with some freight companies is enough to make supply chain managers cry "Bah, humbug!" Rates for familiar shipping solutions are creeping up as high as Santa's fabled sleigh, and fulfillment centers are facing higher costs for the same service—a recipe for disaster in profit margins, if left unchecked. Here's how to tamp down those rate hikes without paying for it in customer goodwill.
Be Ready for Holiday Returns
While UPS and USPS are seemingly holding off their rate hikes until after the holidays have officially passed, that doesn't mean fulfillment centers are off the hook.
Tim Perry of MultiChannel Merchant reports that the USPS rate hike is slated for 2016 "at the conclusion of the holiday season," while UPS itself reports December 28th will be the date of their pricing shift. The annual flood of doesn't fit/have it already/arrived defective gift returns come hot on the heels of late December, and depending on your company's returns process, that may mean eating the cost of higher return shipping. Slated to rise in late December and early January respectively, both UPS and the Postal Service's rates could spell big headaches for automated processes. If, for example, your company sends generic return labels, your financial department will need to brace for a larger hit in the future—one with a volume that hinges entirely on customer whim or product quality. Make sure these costs are expected and planned for, or your 2016 operating budget could find itself on a strict diet.
Assess Your Shipment Processes
October and pre-Black Friday November is a good time to take a critical look at your shipment processes and improve potential problem areas. Are the boxes you're using for products the correct size? Do you have packing rules, such as an upper or lower item limit for a given box size? Is your warehouse staff—both permanent and holiday hires—aware of your process expectations? You may find that employees are accidentally using or overusing expensive shipping solutions for the wrong item, or tripping DIM tiers by using boxes that are too large for a given product. In an article for Supply Chain 247, Anijay Zinzuwadia also recommends simplifying, condensing or otherwise streamlining order capture processes to maximize efficiency and minimize confusion and miscommunication among your staff and C-suite.
Explore Custom Packaging Solutions
If your products are unusually shaped, heavy, or bulky, you naturally have to recoup the void space with layers of protective packing material. Before you assume that piles of packing material and sturdy generic boxes are cheaper than custom packaging, make sure you've actually done the math. Form-fitting packaging such as foam or even custom containers may provide better protection, improve the fulfillment experience for the customer and save your fulfillment budget a great deal in the midst of the rate hikes. Huddle up with your marketing department and see if you can't agree to split the budget cost on branded custom packaging—it could be a win-win situation for both sides.
It may feel like freight carrier rate hikes are carving out a niche beside the inevitability of death and taxes, but that doesn't mean they have to upset your entire workflow. Shore up your in-house processes, explore a few mostly-painless options for upgrading your packaging or shipping methods and make sure your company is on the same page with expected shipping costs, going forward. It's not to say you won't feel the pinch, especially if the rate hikes continue in 2017, but with careful planning you can work through them, rather than at their mercy.