Ep. 2 - The 6-Step Shipping Playbook

I met with a client in LA today. We spent two hours discussing their supply chain without looking at a computer. Just rough numbers, quick math, and back-and-forth insights that often get lost when you’re buried in spreadsheets. If you’re in LA, let me know!

In Today’s Email:

• The 6-Step Shipping Playbook

• Bookmarks

In shipping, everyone wants cheap prices and great performance. Often, these are at odds. But they don’t have to be. Here’s the 6-step playbook to save 6-figures on shipping while maintaining CSAT. 👇

#1 - Know Your Numbers

You can only improve your COGS if you know what they are.

Let’s walk through an example using FedEx.

1. Access

   1. Log in to http://FedEx.com

   2. -> “View & Pay Bill” -> “Invoices”, filter for “Invoice Type = Transportation” and then download at least the 4 most recent invoices, then put them into a spreadsheet.

2. Analyze

   1. The columns of interest are “Net Charge Amount”, “Service Type”, “Actual Weight”, “Rated Weight”, “Dim Length”, “Dim Width”, “Dim Height”, “Dim Divisor”, “Zone Code”, and all the columns from CX:GT that show how your net charge was calculated by line item (fuel, residential, etc)

   2. Filter for your most common “Service Type” (ex. “Home Delivery”) and calculate your average “Net Charge Amount”.

   3. In my example, the average is $49.26.

   4. Now, filter for your most common SKU’s and find the “Rated Weight” for each. In this example, the brand has 2 common SKU’s.

   5. Again, find the average spend.

      1. #1 - Rated Weight = 63 lbs, Avg. Price = $49.99

      2. #2 - Rated Weight = 56 lbs, Avg. Price = $48.26

   6. You can slice and dice the prices further to see your average per “Zone Code” for more granular data.

Now, you have a good understanding of your last mile costs.

TIP - (If your shipping partner gives limited data, ask for it! This is important.)

#2 - Shipping Partner Search

I’m building a list of over 50 USA last mile shippers emails and phone numbers.

If you reach out to all of them, you are guaranteed to improve your existing rates.

Here’s an email draft you can use to message them.

Price Negotiation Tip

Do not reveal your current pricing. Instead, ask them to give you a competitive offer that would still be profitable for this book of business. Once you start receiving offers, you can reveal competitive offers to motivate other shippers to discount their pricing further.

Contract Negotiation Tip

Do NOT commit to any long term contracts. If asked, you can say:

#3 - Software Partner Search

You’ll want to use a software that rate shops pricing between multiple carriers.

There are multiple tools that can accomplish this. Shipstation is a good light weight option.

Connect directly with a rep at Shipstation or equivalent, tell them the name of the shipper, and ask them if a direct integration with that shipper exists. Most likely, it does. If not, ask how they recommend implementing the rates.

If you got proposals from at least a few shippers, it’s very likely that at least 1 or 2 have an existing integration with the software provider.

#4 - Integration / Testing

Make it clear to both the shipper and software provider that you are doing a 1 DAY TEST.

You will turn on the new shipper for 1 day, then turn them off and switch back to your old shipper.

Then, over the next week, monitor all shipments from that day and search for issues:

• Are the packages being delivered on time?

• Is the tracking experience good?

• Is the performance as good or better as before?

• If worse, are we willing to make the trade off?

#5 - Decide

You now have enough data to tell if the performance and pricing is an improvement.

Tell your software provider who you’re going to ship with moving forward.

Note - Some shippers will not have 100% coverage. In this case, you may still use both shippers.

#6 - Repeat

Repeat steps #1 - 5 at least twice per year.

Shippers will raise prices, often without telling you, so you need to be checking your invoices carefully and keeping them honest by seeing what exists on the market.

Why Go Through All This Trouble?

Shipping is one of the most expensive line items, yet changing it is not very disruptive.

Compared to switching manufacturers or fulfillment partners, it’s a walk in the park.

Things can still go wrong (which is why we do a test period). If you follow these steps the most likely outcome is better rates and no disruption to your supply chain.

See you all next Thursday 👋

Keyan

PS: Whenever you’re ready… we help founders reduce COGS by 10% and eliminate logistics overwhelm. If you’d like to work together, just reply “Ops” and I’ll shoot you details.