Parcel - November 2008 - (Page 30) on the mark Have you heard the expression, “GIGO?” It used to mean “Garbage In, Garbage Out.” It referred to the problem of incorrectly inputting data and expecting the computer program would “do the right thing.” In our times, GIGO has been refined to mean “Garbage In, Gospel Out.” This refers to our tendency to put excessive trust in computerized data, and the tendency to blindly accept what the computer says. With computerized shipping systems, blindly trusting that to calculate the shipping costs you pay is a serious mistake. Here is something else to think about: if you are shopping for the best rates, is your shipping system configured correctly to compare apples with apples? Most of the time it is not, and the result is inefficiencies amounting to 25% or more. Here is what you need to know about making sure your system is rating correctly. Thirty years ago, it was easy to determine the rate for shipping a package. You would find the zone by looking at a chart and converting your ZIP Code. Then you would weigh your package and look at another chart that would show the cost, which would be at the intersection of by mark taylor, MBA, DLP the zone and the weight. That was the amount you would pay. If you had a parcel register, you would set that amount and print it out on a tape, similar to the way a postage meter works. That was the exact amount you would be billed. Today, that is the methodology used to compute just the base rate; however, now there are over 25 variables that affect the cost of shipping a parcel, in addition to weight and distance. These variables can double the cost of shipping a package! So, if your shipping system is comparing rates but does not include all the variables, it is costing you money, rather than helping you save. Let’s look at a few specific examples. With the exception of the U.S. Postal Service, parcel carriers are charging a fuel surcharge that has been as high as 34.5%. This additional charge changes every month. Many shipping systems require the operator to be trained to make the change (and remember to do it). What if that shipping clerk is sick or on vacation? Are you confident your system has the right fuel surcharge? The vast majority of parcel shippers do not pay standard rates; they have negotiated a discount. Even the USPS offers discounts today. Typically, these discounts are based on 52- week rolling averages, revenue tiers and net minimum charges. Some are based on specific weight and zone brackets. Some carriers offer ramp-up discounts, bonus discounts and rebates. Most shipping systems are programmed with standard rates. Unless you specify that you want your net rates, or have your 30 November 2008 www.PARCELindustry.com http://www.PARCELindustry.com http://www.PARCELindustry.com http://www.PARCELindustry.com
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