Preventing Shipping Losses – the Basics
Shipping can make up a significant amount of your overall product cost. We know – it's a lot. A poor shipping strategy can mean the difference between profitability and being in the red. The good news is that the cost of shipping can be within your control.
When it comes to shipping smart, it's the little things that matter – from oversized package fees to choosing the wrong carrier, there's a lot of potential pitfalls when trying to get your product from point A to point B.
In this article, we will examine the top three areas of shipping loss – damages, claims, and additional fees – and how you can prevent losses in these areas.
Damages
Keeping a close eye on your products' damage rates does even more than keep your customer happy – it ensures that you are not losing money on claims, refunds, and replacements. There are two significant factors in damage prevention: packaging and data.
Following best practices for damages is the first step to preventing damages; you can learn best packaging practices for individual product types here. What is often overlooked in damage-prevention, however, is data. We recommend analyzing not only your average damage rate for all products but damage rates for individual SKUs. High damage rates indicate which products could use packaging improvements and can indicate that you are using the wrong carrier for that SKU.
If you're already using Freight Club, you're in the clear when making the correct carrier decisions. With years of collected data that back our software, our platform suggests the safest carrier, lowering damage rates up to 10%.
Claims
Even for the damage-savvy, damages are inevitable – don't fret; there are ways that you can increase your claims payouts when it's time to file that dreaded case.
The average shipper only receives a 25% payout on claims, and it's usually due to a lack of resources and evidence to support claims. Think of shipping claims like a court case – you need as much supporting documentation as possible to prove your case and receive a payout. We recommend recording the damage as soon as it occurs so that you or your logistics professional can manage it immediately.
Handing your case over to a logistics professional experienced in disputing claims will always render better results. This is a service the Freight Club team provides for free on behalf of our members, and it renders up to 95% payouts on claims.
Avoid Unnecessary Fees
Additional fees – it’s every shipper’s worst nightmare. Fees, such as oversized package fees, can set you back up to $900 per shipment. This is why it’s so important to get your information correct when you’re shipping.
Below are the five factors that lead to the dreaded “secondary invoice.”
Loose Cartons vs. Pallets: If you have multiple loose cartons that get packed into one pallet in a warehouse before shipping, the pallet weight needs to be included in the overall weight or else fees may incur.
Incorrect Freight Class: Freight class is calculated based on the weight per cubic foot of the packages shipped. If you select a class lower than your package, this may incur fees.
Wrong Category: Fees may incur if you do not choose the right product category. The category "Upholstery," which refers to a product with a soft, padded textile covering, tends to get confused with the category "Cased Goods – Furniture." Be sure to double-check categories before shipping.
Incorrect Location – Residential vs. Commercial: Residential deliveries are slightly more expensive commercial, and most residential customers require lift gate services, which incur additional fees. Be sure always to select the correct location type.
Oversize fees: Oversize fees incur when your package's weight and dimensions exceed ground shipping limitations set by the carrier.
Conclusion
Additional fees, damages, and claims can really hurt your margins – but they don’t have to. With your new awareness of the basics of loss prevention, you can ship confidently knowing how to win claims and mitigate the risk of damages and fees.