3 Parcel Spend Strategies to Reduce Shipping Costs

What Is Parcel Spend Management?

Parcel spend management involves analyzing and optimizing your shipping costs to reduce parcel delivery expenses. It’s a logistics-wide effort that looks at your carrier contracts, parcel invoices, and overall operations to find ways to boost efficiency without lowering service quality.

With so many factors contributing to your shipping costs, one small mistake, oversight, or out-of-date rate can significantly impact your bottom line. But with a structured approach to monitoring and optimizing parcel spending, you can eliminate wasteful spending, solidify your operations, and provide a better customer experience.

Keep reading to learn three cost-saving strategies you can use to save money and control your parcel spend—powered by smart tools, better negotiations, and expert insights. 

Key Takeaways

• Parcel spend management is an essential practice for improving your bottom line, but it can also help improve your service quality.
• Proactive cost management, including regular audits and contract reviews, prevents unnecessary expenses and enhances long-term efficiency.
• Data-driven decision-making helps you identify cost-saving opportunities, streamline processes, and optimize carrier relationships.

1. Audit Your Shipments for Better Cost Visibility and Control

Billing errors are common in high-volume shipping, and without oversight, they can drive up your costs. Incorrect rates, hidden accessorial fees, and duplicate carrier invoices are just a few mistakes that can slip through manual reviews and lead to unnecessary overspending. 

Regular freight and parcel audits ensure you only pay for what you owe, helping you recover overcharges and prevent future billing discrepancies. They also provide critical cost visibility by uncovering both individual invoice errors and broader spending trends, like common accessorial fees or increasing costs, that can save you as much as 15% on total shipping costs. 

For maximum savings, choose an advanced auditing solution that:

• Automates invoice processing, reducing audit time from days to hours
• Improves accuracy, minimizing costly human errors
• Identifies cost-saving opportunities, such as excessive accessorial fees
• Enhances financial forecasting, leveraging historical data for better budgeting

With a smart, structured parcel audit approach like we offer at Zero Down, you can optimize your shipping spend, increase cost predictability, and improve overall logistics efficiency in a fraction of the time.

Case Study: Zero Down Uncovers 18% More Savings

Data is the backbone of parcel spend management. If your logistics platform doesn’t look closely enough, you’ll miss improvement and savings opportunities—and that’s what happened to a Zero Down client.

The client initially received a parcel spend analysis from another provider but sought a second opinion. Leveraging FreightOptics, Zero Down’s proprietary Spend Management System, their audit team identified major discrepancies in the original findings—recovering an additional 18% in savings that were previously overlooked.

2. Negotiate Smarter Carrier Contracts to Reduce Parcel Spend

Your carrier contracts are agreements that outline your carrier’s service levels and their respective costs. They form the foundation of your parcel spend, so you need to negotiate favorable terms and establish clear expectations to avoid costly misunderstandings. 

A key part of negotiating cost-effective contracts relies on building strong carrier relationships. If you can establish your business as a preferred shipping partner, carriers may become more flexible in their terms and pricing.

You can build better carrier relationships by:

• Maintaining consistent shipping volumes to show reliability
• Communicating proactively to resolve issues and set clear expectations
• Making timely payments to demonstrate financial stability

You should also support your demands using shipping data and carrier performance history to strengthen your position. When you provide evidence of consistent volume, past service failures, or above-average market rates, carriers are more likely to consider your proposals.

By negotiating with carriers, you can achieve:

• Volume discounts fueled by consistent volume
• Discounted or capped surcharges on fuel, residential surcharges, and common accessorials
• Clear and timely refund policies and procedures for service failures or delivery issues

With these carrier contract negotiation strategies, you can secure better rates and ensure consistent delivery experiences that boost customer satisfaction.

3. Optimize Operations with a Transportation Spend Management System

Managing parcel spend is more than just ensuring your shipping invoices are accurate and fair—it requires you to optimize every aspect of your shipping process to eliminate inefficiencies and control costs. 

A Transportation Spend Management System (TSMS) provides the automation, visibility, and data analytics you need to make smarter shipping decisions, reduce manual tasks, and improve cost efficiency across your operations.

With a TSMS, you can:

• Optimize Your Packaging: Large packages take up more space, and heavy packages use more fuel. Package optimization, like choosing the right packaging size and material, minimizes dimensional weight fees and helps lower shipping costs while still protecting each package’s contents.
• Automate Your Shipping Workflows: Manual shipping processes increase costs and the risk of errors. Automated systems for label creation, carrier selection, and shipment tracking reduce labor-intensive tasks and improve accuracy.
• Gain Real-Time Visibility: Tracking shipments manually leads to delays and inefficiencies. A transportation management system (TMS) provides real-time tracking and reporting, allowing you to monitor deliveries, improve carrier performance, and resolve issues proactively.
• Leverage Data for Cost Savings: Unoptimized shipping decisions lead to unnecessary expenses. Using data analytics, you can identify cost-effective carriers, optimize routes, detect billing discrepancies, and forecast demand for better budgeting.

With the help of a TSMS, you can cut down on shipping and labor costs, improve operational efficiency for faster deliveries, and make data-backed decisions that enhance cost predictability and long-term savings

Streamline Your Shipping with Proven Parcel Spend Management Strategies

Effective parcel spend management requires a diverse approach, including negotiating carrier contracts, optimizing packaging, leveraging automation, and utilizing data analytics for smarter decisions. Each strategy plays a crucial role in reducing shipping costs and enhancing overall efficiency.

By implementing these proven strategies, you can achieve significant cost savings and gain full control over your shipping operations. And it’s easy with Zero Down’s parcel spend management solutions.

Frequently Asked Questions

How do carrier contracts impact parcel spend management?

Carrier contracts impact shipping expenses by defining specific rates, surcharges, and conditions for small parcel shipping. These values help businesses set expectations for costs and service levels to help optimize the shipping process.

What are the benefits of optimizing packaging for parcel shipping?

Optimizing packaging for parcel shipping can help minimize dimensional weight charges, reduce overall shipping costs, and ensure product safety and regulatory compliance.

How can automation reduce shipping costs?

Automation reduces shipping costs by streamlining shipping processes, minimizing manual errors, highlighting optimizations, and identifying billing errors.

Why is data analytics important in parcel spend management?

Data analytics provides insights to help optimize supply chain performance and shipping efficiency, reducing shipping costs and improving decision-making.

How does auditing improve spend visibility and control?

Auditing improves parcel spend visibility by carefully reviewing all charges, verifying them, and highlighting opportunities for refunds. You can use this parcel data, along with shipping data, to negotiate with carriers and recoup overcharges for reduced shipping spend.