A Detailed Guide to Small Parcel Shipping
Overview
Parcel shipping has been booming globally, thanks to increased shipping volumes and the rise of e-commerce businesses. In 2021, the global parcel shipping volume amounted to over 159 billion parcels. By 2027, the volume is expected to reach 256 billion parcels at a compound annual growth rate of 8.5%.
Most small businesses and e-commerce enterprises rely on small parcel shipping to deliver customer orders. However, for this to be effective, companies have to pay attention to factors such as cost and delivery speed. For instance, small parcel shipping can be cheap or expensive, depending on your chosen carrier.
Like other business areas, shipping expenses can affect the company’s productivity. Getting the best freight quotes for shipping small parcels is also an intensive process. Fortunately, there’s a way to check whether you are paying the correct shipping rates. Betachon Freight Auditing evaluates your small parcel shipping costs to help you save money.
If you have been looking for favorable freight costs for your shipping operations, there’s a chance you are not getting the best deal.
Is your business making losses from small parcel shipping? There’s a way to optimize these rates. This whitepaper looks at how small parcel shipping works and provides valuable tips on why you should use it for your business.
How Small Parcel Shipping Works
Small parcel shipping, also known as light freight or parcel package delivery, involves transporting individual packages that weigh less than 70 pounds. They can be lifted without assistance and are usually shipped using the carrier’s boxes or the business’ own packaging.
This type of shipment is mostly used by online retailers when sending small orders to consumers. You pack the goods in an envelope, box, or mailer and ship them via your preferred shipping carrier. The carrier then transports the parcel through its network and drops it off in the last mile.
The rates for small parcel shipping change depending on the kind of package and the carrier. The U.S parcel market is dominated by USPS, UPS, and FedEx, who offer different rates. Together, the three players account for approximately 78% of the U.S. market share. The other providers include Amazon, DHL, and a few regional and local carriers.
Here are the characteristics of small parcel shipments;
- Low dimensional weight
- Less than 70 pounds
- Delivery vans can carry 50-100 parcels
- The delivery trucks make several stops at customers' doors daily.
Small Parcel vs. Freight Shipping
While small parcel shipping is for individual packages below 70 pounds, freight shipping is more complex and used by businesses to transport larger, bulky shipments. Freight is usually packed in containers or pallets and transported via different modes, including ship, rail, air, and road.
If your customers mostly order hundreds of small packages, you’ll use small parcel shipping to send the orders to different destinations. However, if you need to send tons of packages on pallets, oversized items like furniture, or any item larger than 30″ x 30″ x 30″ and over 150 lbs, you’ll use freight shipping.
Freight shipping is more complex because it involves transloading, cross-docking, freight consolidation, and other tactics to reduce the cost of transporting the goodsto the customers. Additionally, it requires more logistics management whether you choose to use less than truckload (LTL) or full truckload (FTL) shipments.Before choosing one of these shipping methods, getting an audit from Betachon Freight Auditing is advisable to help you evaluate what you’re actually paying for.
Why Businesses Use Small Parcel Shipping
1. Small Parcel Shipments are Easy To Track
An advantage of sending small packages is that they are quite easy to track. Although most e-commerce businesses have to spend packages across the country or globally, they can rely on technology to track them from the warehouse to the final customer. Parcels are easily trackable because of the multiple checkpoints between order pickup and delivery.
Carriers like USPS, UPS, and FedEx rely on advanced shipping software that tracks hundreds of parcels across the delivery network. They have dashboards that customers can use to monitor the progress of their orders.
Apart from this, customers receive confirmation emails once the order is shipped. They can use the link provided to check the tracking status and follow up on any changes. Thanks to these tracking tools, there are fewer errors, reduced lost shipments, and fewer returns. This is advantageous for the business because it reduces shipping costs.
Betachon Freight Auditing comes in handy if you are having any issues with late deliveries of your parcels. They will help you get a refund from the carrier after auditing all the shipping costs and processes.
3. It’s Cost Effective Than Freight Shipping
Compared to freight shipping, small parcel shipping is much cheaper. This is because the packages are shipped in lightweight packaging that does not incur a lot of costs. Freight shipping is bulky and involves pallets and packaging in containers, making it more costly.
If you have a package that’s less than 150 pounds, you can ship it using small parcel packaging and pay less. Otherwise, if you have high-volume orders, you have to pay extra because of the additional weight and dimensions.
2. Small Parcel Shipping is Convenient
When shipping parcels, you can choose to arrange for pick up or take the package to one of the drop-off locations, depending on your preference. The carrier doesn't always have to come to you.
Carriers like FedEx have a Drop Box Network that you can take advantage of if you need to deliver your packages without in-person contact. There are thousands of such centers at shopping centers, grocery stores, or FedEx offices. Since the packages are light, you can drop them off and go about your day.
4. It’s Environmentally Friendly
Parcel shipping increased by 9% between 2020 and 2021 in the U.S. On top of this, more customers and companies are also shifting towards eco-friendly practices. Most of the packages in the U.S. use boxes made of cardboard sourced from trees.
To be more environmentally friendly, businesses can
use eco-friendly packaging or pay attention to the dimensional weight of their shipments. Carriers use the dimensional weight to determine the amount of space the package takes up.
Therefore, if you have a lighter package that takes up less room, you’ll need less packaging material, reducing the carbon footprint.
5. You Can Negotiate Shipping Rates
As a business, negotiating with carriers like FedEx and UPS can be a daunting task. The agreements are usually complicated, and you'll need to take into account multiple factors before agreeing on a reasonable rate. In addition, parcel shipping contracts come with wrong waivers and fees; therefore, you need to understand how it works before you start negotiating.
Betachon Freight Auditing has more than 12 years of experience negotiating parcel contracts. They have live market data to help you negotiate a good rate, no matter the size of your company.
The team ensures you receive the best rates and services from the carriers. They benchmark the shipping rates against hundreds of other agreements and make a side-by-side comparison to get you the rates you deserve. This saves your business time and money spent negotiating with the carrier
What Are The Drawbacks Of Small Parcel Shipping
Increased Risk
Small packages have several checkpoints from pickup to delivery. In addition, they change hands more often before getting to the final customer. Because of this, they are more likely to get damaged, get lost, or have delays.
You Could Pay More
Although small parcels are lighter, they can be more costly if they exceed the dimensional and weight requirements. Carriers charge more if the package occupies more space. Before shipping, ensure that the dimensional weight will not be too costly.
The Key Factors to Consider for Small Parcel Shipping?
The Costs
Although small parcel shipping is relatively cheaper, the shipping cost is not usually as straight forward. Every carrier has its own pricing point. You need to check for volume discounts and additional fees. For instance, some carriers might charge you extra cash for address changes, weekend deliveries, and rural shipments.
Therefore, before sending your parcel via a specific carrier, you need to consider all these factors and compare prices to choose the best option according to your budget and shipping needs.
Delivery Speed
Small parcels shipped via Same Day Delivery have less complexity than freight shipping. You can use a local courier service or a carrier to deliver the order on time. Additionally, if the order has to use air shipping, the buyer can pay the highway price to get the fastest shipping option.
Most merchants can guarantee 1-2 day countrywide shipping if the inventory is already stocked in the warehouses. Confirm the delivery options and speeds for each carrier before sending the package to ensure that it gets to the customer in time.
Outsourcing Fulfillment Services
E-commerce merchants can ship orders more cost effectively by outsourcing fulfillment services. If you are involved in small parcel shipping, you need to consider whether you need to outsource freight forwarders, truck brokerages, and third-party logistics (3PLs) to help you in the fulfillment process.
Engaging these service providers can benefit the business because it frees up capital and time, allowing you to focus your efforts on growing the company. However, you need to know that these companies come with contracts that may not be ideal and flexible enough for your business. Take time to read the fine print and understand the services before signing up.
Additional Costs
Some shipping services offered by carriers, such as easy tracking, can come at a cost. This happens because small packages go through multiple checkpoints, making it possible to track them at each stage. This visibility normally comes at a cost; therefore, you need to consider this extra expense.
Apart from this, the multiple checkpoints mean there is a greater risk of losing the package, delays, and damaged orders. In case any of this happens to your order, you might need to replace the item and ship it again to the customer, which comes at a cost.
How Parcel Shipping Rates are Determined
Weight
The weight of your shipment plays a huge role in how much you pay. You'll notice that heavier packages get charged more if you check the price guides from FedEx, UPS, and USPS. Pay attention to the weight of your package to determine the rates
Delivery Speed
Small parcels shipped via Same Day Delivery have less complexity than freight shipping. You can use a local courier service or a carrier to deliver the order on time. Additionally, if the order has to use air shipping, the buyer can pay the highway price to get the fastest shipping option.
Most merchants can guarantee 1-2 day countrywide shipping if the inventory is already stocked in the warehouses. Confirm the delivery options and speeds for each carrier before sending the package to ensure that it gets to the customer in time.
Dimensions
Besides the weight, shipping carriers also consider the package dimensions when coming up with the rate. Your package can fall in the higher weight category based on the dimensional weight (DIM).
Carriers use dimensional weight pricing to ensure that businesses pay for the space the packages take up in a delivery truck. For instance, a larger package will take up more space, reducing the total area for the other deliveries. However, as an e-commerce merchant, you can avoid these costs by being more efficient with your packaging.
Distance
The small parcel shipping cost is calculated based on the distance your order will cover. Carriers use the destination and origin ZIP codes to determine the final rate. If your shipment needs to travel much farther from its origin, the higher the rate.
Shipping companies have zones that they use to classify the ZIP codes. Therefore, your rate will vary based on the zone your order needs to get to.
Level of Service
You’ll be charged more if you need your shipment to get to the destination much faster. Shipping carriers offer next-day and overnight delivery to customers. However, this expedited service comes at a fee.
You can save money and avoid paying more if you have some extra time to plan for the shipment. Carriers have ground service that may take longer, but it’s quite affordable.
Fuel Cost Changes
Fuel prices have constantly been increasing and changing. Because of this, carriers like FedEx and UPS make adjustments almost weekly based on the details provided by the U.S. Energy Information Administration (EIA). This percentage surcharge is applied to the base rate to determine the delivery cost.
Additionally, when the fuel price is high, the carrier companies have to pass on the cost burden to the customers. When there’s an increase, the shipping rates could go up.
Discounts
Carriers offer some discounts, especially to customers that have significant volume. Before sending the parcel, confirm with the carrier whether there are any discounts you can take advantage of and pay less for the shipping. This discount will be deducted from the total delivery costs to allow you to save money.
Surcharges
You can get hit with additional fees known as surcharges and accessorials based on your shipment's characteristics. These extra fees are included for additional services. For instance, a carrier can charge you more if you need extra handling, make residential deliveries or have oversized dimensions.
To avoid spending money on this, it's better to learn and understand the common fees each carrier provider charges. With this information, you can budget for the compulsory fees and effect changes to avoid paying the extra fee. Consult the shipping carrier teams and confirm all the details you need to know before sending a package via their network.
What Small Parcel Shipping Carriers Can You Use?
There are three major carriers in the US; FedEx. USPS and UPS. Each of these carriers handles small parcel shipments domestically, has different pricing levels, and specializes in distinct areas of the industry. The best alternative among the three depends on your business needs.
You can also use regional parcel carriers for small parcel shipping if your customers are primarily in one area of the country. Regional alternatives might have faster delivery times and competitive rates compared to the primary three carriers because they are clustered in one zone. Additionally, since their focus is one area, some of them might provide same-day delivery.
Here’s a table comparing small parcel shipping between the three primary carriers.
| Carrier | Price | Price |
| FedEx | Over $16 |
|
| USPS | More than $4 |
|
| UPS | Over $7 |
|
Steps to Ship Small Items
While shipping seems like a daunting task, it should not be a hassle. Here are the key steps you should take before shipping the orders to your customers.
Measure your Items
Once you select the packaging, you need to know the dimensions. Carriers use the DIM to calculate shipping rates; therefore, you should not ignore this step. Smaller packages have a slimmer margin of error, meaning you have to be accurate.
Take accurate measurements of the package's length, width, and height and record the dimensional weight. This measurement determines how much space the parcel will take up. You'll avoid surprise costs and surcharges when the package is measured correctly.
Get Exact Shipping Rates
You can now calculate the rates when you have the dimensional weight. Most carriers provide a way to calculate the rates for you automatically. You can also use Betachon Freight Auditing to break down your costs and budget for the shipping. The fundamental details you'll need are the measurements, origin, and destination.
Pay Attention To the Packaging
As mentioned, your packaging can significantly affect the dimensional weight. Therefore, before doing anything else, ensure that your order is packaged correctly. While most small items come with their own packaging, you can add your custom options to boost your branding efforts.
If the carrier allows for custom packaging, this can help you in protecting your product from damage. If the order is fragile, the packaging will cushion it from breaking.
Weight The Package
In addition, you also need the exact weight of the package. Small parcels are weighed in pounds or ounces. Once you determine the weight, it becomes easier to estimate the shipping rate of your parcels.
Pay For Delivery
Once you have the rate, choose the carrier of your choice based on your business needs and costs. Book and pay for the shipment.