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Small parcel carriers like UPS, RPS, and FedEx, all offer their customers "free" computerized shipping systems for parcel processing. On the surface, these offers appear to be a great opportunity to save money. Is there a catch? You bet.
What haven't the carriers told you? The following lists 18 reasons why you and the management of your company should carefully consider the implications of accepting a carrier's "free" gift.
1. Free Choice/Rate Shopping
Shipping managers who accept "free" carrier systems are eschewing the opportunity to rate shop among all carriers and garner discounts. Instead, they are locked into using only that carrier's services.
2. Service Shopping
Carrier supplied systems do not offer the capacity to shop for a service based on need, urgency level, delivery time, day of the week or cost. Moreover, they force shippers to use only their particular service jargon.
3. Multiple Package Discounts
While companies that ship multiple packages to the same destination can qualify for discounts of up to 40 percent on the open market, "free" systems may not automatically consolidate packages nor apply such discounts.
4. Higher Insurance Rates
"Free" systems utilize the declared value or insurance rates provided by that carrier. They typically do not offer the advanced tracking and accounting capabilities of vendor supplied systems.
5. Zone Skipping
While it is often financially beneficial to send packages by truck across several zones before they are dropped off at a carrier's distribution center, this capability is typically not available with carrier supplied "free" systems.
6. Integration
Carrier supplied systems do not integrate on a real time basis with other
PC-based systems or host system applications. This limitation prevents the shipping system from becoming an integral part of a company's total information environment.
7. Invoice Automation
Without the capability to invoice customers at time of shipment, 'free systems' can result in substantial financial losses for a company, when the cost of data entry, data entry errors, postage, and labor costs associated with obtaining overdue payments are taken into account.
8. Query/Reporting
Most carrier supplied systems only provide standardized reports. Multi-carrier systems, on the other hand, may provide a report writer from which the shipper can design and customize virtually any type of report.
9. Carrier Performance Auditing
As carriers often do not care to share performance information with customers, their 'free systems' typically do not offer auditing features that monitor actual package deliveries and calculate refunds when delivery promises are not met.
10. Multiple Applications
Carrier-supplied systems typically do not provide applications of technical functionality, such as receiving, labeling, mail processing and more.
11. System Service/Maintenance
Carriers are not in the computer business. More often than not, they do not have adequate technical staffs in the field to service customers effectively. In fact, many carriers hire a third party, who is not always entirely familiar with the software to service their systems.
12. Adaptability
In general, carrier supplied systems are not particularly designed to adapt to the shipper's unique processing environment. These systems are, instead, geared toward the carrier's own business environment and billing practices.
13. Expandability
New features and enhancements to your shipping system cannot be easily implemented with a "free," carrier supplied system.
14. Cost of Marriage
Recipients of "free" systems are, for all intents and purposes, 'married' to that particular carrier, what happens when the carrier who supplied that system goes on strike? What is the cost of not being able to ship for several days or weeks? It might be time for a divorce.
15. Fox in the Chicken Coop Syndrome
Once a shipper accepts a "free" system, they relinquish some control over their business and information about their business. The carrier supplied system is oriented towards their interests, their profits, and their way of doing business.
16. Proprietary/Confidential Information
As today's computerized shipping systems store a wealth of information, do you really want a third party to have access to confidential data regarding your company, products and customers?
17. Negotiation Leverage
Although carrier supplied systems are "free" of up front charges, the actual cost of the system is factored into any future discount negotiations. If the discount program is challenged by a customer, the carrier will often threaten to remove the system.
18. Competitive Edge
Experience shows that competition is good. It promotes technological advances and innovation in any industry, including ours. The constant threat of competition keeps carriers on edge, forcing the carriers to strive to be the best in service, price, and convenience. When the threat of competition is removed, carriers become lackadaisical and less responsive.
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