#logistics-operations

Yes, at quick glance they should be 20-30% less expensive. Are you using a 3pL, or managing parcel rates independently?

@Matt Hertz - ThirdPerson.​co I'm using a 3PL and their rates.

@Nate D shoot me a DM. Happy to chat!

<@U081DD974EA> Appreciate the insight? What's the best move here? Tell my 3PL they're too high based on benchmarks and negotiate them down?

<@U081DD974EA> We're not doing a huge volume of orders right now. About ~2,500 orders/mo. At won't point would carriers offer a rate card directly?

Those are steep markups. What service is that for?

Which carrier? For FedEx/UPS these is reasonable.

@Chad Michael Carleton @Fames Chocolates This is primarily UPS Ground or USPS Ground Advantage. We use the "Cheapest X day" option in ShipHero to map to the most cost-effective carrier, but I have doubts that's actually what is occurring. Here are the averages for those carriers:

@Chad Michael Carleton @Fames Chocolates This is primarily UPS Ground or USPS Ground Advantage. We use the "Cheapest X day" option in ShipHero to map to the most cost-effective carrier, but I have doubts that's actually what is occurring. Here are the averages for those carriers:

A little expensive

@Nate D honestly if you can connect your own rates just use any software (that has UPS/USPS commercial rates enabled).

Everyone has said it already, but those rates are expensive for ground service - Matt is right, about 20%-30% higher than average.

@Fames Chocolates @Ryan Bennett Thanks!

@Matt Hertz - ThirdPerson.​co @Chad Michael Carleton <@U081DD974EA> @Fames Chocolates @Ryan Bennett I was able to get my 3PL's rate card for USPS Ground Advantage, which is what a majority of our orders are shipping with. Clearly there's a significant markup here. I understand they need to make money, but are these reasonable?

Looks like 15-20%

Hey @Nate D - I compared those rates vs USPS Commercial Plus rates and USPS rates you would typically get in a NSA (National Service Agreement). @Chad Michael Carleton is correct - likely a 15%-20% mark-up on rates if they have an NSA

15-20% markup is better than the original 20-30% markup!

If I were you I'd be looking beyond USPS as my primary carrier. Options like DHL, or other alternative carriers will help get those prices down ever more.

@Chad Michael Carleton @Ryan Bennett @Matt Hertz - ThirdPerson.​co Appreciate the insight! Is this a typical markup? Is it common for 3PLs to reduce their markup as volume scales?

I've seen 3PLs range from 0% to 100% markup (even more!). My general philosophy is I'm okay with 3PLs marking up postage as much as they want, so long as the net rate the client pays is more competitive than what they can get on their own (or elsewhere).

3PLs gotta eat too, and it's a very thin margin business. Some make margin on postage, while others make it elsewhere (fulfillment, storage, fixed fee overhead, etc).

Cost per order is a metric I care more about, rather than hammering every single line item. So long as that net cost is competitive, let the 3PL make their $$ too. Besides, they'll like you a little bit more if it's a higher margin client 🙂

PREACH MATT

@Nate D it's fairly typical. Matt is right. The 3PL takes all the risk by owning the courier accounts, all it takes is for a large client up go belly up and not pay their courier invoice from the 3PL - the markup is like an interest rate in a way. Also, it's the only true fixed margin a 3PL has, most other fees are variable margin (labor and storage).

The range is typically see is 0% markup for a very large client (3PL just wanted to win the client's business and then would go negotiate better courier rates based on the client's volume and make more profit on their other clients) and I have seen up to 40% margin as well for smaller clients at 3PLs.

@Chad Michael Carleton @Matt Hertz - ThirdPerson.​co @Ryan Bennett You guys rock. Thanks for the help!