Parcel shipping can represent 5% to 25% of total supply chain costs. For high-volume shippers, that's often millions of dollars annually—and most of it is optimizable.
Yet many warehouses still ship packages the same way they did five years ago: pick a carrier, print a label, and hope for the best. They're leaving money on the table with every shipment.
This guide breaks down the three highest-impact strategies for reducing parcel costs: cartonization, rate shopping, and carrier selection optimization. These aren't theoretical—they're the same techniques that help JASCI customers achieve 15-30% shipping cost reductions.
The Hidden Cost Problem
Most shipping overspend isn't visible on any single invoice. It accumulates silently across thousands of shipments through three common patterns:
Shipping Air
Using boxes larger than needed, paying for dimensional weight instead of actual weight
Rate Blindness
Using the same carrier for every shipment without comparing real-time rates
Service Mismatch
Paying for 2-day delivery when ground would meet the customer's expectation
The good news: all three problems are solvable with the right systems and processes. Let's break them down.
Strategy 1: Stop Shipping Air
Cartonization is the process of automatically selecting the optimal box or bag size for each order based on product dimensions, weight, and item count.
Why Cartonization Matters
Carriers charge based on dimensional weight (DIM)—not just actual weight. A small item in a large box gets billed as if the box were full of lead.
Without Cartonization
- Packers guess at box sizes
- Default to "safe" larger boxes
- Pay DIM charges on every shipment
With Cartonization
- System recommends exact box size
- Considers product nesting & orientation
- Minimizes DIM fees automatically
Real Impact: Warehouses implementing cartonization typically see 8-12% reduction in shipping costs from DIM optimization alone.
Strategy 2: Rate Shop Every Shipment
Rate shopping compares real-time rates across all your carrier contracts for each shipment and automatically selects the cheapest option that meets delivery requirements.
How Rate Shopping Works
The key is that rate shopping happens automatically, in real-time, for every single package. Packers don't choose carriers—the system does, based on your negotiated rates and business rules.
Real Impact: Rate shopping across multiple carriers typically yields 5-15% savings compared to single-carrier shipping.
Strategy 3: Match Service to Expectation
Not every order needs expedited shipping. Service level optimization ensures you're not paying for speed you don't need.
| Scenario | Typical Choice | Optimized Choice | Savings |
|---|---|---|---|
| Customer expects delivery in 5 days | 2-Day Express ($18.50) | Ground ($8.20) | 56% |
| Local delivery (same zone) | National carrier ($12.00) | Regional carrier ($6.50) | 46% |
| Lightweight item (<1 lb) | UPS Ground ($9.80) | USPS First Class ($4.20) | 57% |
Smart service selection considers the customer's actual delivery expectation, not just the fastest option available. When a customer orders on Monday expecting delivery by Friday, shipping 2-day on Wednesday wastes money.
The ROI Reality
Let's put real numbers to these strategies. For a warehouse shipping 50,000 packages per month at an average cost of $10/package:
Monthly Shipping Spend
With 15% Optimization
Getting Started
You don't need to overhaul your entire operation to start saving. Here's a practical path:
Audit Your Current Spend
Pull 3 months of shipping data. What carriers are you using? What's your average cost per package? How much are you paying in DIM surcharges?
Negotiate Multiple Contracts
Rate shopping only works if you have multiple carriers to compare. Get quotes from UPS, FedEx, USPS, and at least one regional carrier.
Implement Integrated Shipping
Standalone shipping software creates data silos. Integrated parcel shipping in your WMS provides real-time rate shopping, automatic cartonization, and complete analytics.
Monitor and Optimize
Track your cost-per-package weekly. Look for anomalies. Adjust business rules as carrier rates change seasonally.
Key Takeaways
Ready to Optimize Your Parcel Spend?
See how JASCI's integrated parcel shipping can reduce your costs while improving visibility and control.
Shipping is just one piece of the puzzle
Parcel optimization integrates with your entire warehouse operation. Learn how a modern WMS connects shipping with inventory, picking, and packing workflows.
Read the Guide to Modern WMS 2025
