We caught up with the brilliant and insightful Rob Martinez a few weeks ago and have shared our conversation below.
Rob, appreciate you joining us today. What do you think Corporate America gets wrong in your industry? Any stories or anecdotes that illustrate why this matters?
Well, as you know, we help Corporate America reduce its supply chain costs, especially in the area of small package shipping. Over the past 22 years, we’ve worked thousands of businesses from small privately owned companies to the Fortune 500.
What Corporate America gets wrong is overspending by an average of 20% on shipping costs. If there’s one thing we know, it’s how to help high volume/high spend businesses reduce shipping costs with vendors like FedEx, UPS and DHL. Roughly 94% of Corporate America is doing it wrong — and we can help!
A few items that most get wrong: 1) While no business would negotiate pricing with a company like FedEx or UPS and knowingly overspend by 20%, we find that 94% of businesses are doing just that. Discounts, concessions and terms can be optimally negotiated to cut costs dramatically. Moreover, shippers need to better understand the in’s and out’s of the shipping contracts they enter to maximize their value. 2) The majority of businesses are leaving Money-Back-Guarantees on the table by not auditing parcel invoices. If a shipment is delivered even a minute late, you’re entitled to a full-refund. 3) Corporate America is over-reliant on FedEx and UPS to handle all deliveries. Businesses can reduce costs and improve time-in-transit through a multi-carrier strategy using all shipping providers including FedEx/UPS, regional parcel carriers, the US Postal Service, package aggregators, and even new “final mile” players.
As always, we appreciate you sharing your insights and we’ve got a few more questions for you, but before we get to all of that can you take a minute to introduce yourself and give our readers some of your back background and context?
For many business, shipping expenses are one of the top 5 areas of spend, and often top 3. (It usually goes 1. People; 2. Materials for manufacturing; 3. Warehousing/distribution/shipping.)
When you think about the major providers of package delivery, it’s really only FedEx and UPS in the US. Fewer options are never good for businesses interested in low costs. Amazon has all online consumers demanding free shipping, but FedEx and UPS keep raising rates more than twice the rate of inflation. Shippers margins are getting squeezed.
I founded Shipware in 2001 with the mission to help deliver cost savings that are largely out-of-reach for most businesses. The truth is, shipping contracts and discounts are subjective and negotiable. Shipware has assembled the largest and most talented pool of industry experts to represent shippers’ interests on YOUR side of the negotiating table.
We also offer technology that automatically watches every single package to ensure its delivered on time and that all invoices are correct and paid on-time. Our spend management portal gives logistics professionals the insight they need to most effectively manage their distribution. Finally, we help shippers implement multiple carriers to ensure the lowest overall costs and best, fastest and most accurate deliveries possible.
Alright – let’s talk about marketing or sales – do you have any fun stories about a risk you’ve taken or something else exciting on the sales and marketing side?
Shipware recently met a prospective client (a major retailer in 440 malls across the US and Canada) at an industry conference. The prospect was interested in working with Shipware with the goal of reducing its annual expenditures of $19 million with one of the “big two” shipping companies. We ran an analysis and determined the client was overspending by at least $1.5 million dollars annually, and potentially a lot more.
Before the client signed our agreement, she told the shipping company she was going to take her business out to bid. To avoid exposing themselves to revenue fallout that could come with an open bid, the carrier told the client they’d agree to reduce costs $1 million dollars if it avoided a bid. I told the client that we’d guarantee the same $1 million dollar savings and convinced them to take a chance on our service.
Well, the outcome was amazing as we achieved $3.5 million in savings, 18.4% cost reduction. That’s incremental savings, above and beyond existing discounts, and straight to their bottom line. The company was able to open several distribution centers with the savings, improving their time-in-transit and further reducing shipping costs by serving shorter hauls. Customer loyalty as measured in reorders and higher revenue per order were improved as a result. In short, we not only helped reduce costs, but also maintain a competitive strategic advantage that improved customer lifetime value and shareholder returns.
Let’s talk about resilience next – do you have a story you can share with us?
When Covid first hit the US and businesses shut down, our business, too, essentially shut down. We quickly sent our employees home and provided all the equipment for those who needed it to enable work-from-home. Our costs shot up, and our revenue came to a screeching halt. But we held firm and managed to withstand the disruption to not only have the best year in the company’s history, but we doubled our headcount and payroll by the end of 2020. Just barely in 2022, and we’ve nearly doubled it again, and all the while, employees are still working from home.
More than demonstrating my own resilience, I believe the story speaks volumes to the resilience of our great team, who we affectionately refer to as “Shipwarriors”. We are indebted to the efforts and positive attitudes of the entire team to not only get us through the toughest business climate in recent memory, and to consistently reach and exceed new heights.
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