Inside the Box Thoughts from the thought leaders in transportation spend management


The cost of carrier-provided insurance has gone up again

If you use shipment value protection on your small package shipments (also known as Declared Value Insurance), be aware that FedEx and UPS raised the rate in January, 2012 to $0.80 per $100 of declared value. The 2011 rate was $0.70 per $100 of declared value.

Since the standard limit of liability for FedEx and UPS package delivery service is $100, most shippers insure their packages when the value is greater than this so that they are protected from loss and damage.

In some enterprises, it is commonplace to fill in the innocent-looking field on the shipping form entitled "declared value".  Some enterprise shipping systems that are tied to ERP (enterprise resource planning) systems and WMS (warehouse management systems) will even pull value information from a shipper's database to populate this area. Once you put an amount in this field, you are opting in for the carrier's declared value service and the associated fees that go with it. Not a big deal if you are shipping a $500 watch one time; that would be a  an additional $3.20 in service fees (.80 cents * 4, as the first 100 is covered under the standard liability). What if you "declared value" on every shipment as a matter of standard operating procedure and you sent 250 watches per day? How about $1,000 per day in declared value surcharges!

How can you minimize your declared value charges?

Self-insure - check with your insurance provider about adding transit insurance to your policy. Many insurers have a standard rider that they can add to your existing policy. If you are a large shipper who frequently sends expensive packages, this is a good option.

Use carrier-provided services wisely - check your default settings on your shipping systems, inquire with your shipping managers and warehouse staff about their common practices and set a policy for all to abide by that is in line with the exposure you wish to have or not to have. You might be surprised at how much cost you can cut out of shipping by just checking to see what's going on.

Use third-party parcel coverage - a number of providers exist that specialize in parcel package insurance coverage. Many times, their rates are less than the surcharges levied by the carriers directly. At PA & Associates, we have preferred relationships with some of these companies and have obtained coverage for as little at $0.10 per $100 of value.




Using the example above, the $1,000 in fees becomes $125. Now that's real savings!

Contact us to learn more.

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