Parcel Shipping Optimization: A Guide

For high-volume businesses, moving products from warehouse to customer represents one of their most significant operational expenses. To take control and manage costs, you need to implement a robust parcel strategy designed to streamline your processes.

This guide explores the importance of parcel shipping optimization and presents practical strategies to help improve your current approach.

What is parcel delivery optimization?

Parcel delivery optimization is a method of improving the efficiency and — more importantly — the reliability of your overall shipping process, from initial carrier selection to final delivery. Combining strategic planning with the right technology can enhance your fulfillment performance and save money.

Key business outcomes of optimized shipping

By working toward an optimized shipping process, you can: 

• Reduce operational costs through better routing, lower fuel consumption, and better resource utilization
• Increase profitability with improved spending control across shipping operations
• Boost customer satisfaction through faster shipping, better tracking, and proactive issue resolution
• Strengthen ecommerce supply chain performance with lower inventory levels and shorter cash cycles
• Gain competitive advantage through superior service levels and scalable operations

Key components of streamlined parcel shipment 

Before exploring strategies for parcel shipping optimization, let’s take a closer look at the common elements found in mature fulfillment processes:

Robust carrier management

Your network is only as efficient as the providers within it. One of the most important steps toward delivery efficiency is implementing a multi-carrier solution designed to handle contract management, reduce manual decision-making, and improve fulfillment. 

Successful carrier management requires:

• Enhanced selection efficiency: Evaluate shipping providers based on cost, reliability, and service coverage to build an optimal mix for your delivery network.
• Favorable pricing: Apply volume data and performance metrics to negotiate contracts that align with your shipping patterns.
• Strategic relationships: Maintain open communication channels with carriers and review performance tracking to ensure reliable capacity and performance standards.

A solution like Shipium can manage your shipping network and improve per-package carrier selection, helping speed up operations and increase profits. For example, when Saks expanded beyond a single provider to a diverse carrier network that included regional last-mile services using our platform, three-day deliveries became more cost-effective than slower shipping options.

Intelligent packaging optimization

Whether your boxes have excess space or poorly packed shipments result in damaged products, not having well-defined cartonization strategies impacts your bottom line and enhances customer satisfaction.

A strong strategy should prioritize:

• Reducing dimensional weight charges: Design packaging strategies that minimize wasted space while maintaining product protection during transit.
• Streamlining order grouping: Analyze order patterns to combine or split shipments based on cost efficiency and delivery speed requirements.

Leading WMS platforms like Manhattan and Blue Yonder include built-in cartonization modules to optimize package sizing at the warehouse level. However, adopting an advanced platform like Shipium enhances the functionality of your systems. With the Packaging Planner API, for instance, you can extend your package planning capabilities upstream, enabling better decision-making before routing orders.

Efficient shipment routing

Your parcel shipment operations can become more productive if your systems intelligently route your orders to ensure products are sent to customers from the closest locations, significantly reducing transit times and increasing profit margins. 

A comprehensive routing process should:

• Design optimal delivery paths: Create routes based on destination zones, service levels, and carrier capabilities to minimize transit time and costs.
• Leverage routing tools: Apply advanced algorithms and real-time data to select the best shipping lanes for each order.
• Adapt to changing conditions: Monitor and adjust routing decisions based on weather, capacity constraints, and other macro-environmental factors affecting delivery.

It's important to bridge your existing systems to ensure you make the best decisions when managing your orders. A software solution like Shipium's Fulfillment Engine, for example, uses advanced machine learning to manage and direct orders appropriately, minimizing shipping expenses while maximizing delivery speed and accuracy.

Strategic shipping technology integration

Modernizing your current shipping process requires the right technology stack. This stack should promote automation whenever possible and use cloud-based infrastructure to reduce development lead time and budget.  

Essential technology components include:

• Deploying comprehensive shipping software: Adopt platforms that centralize carrier management, eliminate routine manual activities, and provide real-time visibility across operations.
• Applying predictive analytics: Use historical shipping data and market trends to forecast demand, fine-tune inventory levels, and plan carrier capacity needs.
• Automating fulfillment choices: Apply rules-based logic and machine learning to make instant routing choices based on service levels and cost parameters.

Explore how predictive analytics can improve your ability to make strategic supply chain decisions.

How to optimize your parcel shipping strategies for cost and efficiency

Here are five tactical and strategic improvements that you can implement to help enhance your current parcel shipping strategy: 

Enhance your rate shopping 

Effective, automated rate shopping ensures that your business consistently selects the most economical delivery options. To improve your current process, consider:

• Using real-time comparison tools: Access instant multi-carrier quotes to make quick, informed decisions on parcel shipments based on current prices.
• Conducting accurate cost analysis: Gather complete costs — including surcharges and accessorials — to better understand and compare carrier charges.
• Improving service level selection: Balance shipping costs against delivery requirements to meet both budget constraints and customer expectations.

Discover how fully loaded rate shopping maximizes your cost savings.

Consolidate your shipments 

Strategic consolidation can transform shipping efficiency. Properly combining shipments increases delivery density while reducing handling points and product damage. Here's how to approach it:

• Build order groups: Combine multiple orders by destination to reduce per-package costs while maintaining delivery speed requirements.
• Leverage zone skipping methods: Use regional carriers and strategic routing to bypass shipping zones and reduce long-distance transportation costs.
• Distribute your inventory: Place your stock across your warehouses strategically to minimize shipping zones and improve delivery times across your network.

See how last-mile delivery can impact your bottom-line shipping expenses.

Automate your fulfillment processes 

Manual tasks create bottlenecks and increase error rates in shipping operations. A well-designed strategy connects systems and streamlines workflows to:

• Simplify order workflows: Automate routine fulfillment activities from order receipt to delivery to reduce manual intervention and processing time.
• Integrate warehouse systems: Connect your Order Management System (OMS) and Warehouse Management System platforms to ensure seamless data flow and eliminate information silos.
• Enhance operational efficiency: Implement intelligent sorting and packaging systems to increase accuracy and throughput in your operations.

Increase your delivery options and flexibility

Today's customers expect shipping choices that match their specific needs — and not meeting those expectations can lead to negative reviews and lost sales. Consider applying the following improvements to your parcel strategy:

• Expand delivery options: Offer multiple shipping speeds from same-day to standard delivery to match varying customer needs and budgets.
• Generate accurate estimates: Create precise timelines using actual time carrier data and historical performance metrics.
• Offer flexible pickup: Provide customers with convenient alternatives like secure lockers and delivery to retail locations to improve satisfaction.

Shippers often avoid economy services for time-sensitive deliveries without reliable insights, defaulting to more expensive options. Software that properly reviews performance data can power more informed shipping method selection. For example, our dynamic Time-in-Transit Model analyzes historical performance to identify when economy services can reliably keep delivery promises, helping you reduce shipping costs.

Improve your order tracking and communication

Transparent status notifications create confident customers and reduce support queries. End-to-end visibility transforms the post-purchase experience by:

• Boosting tracking visibility: Provide real-time parcel shipment location and updates as orders move through your supply chain.
• Sending proactive alerts: Notify customers about shipping milestones and potential delays to manage delivery expectations.
• Easing returns management: Simplify the returns process with easy label generation and convenient dropoff options to improve the customer experience.

Many businesses struggle with communication due to gaps between operational systems and customer-facing platforms. Solutions like Shipium integrate your shipping data with your customer delivery experience, ensuring buyers receive accurate updates throughout their experience.

Best practices for optimizing parcel delivery

Successful shipping strategies are never set-it-and-forget-it. Instead, they require you to pay attention to key performance drivers, proactively making improvements to maintain maximum efficiency. 

Focus your optimization efforts on these proven approaches:

Simplify and refine your parcel strategy with Shipium 

With Shipium’s end-to-end platform, you can connect your OMS and WMS solutions to streamline and enhance your fulfillment — reducing transit times, improving accuracy, and reducing your parcel spend by up to 10% on average.

Book a demo today and see how Shipium powers parcel shipping optimization.