Too Good to be True: Beware “Cheap” Shipping Software
  • Alex Kemp
June 11, 2024
Posted by Alex Kemp
Alex Kemp
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Our customers have worked hard to get to where they are; they’ve fought against the odds to have a successful business, despite countless setbacks and have now arrived at a point in their business where they ship products from their warehouses at scale. It’s our view that our customers should benefit from the shipping volume and favorable price discounts they receive from carriers as a result of that shipping volume. All brands that ship a certain level of volume should have negotiated rates with carriers in place.

ShipHawk is a fulfillment management platform focused on helping customers increase throughput, accuracy and reduce costs in the warehouse and shipping processes, not a freight broker or reseller of shipping rates. At ShipHawk we made a strategic decision early on that our goal is to be an automation platform to get more orders out the door, accurately and not to make a margin on marking up shipping rates.

The Secret of Rate Brokers Hiding as Software Companies

Many software companies will offer what is communicated as “cheaper” shipping rates that take advantage of economies of scale of all of that shipping volume from the combined customers going through that one software company’s contract. What is often not advertised is those companies get revenue shares or kickbacks from carriers for volume going through their platform. This will often allow these companies to charge slightly less for their software as a result since they have kickbacks from the carriers coming.

This also creates incentives for the software company that might not benefit the user of that software. For example, what if the software company has a special relationship with ABC carrier where their rates are more favorable for kickbacks but the company prefers XYZ because they can provide better service for their end customers? Incentives like this can misalign incentives and drive business decisions that might not benefit the customer.

At ShipHawk, in certain instances we might be able to help with discounted rates, but this is not our core business. Our goal is to be a fulfillment management solution that manages the warehouse and shipping process from receipt of items into the warehouse through to shipping. We measure our success on customers successfully using our solutions to improve their operations, not how much revenue we’ve driven from kickbacks from carriers. While we integrate with hundreds of parcel, LTL, and 3PL carriers, our customers leverage their own negotiated rates.

Data to Enable Contract Negotiations with Carriers

While ShipHawk does not offer direct rates to customers, we can assist with providing analytics, an audit and reconciliation platform and data that allow our customers to prepare for contract optimization and renewal conversations with carriers. We can offer data at scale of performance against promises by carriers, issues of overpayment, etc which will allow more informed, two-sided contract negotiation conversations.

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