Reduced Shipping Cost Analysis

Model potential shipping cost savings from opening an additional distribution center


Snack Magic

New York City, New York

The client is interested in opening an additional distribution center that would serve alongside their existing center in New York City. One of the leading expenses of having just one distribution center is the cost of shipping to customers, and opening an additional distribution center could significantly reduce this cost. Tessellations reviewed the current sales data of all packages shipped, considering package weight, actual cost of shipping, and the shipping carrier used. Using published shipping costs of each of the main carriers (UPS, FedEx, and USPS), along with each carrier’s defined shipping zones, the estimated cost of shipping could be modeled based on opening an additional distribution center, along with total shipping costs savings.

Services Provided:

Analyzed current sales data

Mapped and identified sales hotspots

Researched costs associated with shipping carriers

Developed FME process to model reduced shipping costs



  • Reviewed and mapped all sales data within the contiguous United States.
  • Completed a hot spot analysis to identify potential regions for placing an additional distribution center.
  • Researched shipping cost models to be included in modeling the prospect of opening an additional distribution center.
  • Used published shipping cost data from each of the main shipping carriers to accurately model the cost of shipping from different locations.
  • Developed a solution in FME to quickly analyze the estimated cost of shipping based on the opening of a new distribution center in different locations.


Notable Accomplishments

The results of the hot spot analysis gave an initial idea where it might be feasable to open a second distribution center to reduce shipping costs. Modeling the addition of this second location with FME allowed us to quickly analyze multiple locations and report on potential savings in shipping costs.