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Higher Annual Carrier Rate Increases Tighten the Squeeze on Parcel Shipping

Supply Chain Dive recently published an article examining the effects of higher-than-normal annual rate increases from major parcel carriers. Among the key points:

  • The published 5.9% general rate increases common to the major carriers could be closer to 9% when accounting for adjustments to common surcharges (fuel, oversized packages, etc.)
  • Surcharges could account for up to 40% of transportation costs compared to 10%-15% in recent years
  • Carriers are prioritizing more profitable deliveries from small and medium-sized businesses by leveraging the capacity crunch
  • Ground parcel rates are expected to be more than 25% higher in Q1 2022 than Q1 2018

The best way to combat these alarming trends is to employ a multi-carrier shipping strategy and leverage parcel shipping software to manage carrier capacity. Moving to a multi-carrier shipping strategy enables shippers to rate shop and select the best carrier and service for each parcel based on point of origin, point of destination, delivery timeframe, cost, capacity availability, and shipper-established business rules. Choosing the best rate and service for each parcel can help shippers offset these common surcharges as well as limit the impact of rate increases on the bottom line.

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From Supply Chain Dive:

“Additionally, FedEx and UPS aren’t the only game in town, and more shippers are diversifying their mix of carriers to include regional players.

‘Regionals are finally getting their due because of what’s happened in the marketplace, with UPS and FedEx having peak restrictions, because of the massive amounts of volume that have come through, especially on e-commerce,’ said Melissa Priest, founder and CEO of Alexandretta Transportation Consulting. ‘Shippers haven’t had much choice but to really examine and make use of the regionals when they can.’”

Contact us today to learn how advanced multi-carrier parcel shipping technology can help you save on shipping costs with multi-carrier shipping strategies and carrier capacity management.

Couriers Entering the Carrier Fray

In early October, Logistyx President Ken Fleming published an article in Supply & Demand Chain Executive – “Expanding the Carrier Definition for Modern Parcel Shipping”– exploring how retailers like Walgreens are turning to the gig economy to improve delivery times and customer service alike.

As the holiday season drew closer and capacity crunches increased with major carriers, more gig economy couriers entered the carrier fray to pick up the slack. Two recent Dive Briefs from Retail Dive highlight this trend:

DoorDash plans to offer rapid delivery for retailers

The company has a few built-in advantages in the nascent space tied to its scale and the fact that millions of consumers already have the DoorDash app on their phones. But for retailers, the most important news is that DoorDash’s broader goal — at least for now — is to eventually offer DashMart rapid delivery as a service.

“We see a larger opportunity to help our partners offer quick deliveries to customers and believe we can take our learnings and play an active role in applying them to our partners’ businesses,” Fuad Hannon, DoorDash’s head of new verticals, wrote in an email. “Our plan is to test, iterate and learn with DashMart and ultimately expand this service to partners.”

Like Instacart, DoorDash is moving beyond courier delivery and online storefronts to offer fulfillment services to retailers. This aims to capitalize on retailers’ need to move beyond store-based fulfillment and explore new digital services as more consumers shop online.

Uber to deliver holiday goods from Rite Aid, GoPuff other retailers via Uber Eats

Uber on Tuesday announced the expansion of its seasonal delivery offerings with the launch of its new holiday hub on the Uber Eats platform. The category will expand throughout 2022 to serve various holidays.

The hub will house its recently launched Holiday Shop, which offers Christmas trees to customers in Los Angeles, San Diego and West Palm Beach as well as wreaths in New York City. Shoppers can open the Uber Eats app, click the “Holiday” billboard, and select holiday items from retailers like Rite Aid, GoPuff and Walgreens, according to the announcement.

As Ken stated in “Expanding the Carrier Definition for Modern Parcel Shipping:”

“By turning to gig economy delivery services, retailers are expanding the definition of a parcel carrier and significantly increasing the fulfillment options available to customers.”

To learn how Logistyx can help you integrate gig-economy couriers into your carrier capacity management strategy, contact us today.

Logistyx President Ken Fleming Details the Importance of Creative Carrier Capacity Management in Logistics Viewpoints

Logistyx President Ken Fleming published a new article, “Carrier Capacity Management Levels the Playing Field in a Carriers’ Market,” in Logistics Viewpoints, detailing the critical role of carrier capacity management for parcel shippers facing unprecedented challenges, including higher costs, navigating carrier parcel volume caps, and less negotiation power with carriers and partners. Increasingly, shippers deploy a wide range of creative strategies to create more carrier capacity, above and beyond maintaining a critically important multi-carrier parcel shipping network. Consider the following excerpt:

“A growing number of shippers now embrace the gig economy to get orders to customers, for example. Target, Walgreens, and other retailers now offer same-day and two-hour delivery options. Essentially taxis and bike messengers, this new army of couriers helps shippers lighten their demand for more traditional carrier services by reducing, often significantly, the number of parcels in those carriers’ queues. Their ranks are growing, with more of the gig economy racing to implement the right technology to accommodate heightened requirements for security, proof of delivery, signature capture, and more.

Omnichannel retailers have also begun reexamining their retail footprint from new perspectives. No longer considering only ship-from-store to offset carrier capacity constraints, many retailers found other ways to leverage stores to reduce demand for traditional carrier services. First and foremost, retailers have begun to not just offer services like buy online, pickup instore (BOPIS) and curbside pickup, but to incentivize consumers to choose these fulfillment options. Belk, Petco, Target, and Walmart were among the first to offer customers discounts for picking up orders, but carrier capacity constraints have helped the concept catch on with others.

Manufacturers also adjusted. Out of necessity to move product faster, some added parcel shipping operations at manufacturing facilities. This strategy gives manufacturers another distribution point and allows them to navigate capacity limits and volume-based pricing more strategically.”

Read Ken’s full article at Logistics Viewpoints: https://logisticsviewpoints.com/2021/12/07/carrier-capacity/

To learn how Logistyx can help you implement or adapt a carrier capacity management strategy that fits your needs, contact us today.

Carrier Capacity Management and Costs Explained

A lot goes into a parcel’s journey from point A to point B. On paper, it may seem like an easy route to follow, but the odyssey from distribution center to doorstep is highly dependent on a carrier’s capacity. In fact, carrier capacity can affect multiple aspects of parcel delivery execution, from cost to arrival time. Without proper carrier capacity management, businesses run a very high risk of incurring unexpected surcharges and fees and disappointing customers with delivery delays.

But what makes these risks so high? And how can you deliver your parcel on time without sacrificing your budget?

Let’s take a deeper look into carrier capacity management and then learn how it can impact your shipment costs.

What is Carrier Capacity Management?

A carrier’s capacity is defined by how much product a carrier can transport at one time. This capacity can vary depending on several factors including seasonality, e-commerce demand surges, truck driver availability, upstream supply chain bottlenecks, and more.

Businesses negotiate with carriers to secure a certain percentage of capacity to ship their products, and they can use input (inventory), output (orders), or both to estimate their shipment volumes. Should a business exceed their negotiated capacity, the carrier(s) will either take the parcel but assess a fee or equally challenging – refuse to take the parcel altogether. It’s also important to note, fees are assessed for businesses that under-utilize their negotiated capacity as well.

Fortunately, good warehouse management software, integrated with multi-carrier shipping software, will measure shipment volumes against carrier capacity thresholds automatically to help businesses manage their carrier capacity and optimize their shipping strategies – essentially maximizing capacity utilization to minimize transportation spend. And by understanding how much product can ship with each contracted carrier at one time, shippers can also communicate accurate lead times and manage shipping expectations with their customers.

Carriers, Shipping Costs, and Peak Season

It’s no secret that during peak season, carriers have high shipping quotas to fill and therefore often tighten capacity limits and increase rates. Why not simply adjust to accommodate the pressure for added volume? Some carriers do, acquiring more planes, trucks, and other delivery transport vehicles ahead of peak season for a smoother shipping process.

However, many carriers do not have this luxury, and therefore they pass the pressure onto their customers in the way of cost increases. For businesses to acquire more carrier capacity during this high-demand period means they pay higher rates, usually in the form of peak season surcharges. And if the businesses are shipping across borders or shipping same-day, the price goes up even more.

Unfortunately, when it comes to peak season, the pain doesn’t end on December 26. To compensate for any expenses the carriers assumed to successfully navigate peak, almost all increase rates in the new year.

The good news is, there are ways around these increases. A multi-carrier parcel shipping strategy automatically decreases transportation spend by enabling businesses to ship parcels with more than one carrier, regardless of whether a business is shipping globally, regionally, or last-mile.

By utilizing a multi-carrier parcel shipping strategy, you can:

  • Mitigate capacity limitations during peak and non-peak seasons
  • Save money with regional carriers
  • Save time with last-mile carriers
  • Ensure on-time delivery when supply chain disruptions such as driver strikes, carrier capacity limitations, and peak seasons occur

However, managing a multi-carrier shipping strategy can be tedious if you don’t have the right technology. No matter whether you’re a retailer, manufacturer, or a logistics provider, multi-carrier shipping technology enables you to ship millions of parcels worldwide at the lowest possible cost by automatically selecting the right carrier for each shipment based on origin-destination, delivery timeframe, cost, and any applicable business rules, such as negotiated capacity.

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Manage Your Carrier Capacity with Logistyx

Featuring state-of-the-art cloud-based multi-carrier shipping solutions, Logistyx can automatically assist you in quickly on-boarding new carriers, scaling your shipping volumes, and monitoring your carrier capacity – without taxing your internal logistics and IT resources. By using our technology to rate, rate shop, and select the optimal carrier for each shipment based on origin-destination, delivery timeframe, cost, and any applicable business rules such as capacity thresholds, you can save precious time and effort and turn toward optimizing your order fulfillment strategies instead.

In a shipping landscape fraught with limited carrier capacity and rising shipping costs, Logistyx’s unique solutions help you take control of your capacity management and reduce your transportation spend. Contact our team to learn more about how we can help your organization manage your carrier capacity.

Transport Topics: Logistyx President Ken Fleming Shares Expectations for the Holiday Shipping Season

Logistyx President Ken Fleming recently spoke with Transport Topics to discuss what shippers should expect from this holiday season when it comes to demand and possible shipping delays.

Among the handful of industry experts cited, Ken revealed Logistyx had not just been anticipating a busy holiday season but noted it also started earlier than normal. He continues:

“The big one that’s impacted by the holiday season is obviously retail, which is a very large market for us. Now those customers, and I would say on average, are expecting a 35% increase year-over-year.”

Read the full article at Transport Topics for further insights on high consumer demand and continued supply chain disruptions.

To learn how Logistyx can help prepare you for current and future shipping and logistics challenges, contact us today.

2022 Carrier Rate Increases Highlight Need for Multi-Carrier Parcel Shipping Strategy

It’s that time of year again. As detailed on Logistyx’s Carrier Updates and Resources page, three major carriers announced rate increases for the coming year:

DHL: Starting January 1, 2022, DHL Express plans to raise rates for U.S. shippers by an average of 5.9%. The increase will apply to U.S. account holders shipping to or from the 220 countries and territories DHL Express serves. DHL increased rates by an average of 4.9% for 2021, and by 5.9% on average for 2020.

FedEx: Effective January 3, 2022, FedEx Express shipping rates will increase approximately 5.95% on average across U.S. domestic, U.S. export, and U.S. import services. FedEx Ground services are also expected to increase. Specifically, rates will increase 5.9% across those using FXF PZONE and FXF EZONE. Those who use FXF 1000 and 501 will see shipping rates increase even more, 7.9% on average.

UPS: Effective December 26, 2021, published rates for UPS Ground, UPS Air, and International services will increase an average net 5.9%. UPS says the rate increase “helps to support ongoing expansion and capability enhancements as we strive to maintain the high service levels you expect from UPS.”

Following nearly two years of shipping and supply chain chaos fraught with capacity crunches, shipping quotas, service delays, and a slew of surcharges, it seems logical for carriers to increase rates, but yearly rate increases were the norm even before the pandemic. Carriers often acquire more planes, trucks, and other delivery transports ahead of peak season when volume increases require more capacity and then pass the costs of those acquisitions on to consumers with rate increases the following year.

Webinar - Take Control of Your Parcel Shipping Network

Regardless of the reasons, carrier rate increases are here to stay, increasing the importance of utilizing a multi-carrier parcel shipping strategy to keep costs down and customers happy. A multi-carrier shipping strategy leverages many carriers, including global, regional, and last-mile carriers, and enables service selection that makes the most sense for each shipment. By taking this approach, shippers can save money with regional carriers; save time with last-mile carriers; and ensure on-time delivery when strikes, overcapacity, and peak seasons occur.

Manually managing a multi-carrier parcel shipping strategy can become quite cumbersome, especially as the number of shipments, carriers, and increase. Luckily, multi-carrier shipping technology helps retailers, manufacturers, and logistics providers ship millions of parcels worldwide at the lowest possible cost by automatically selecting the right carriers and services for each shipment based on origin-destination, delivery timeframe, and any applicable business rules. Of course, there are numerous other benefits of multi-carrier shipping technology, especially Logistyx’s cloud-based solution, which streamlines the journey from label to delivery.

Watch our webinar, Simplifying the Complexity of Multi-Carrier Parcel Management, to see how a multi-carrier parcel shipping solution can help you reduce shipping costs even in the face of rising carrier rates.

USPS Announces Peak Season Surcharges

Following suit with other major carriers like FedEx and UPS, the United States Postal Service (USPS) announced peak season surcharges for 2021. According to the announcements:

“The planned peak-season pricing, which was approved by the Governors of the Postal Service on Aug. 5, would affect prices on commercial and retail domestic competitive parcels – Priority Mail Express (PME), Priority Mail (PM), First-Class Package Service (FCPS), Parcel Select, USPS Retail Ground, and Parcel Return Service. International products would be unaffected. Pending favorable review by the PRC, the temporary rates would go into effect at 12:00 a.m., Central Time, on Oct. 3, 2021, and remain in place until 12:00 a.m., Central Time, Dec. 26, 2021.”

Though less common from the USPS, the peak season surcharge isn’t unprecedented; they announced a similar surcharge for commercial customers ahead of a 2020 peak season when parcel volumes and capacity shortages were both anticipated and later came to fruition. The 2021 surcharge extends beyond commercial shippers to individuals shipping even single packages.

USPS peak season surcharges

Preparing for Peak Season

Capacity issues appear poised to rear their ugly head during the upcoming holiday season, meaning retailers should consider alternative fulfillment options such as buy-online-pick-up-in-store (BOPIS), ship-from-store, and incorporating more local last-mile and regional carrier services into the mix. By providing an omnichannel sales and fulfillment approach, retailers can ensure they’re offering customers the greatest flexibility and pricing possible during the critical peak season.

Retailers should also employ a multi-carrier shipping strategy to increase stability and quickly react to carrier surcharges and rate increases to control costs. Logistyx offers an extensive carrier network that includes dozens of regional carriers – including LaserShip, OnTrac and Speedee Delivery – making it easier and faster to add and maintain carriers’ rates and services in a shipper’s carrier network.

With a cloud multi-carrier shipping system, businesses can maintain the levels of service customers are accustomed to despite surging demand, carrier capacity crunches and increased shipping rates by automatically comparing carriers’ rates and service levels to select the optimal carrier for each shipment.

Contact us today to learn more about how a cloud-based multi-carrier shipping system can help your business optimize parcel shipping ahead of peak season to help control costs.

3 Benefits of Using a Local Shipping Carrier for 2021 Peak Season

Utilizing local carrier shipping services is key to efficiently delivering goods to your customers during peak season this year.

When COVID-19 shut down storefronts, consumers looked online to satisfy their latest wants and needs. And with this influx of online shopping, major warehouses quickly ran low on popular products and carriers ran low on capacity. Furthermore, although the demand for goods online skyrocketed, production of goods slowed due to social distancing guidelines and a decreased workforce.

Hence, we had a perfect storm. In the last 18 months, freight shipping rates to some regions skyrocketed a staggering 443% due to shortages, limited capacity, and the increased demand COVID brought to the scene.

Now, the world is opening its doors again. But while production may be back to full speed, global carriers like UPS are still fulfilling backorders, and carrier capacity remains limited. Given the ongoing carrier capacity issue, how should you prepare for peak season this year?

The answer: local carriers.

Read on to learn about local carriers and the benefits of integrating them into your shipping processes.

Local Shipping Carrier, Defined

Unlike a national or regional carrier that delivers goods from warehouse to doorstep, a local shipping carrier, sometimes taking the form of a last-mile carrier or “gig economy” fulfillment provider, delivers goods to your door from your local store. For example:

  • If you’re a grocery store, you can partner with a local carrier service like
  • Your customers can go on the Instacart website and choose your grocery store to buy goods online.
  • Instacart’s integration will find a local carrier to shop for your food and deliver it to your door within the customer’s chosen time frame.

Local shipping carriers present a win-win for retailers and consumers. For the retailer, platforms like UberEats, DoorDash, and Instacart provide easy access to customers by promising instant gratification when large online shops are overbooked. And for consumers, favorite products are within easy reach.

Local shipping carriers are typically ideal for fulfilling orders such as:

  • Cosmetics
  • Pharmacy
  • Groceries
  • Sports equipment
  • Restaurant items and fast food
  • Apparel
  • And more

Let’s look at the benefits of integrating your local brick-and-mortar store with local carriers.

Ensure On-Time Delivery with Local Shipping Carriers

Your online store in peak season is a crowded place. And with people ordering products nationwide, delivery times are more of a hope and less of a promise. For example, if a customer from California orders a Christmas present on December 23, and your closest shipping facility is in Texas, you may not be able to guarantee the gift arrives by Christmas Day.

However, if that same person can order the in-stock product from your store in their hometown and utilize a local carrier or gig economy fulfillment provider, it’s sure to be on their doorstep same-day – without braving the holiday crowds. Essentially, your customer follows their normal online ordering process and their satisfaction with the purchasing experience actually increases due to the speed of delivery and convenience.

Provide the Luxury of Convenience

One thing this pandemic has taught us? Most things in life can be done from home if you have the right tools. Case in point: according to a recent statistic, before COVID, only 17% of Americans worked fully remote jobs, and now 44% work remotely full time

With almost half of the American workforce at home completely and two-thirds working from home in some capacity, many are shopping online, ordering gifts online, and delivering food to their homes. Looking ahead to peak season, it’s important to consider this dynamic and ensure you have not only contracted with local shipping carriers but also that they are integrated with your shipping systems, so you can avoid any delivery hiccups and easily provide your customers with shopping conveniences such as same-day delivery.

Reduce Your Labor Force

When you use a local carrier, it’s more of a shift in labor than a reduction. More and more, consumers are buying online and during peak season, in particular, your warehouse and production lines are probably teeming with holiday help to meet your order demand.

But when you partner with a local shipping carrier like Instacart, you’re essentially outsourcing your order fulfillment to the local carrier. Most local carriers do the “shopping” and fulfillment in-store, so the only shipping responsibility you have to the customer is providing a local carrier solution.

Be Prepared for Peak Season by Integrating with Local Carriers

Though COVID-induced shipping backups will eventually subside, local carrier solutions are here for the long haul. More and more, consumers prioritize convenience – even over affordability.

If you’re still unsure whether local carriers are the right solution for your business in peak season, consider that multi-carrier shipping software will rate, rate shop, and automatically select the best carrier for shipping your products to delight your customer. This means you can have all the options at your fingertips and automatically select the best one for each order.

If you’re ready to learn more about the right solution for e-commerce shipping during peak season, download the “E-Commerce Checklist for Peak Season.”

How Carrier Capacity Impacts E-Commerce Shipping Solutions

Understand how carrier capacity can negatively affect e-commerce shipping rates and delivery timelines.

Online retail sales gained traction once again in the first quarter of 2021, up a dramatic 39%. The cause? An uptick in online shopping due to COVID-19. But while the trend may have begun because of shutdowns and store closings, it’s expected to continue into peak season due to convenience – even as stores reopen their doors.

Unfortunately for e-commerce retailers, this demand for online shopping may outweigh its rewards. With national carriers at capacity, many retailers aren’t enjoying typical benefits such as discounted rates and shipment pick-up flexibility, largely due to vehicle and manpower shortages.

In this blog, we’ll help you understand how carrier capacity can negatively affect e-commerce shipping rates and delivery timelines as well as outline how a multi-carrier shipping solution can help you surmount carrier capacity issues – setting you on the path to success in 2021 and beyond.

How Carriers at Capacity Affect E-Commerce Retailers

National shipping carriers can’t keep up with the increase in e-commerce demand brought on by the pandemic. Although shipping carriers are trying to expand their capacity as quickly as possible, a lack of workforce and ships, trucks, and planes have left them behind.

The Wall Street Journal stated last month, “Shipping costs have tripled since last year, but merchandise comes in up to 45 days late.” This dynamic has made it difficult for retailers to compete with same-day/next-day delivery behemoths such as Amazon and compromised their customer relationships. Without the ability to meet customers’ demands for “delivery now,” once-loyal customers have instead turned to brands who promise convenience in the form of 2-day shipping and easy returns.

What’s more, carriers aren’t offering the benefits they usually would. For example, an e-commerce retailer may have a warehouse outside their shipping carrier’s typical pick-up range. Traditionally, however, if the retailer is a big customer, the carrier may make an exception and pick up the parcels outside of the range.

But with an increase in demand, the carrier may not have enough trucks or workers to drive an hour out of the way to the retailer’s warehouse without charging extra or taking a long time to pick up the shipment. This either forces the retailer to pay more to ship their goods (which can lead to price inflation) or to look for a new carrier. Either way, customer satisfaction suffers, goods are delayed, and shipping is more expensive.

Though not every e-commerce retailer receives special pick-up benefits from their shipping carriers, almost all have been subjected to substantial surcharges and rate increases over the last 14+ months, as many large national carriers kept their 2020 holiday surcharges in place in early 2021.  Even more daunting: many national carriers are already announcing new holiday surcharges.

States FreightWaves about the most recent surcharge announcement from UPS, “The holiday surcharges, which kick in Oct. 31 and run until Jan. 15, will, as they did in the 2020-21 cycle, whack UPS shippers that tender the highest volumes. In extreme cases, surcharges will run as high as $6.15 per package.”

While e-commerce demand may diminish slightly as stores re-open, it’s not expected to get better anytime soon. And even though shipping carriers are increasing their workforce and fleets, it may take time for supply to meet demand – all of which means e-commerce retailers need a way today to find the best shipping options to get their packages to their customers efficiently, and at a low cost.

One answer? A multicarrier solution. Read on for the benefits of this smart shipping strategy.

The Benefits of a Multi-Carrier Shipping Solution

By integrating a multi-carrier e-commerce shipping solution into your supply chain tech stack, you don’t have to ship with just one carrier.  Instead, you can tap into an extensive carrier network that includes dozens of regional carriers, making it easier and faster to add and maintain carriers’ rates and services and enabling you to quickly react to carrier capacity limitations, surcharges, and rate increases to better control costs and maintain on-time delivery KPIs.

When you use a multi-carrier shipping solution to compare carriers, you gain visibility into which carrier really works best for each of your shipments, based on:

  • Location
  • Capacity
  • Shipping rates
  • And more

With this visibility in place, you can see which national, regional — and in some cases last-mile — carriers can help minimize the cost and maximize the speed of your shipment, automatically.

Note: Customers are concerned with convenience. If your e-commerce store has a physical location, consider integrating same-day carriers, like DoorDash or Instacart, as a shipping option. This takes the shipping burden off you and integrates a third party to satisfy your customer faster.  

And by adding a multi-carrier shipping solution like Logistyx to your supply chain tech stack, you also:

  • Create an agile logistics infrastructure that withstands complex supply chain issues
  • Improve transparency and coordination across your supply chain
  • Leverage Business Intelligence to make informed business decisions based on your shipping data, such as:
    • Change your inventory footprint: Move products from distribution centers to brick-and-mortar stores to better meet delivery timeframes, etc.
    • Expand your carrier network: Add new carriers to handle parcel deliveries, be it international or local
    • Compare last-mile/regional services against those from major carriers: Which carriers are best suited to meet delivery and cost expectations
    • Determine what types of orders can be shipped versus orders that customers can pick up


A multi-carrier shipping solution like Logistyx can minimize the effects of carrier capacity limitations on your business by giving you easy access to several different carrier options and more. To learn more about Logistyx’s solution, download our whitepaper, Simplifying Multi-Carrier Parcel Management for Peak Season and Beyond.

Logistyx’s Ken Fleming Puts the Last Mile First in an Article for Supply & Demand Chain Executive

The last mile of any delivery is the most critical piece, argues Logistyx President Ken Fleming in a new article for Supply & Demand Chain Executive. Getting products off trucks and into customers’ hands is the top priority, and shippers should take a proactive approach and prioritize the last mile to ensure this happens on time.

Ken argues that shippers can reduce costs and meet customer expectations by making a few strategic decisions that keep the last mile first:

  1. Utilize a multicarrier network for shipping
  2. Reconsider inventory and fulfillment capabilities
  3. Trust business intelligence and data

Only once the details of the last mile are in order should shippers examine the rest of the shipping journey.

Read Ken’s full article, “Putting the Last Mile First,” for the details of each strategic decision and see if your last-mile approach will pass muster.

Christmas in July? New UPS Surcharges Could Signal a Prolonged Peak Season for Shippers

UPS is imposing new surcharges across its services, hitting major shippers particularly hard.

The unusually speedy growth in e-commerce driven by the COVID-19 pandemic continues, as more consumers shift to online shopping despite the recent relaxation of pandemic guidelines. This growth puts persistent pressure on retailers and transportation companies alike to adapt without sacrificing customer service, resulting in an unrelenting strain on carrier capacity.

Looking ahead to the upcoming holidays, when another volume surge is likely to create an extended peak shopping season, UPS is again imposing surcharges across its services, hitting major shippers particularly hard.

According to FreightWaves:

“The holiday surcharges, which kick in Oct. 31 and run until Jan. 15, will, as they did in the 2020-21 cycle, whack UPS shippers that tender the highest volumes. In extreme cases, surcharges will run as high as $6.15 per package.

As they were last holiday, the specific surcharges will be based on how much a shipper’s weekly volumes during the holiday peak will exceed its average weekly volumes during February 2020.”

Many major carriers continue to experience network constraints, with several already close to capacity. The costly increases and carrier limitations will likely send shippers of all sizes scrambling for alternatives as they look ahead to Q4 and plan for capacity. The pricing surges from both UPS and FedEx are pushing many shippers into the arms of regional carriers.

To help fill the gap, as The Wall Street Journal reports, “Regional parcel carriers are expanding their reach as surging e-commerce demand fills up capacity at the national carriers and retailers seek fast, cheaper ways to ship packages to customers’ homes.”

Regional carriers like LSO and LaserShip have expanded into several markets across the U.S. this year to provide delivery services in new coverage areas, while investing in automation to help speed the flow of packages.

Facing limited capacity during the upcoming holiday season, many retailers should plan now by considering incorporating more local last-mile and regional carrier services into the mix. Growing its carrier network can help any business effectively tackle these challenges by introducing more options and capacity into parcel delivery efforts.

Implementing a multi-carrier shipping strategy can help businesses increase stability to quickly react to carrier surcharges and rate increases and effectively control costs. Logistyx offers an extensive carrier network that includes dozens of regional carriers – including LaserShip, OnTrac and Speedee Delivery – making it easier and faster to add and maintain carriers’ rates and services in a shipper’s carrier network.

By leveraging a cloud multi-carrier shipping system, businesses can provide a consistent level of service to customers despite the surging demand for carrier capacity by accessing and automatically comparing different carriers’ rates to select the optimal carrier service for each shipment.

Logistyx continues to offer strategic guidance and solutions for shippers seeking to adapt to these changes and effectively manage costs; explore the following white papers for more info:

Contact us today to learn more about how a cloud-based multi-carrier shipping system can help your business optimize parcel shipping ahead of peak season to help control costs.

FedEx Freight Drops Customers in Capacity Crunch

Customers were apparently provided only short notice – one business day – of the FedEx suspension and must now act quickly to find replacement carriers, many of whom are experiencing similar capacity crunches.

About 1,400 less-than-truckload (LTL) FedEx Freight customers are now in need of a new freight carrier as FedEx Freight recently announced it would be cutting off their service as it attempts to rectify delays caused by an overwhelming amount of tonnage spurred by the COVID-19 pandemic and recovery.

In a statement to FreightWaves, FedEx spokesperson Jim Masilak explained the situation:

“FedEx continues to keep commerce moving and deliver critical shipments during the COVID-19 pandemic. The impact of the virus has generated elevated volumes, and we continue to experience high demand for capacity and increased operating costs across our network. As a result… FedEx Freight will begin implementing certain volume control actions to help balance capacity with demand.”

Customers were apparently provided only short notice – one business day – of the suspension and must now act quickly to find replacement carriers, many of whom are experiencing similar capacity crunches.

Trickle Down from FedEx Capacity Crunch Expected

An unnamed executive speaking on those affected by the FedEx Freight announcement told FreightWaves:

“It’s mass panic because there’s no available capacity to service them to begin with.”

As major carriers experience capacity crunches, those pushed to smaller carriers will certainly take up remaining capacity and likely bump the next set of customers from their rosters creating trickle down capacity crunches.

Avoid the Mad Dash with a More Diverse Transportation Network

Persistent delivery capacity shortages spurred by ballooning e-commerce volumes put many businesses at risk as trusted carriers increasingly prioritize capacity for their largest customers. Companies that invest in a cloud multi-carrier shipping system to create flexibility and diversity in fulfillment can better withstand potential carrier cuts by quickly turning to other carriers to ensure their deliveries reach their intended destinations in a timely fashion, avoiding the mad dash to source and secure capacity with another carrier with whom there’s no contract or relationship in place.

Who Can Pick Up the Slack?

The capacity crunch creates an LTL ecosystem that’s ripe for disruption as carriers struggle to handle the volume of shipments spurred by the pandemic and recovery. Perhaps LTL shippers will opt to change their model and employ a parcel approach. Maybe regional carriers will enter the mix and create more LTL flexibility in both number of carriers as well as service levels.

Whatever the result, the FedEx Freight announcement is likely just the tip of the iceberg and a sign of things to come – and the issue continues to evolve, per an update to this story from FreightWaves.

Whatever the result, the FedEx Freight announcement is likely just the tip of the iceberg and a sign of things to come. When shippers are tied to just one or two carriers, they’re beholden to the whims of the carrier facing a capacity crunch. Having access to more and different types of carriers and services can help minimize the impact of unexpected customer reductions and delays.

Contact us today to learn how Logistyx’s multi-carrier shipping software can help your business manage a wide range of shipping scenarios and optimize parcel shipping to help control costs.