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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.

FedEx and UPS Increase Surcharges Again as Pandemic Continues to Impact Shipping

The significant growth of online shopping propelled by the outbreak of the COVID-19 pandemic doesn’t seem to be letting up. While some aspects of life have returned to pre-pandemic levels, the impact of the virus continues to put a strain on shipping, generating elevated volumes, high demand for capacity, and increased operating costs for carriers. As such, both FedEx and UPS have announced additional peak surcharges due to the pandemic’s continued disruption of the shipping industry.

Effective June 21, 2021, FedEx will implement percentage increases to three delivery surcharges, including an additional handling surcharge, a residential delivery surcharge, and a peak surcharge on Ground Economy.

Recently started on May 23, the UPS surcharge increase now applies to certain international shipments originating from Asia, including Hong Kong, China, Taiwan, Korea, Vietnam, Malaysia, Thailand, Indonesia, Singapore, Australia, and New Zealand to the U.S. UPS increased prices for UPS Worldwide Express Plus, UPS Worldwide Saver, UPS Worldwide Expedited, and UPS Worldwide Express Freight, from these countries.

The changes from both carriers were classified as “peak” surcharges, which, as Modern Shipper notes, “underscores that in the unprecedented environment for package deliveries during the post-COVID-19 era, peak season is no longer associated with the Christmastime holidays but has become a year-round phenomenon. The sellers’ market for parcel-delivery services has never been hotter than it is today, and all carriers have as much traffic as they can handle.”

Control Costs with a More Diverse Transportation Network

For shippers looking to find a workaround, diversifying transportation networks serves as a valuable tactic to combat the peak surcharges. The persistent delivery capacity shortage and unrelenting e-commerce volumes continue to raise the stakes for many businesses. Companies that can invest in a cloud multi-carrier parcel shipping system that creates flexibility and diversity in fulfillment stand a better chance of keeping costs in check. To gain that flexibility and diversity, companies need greater access to more carriers.

Growing their carrier network can help any business effectively tackle these challenges by introducing more options and capacity into the parcel delivery mix. Implementing a multi-carrier shipping strategy can help businesses increase stability to quickly react to carrier surcharges and rate increases and effectively control costs.

Consider Regional and Last-Mile Carriers

Shippers should consider including last-mile and regional carriers in the mix for more flexibility to compete with the massive volume of business that national carriers draw from the market. In some zones, these regional carriers offer cheaper rates and perform better than UPS, FedEx, and other major carriers. Incorporating these carriers into rate shopping initiatives can decrease parcel delivery costs and transit times by providing greater flexibility to allow shippers to select local carriers in different regions that have optimal delivery networks for serving their customers.

When tied to just one or two carriers, on the other hand, shippers cannot reduce costs or supplement capacity. Having access to more and different types of carrier services can help retailers keep customers happy while minimizing the impact of surcharges during peak season and obtaining the best value for every destination, delivery date, and product shipped. To succeed in keeping costs low, shippers should aim to choose the best fit carrier and service for each fulfilled order and leveraging regional and last-mile carriers can significantly expand carrier service options to help achieve that goal.

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. Our cloud multi-carrier parcel shipping system allows shippers to access and automatically compare different carriers’ rates to select the optimal carrier service for each shipment based on unique business rules, despite the continued demand for carrier capacity.

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

Logistyx Increased Parcel Volume 23% with FedEx in 2020, Honored with 2021 FedEx Platinum Tier Award

Progress and innovation require working collaboratively with value-aligned partners to solve business problems. At Logistyx, we continuously deepen our ties with partners to deliver the flexibility, security, and speed customers need to accelerate success.

Our partner community includes global supply chain leaders with track records of excellence and proven commitment to the customer. This is why Logistyx is proud to partner with leading global shipping provider FedEx. As part of Logistyx’s global network of 550+ carriers, FedEx is a long-standing and leading carrier partner, providing innovative shipping solutions that enable customers to ship around the world – faster, smarter, and for less.

2020 was a year full of extraordinary uncertainties, and carriers like FedEx adopted an agile approach to shipping to create a flexible supply chain and work more effectively with shippers to address many of the challenges brought on by the COVID-19 pandemic. Carriers exhibited exceptional dependability supporting a rapid surge in e-commerce growth, an unprecedented peak shipping season, and the complexities of global vaccine distribution.

FedEx has been on the front lines, keeping supply chains moving since the onset of the pandemic and has remained a valued partner of Logistyx. In 2020 alone, Logistyx drove nearly 23% growth in volume with FedEx.

For the third year in a row, Logistyx secured FedEx Compatible Platinum Tier Award honors for 2021. Selection criteria of the award includes customer compliance; year-over-year growth in volume, revenues, and customer installations; and maintaining annual software certifications.

Designed to help organizations identify qualified, third-party shipping solutions, The FedEx Compatible Solution program requires software developers be up to date on current software for FedEx Ship Manager Server or FedEx Web Services and maintain high levels of customer satisfaction and retention. Platinum Tier status is awarded to solutions that demonstrated a high degree of capability, customer experience, and solutions.

A cloud-based Transportation Management Solution (TMS) for global parcel shipping, Logistyx’s flagship software, TME, guarantees carrier compliance, streamlines transportation execution, monitors parcel delivery movements, and identifies ongoing opportunities to increase profits per shipment. Logistyx optimizes carrier service selection and empowers shippers to deploy a more strategic, global transportation strategy to track parcel movements, provide delivery transparency, and proactively respond to unexpected events.

We’re grateful to FedEx for being a trusted partner within our extensive carrier services network and we remain committed to working together to keep driving value for Logistyx customers.

To learn more about how you can leverage multi-carrier shipping systems – and the data within them – to get the most out of your carriers and create the optimal delivery network, watch our webinar, Simplifying the Complexity of Multi-Carrier Parcel Management.

How to Analyze the Impact of Carrier Rate Changes

Carrier rate changes can be complicated. Carriers tend to release generalizations about the percent increase in rates, but these are just an average of the increases levied to various portions of the calculation. Shippers tend to react quickly to carriers’ published “average rate increases” by simply budgeting an extra matching average percentage for each carrier, but this is the wrong approach. The devil is in the details about where those changes take effect and the percentage increase applied. Speed to delivery, weight, distance, and package count are just some of the factors shippers need to consider to understand their true rate increase. Without examining the details closely, shippers’ rates could exceed the “average rate increase” and end up with a budget shortfall.

While the number of 2021 rate increases have been unprecedented, there’s no need to panic. With the right technology, shippers can avoid the pain points and embrace the bargains to bring their own average much lower. The trick is understanding how the rate hikes overlay with their own unique position and needs to better prepare for and execute negotiations with carriers.

Business Intelligence and automated scenario planning illustrate truer impact.

Businesses must manage growing parcel volumes successfully and offer cost-effective ways to meet rapidly evolving customer demands while also getting a good grasp on new rate increases and their impact on the business to effectively plan their budgets.

To get a jump on rate changes, shippers should simulate and analyze various transport factors to identify the potential impacts of rate increases before they take effect. Doing so supports contract negotiations with parcel carriers, and it gives merchants a chance to prepare by adjusting business rules, repackaging goods, or taking other steps.

To pinpoint cost-effective methods for parcel shipping, shippers can run the following types of simulations:

  • Assuming everything is the same as last year: Running re-rate scenarios shows the impact from one year to the next
  • Changing a business’s inventory footprint: Moving products from distribution centers to brick-and-mortar stores, etc.
  • Carrier network expansion: Adding new carriers to handle parcel deliveries, be it international or local
  • Changing the approach to packaging parcels: Administering simulations based on dimensional weight (size/weight of package)
  • Determining metrics and cost of shipment per SKU (cost per unit): Many organizations run SKU level analytics and business intelligence reports; parcel shipping data can help to illuminate even more impactful insights
  • Comparing last-mile/regional services against those from major carriers: Which carriers are best suited to meet delivery and cost expectations

Carriers run their own simulations to see how they can maximize efficiency and profits; technology can help level the playing field by enabling shippers to efficiently run simulations, analyze potential fees, and determine how to mitigate them, along with monitoring cost impacts that could take them by surprise.

For instance, Logistyx’s cloud transportation management system (TMS) for parcel shipping with Business Intelligence enables shippers to glean insights on their own shipping patterns, usage, and more with the ability to filter and identify specific characteristics to better understand impact. With the ability to analyze real time shipping data, shippers can better understand how factors such as distance, speed to delivery, package size, and density affect spend within their transportation landscape. Shippers can also highlight savings opportunities across attributes such as origin-destination, carrier services, modes, accessories, and more.

Once shippers run simulations to consider potential impacts and how to counter them, they can align strategy and budget to particular scenarios. Accessing and analyzing available data can help shippers truly evaluate carrier performance, ensuring carrier selection is better informed and they’re at an advantage when it comes to carrier negotiations.

Analyze your Shipping Data Today

To learn more about how cloud multi-carrier shipping technology can help you effectively analyze shipping data to better inform and execute carrier contract negotiations and yield greater returns, download our e-book: Understanding Carrier Rate Increases.

Outlook: 2021 Parcel Carrier Rates

Surviving 2020 presented a unique challenge, and for many retailers, manufacturers, and 3PLs, the goal was simply to make it to 2021. But the reward for making it to 2021 wasn’t altogether sweet. With the dawn of the new year came parcel carrier rate increases:

And now the question is: how can shippers increase profits per parcel in this shipping landscape?

Parcel Rates Increase as E-Commerce Continues Growing

Normal fluctuations in rates hover around the 4-5% mark for the shipping industry, but 2021 is poised to be anything but an average year, which means monitoring trends in shipping rates will remain a key focus. Summarizes Transportation Insight, “Beyond the average increase on standard services, it is also important to recognize that surcharges, accessorials, new fees, and tweaks to the carriers’ terms and conditions could require you to budget a 2021 cost increase closer to 8.5%. Capacity pressures created by exponential e-commerce growth during the pandemic and uncertainty about mid-year or peak surcharges for 2021 creates an environment of unknowns.”

Shippers Need to Take a Look at Carriers’ Intricate Pricing Strategies

While understanding the impact of carriers’ general rate increases is critical for organizations with any kind of parcel volume, identifying exactly which factors may drive the most significant shipping cost changes is critical for effectively planning budgets for 2021; shippers need to take a comprehensive look at the intricacies of carriers’ pricing strategies.

To optimize parcel shipping costs in the wake of 2021 rate changes, shippers should simulate and analyze various transport factors to identify the potential impacts of rate increases. Doing so supports contract negotiations with parcel carriers, and it gives merchants a chance to prepare by adjusting business rules, repackaging goods, or taking other steps.

To pinpoint cost-effective methods for parcel shipping, shippers can run the following types of simulations:

  • Assuming everything is the same as last year: running re-rate scenarios shows the impact from one year to the next and enables shippers to adjust the current carrier mix to optimize cost savings
  • Changing a business’s inventory footprint: Moving products from distribution centers to brick-and-mortar stores, etc.
  • Carrier network expansion: Adding new carriers to handle parcel deliveries, be it international or local
  • Changing the approach to packaging parcels: Administering simulations based on dimensional weight (size/weight of package)
  • Determining metrics and cost of shipment per SKU (cost per unit): Many organizations run SKU level analytics and business intelligence reports; parcel shipping data can help to illuminate even more impactful insights
  • Comparing last-mile/regional services against those from major carriers: Which carriers are best suited to meet delivery and cost expectations

Carriers run their own simulations to see how they can maximize efficiency and profits; technology can help level the playing field by enabling shippers to efficiently run simulations, analyze potential fees, and determine how to mitigate them, along with monitoring cost impacts that could take them by surprise.

For instance, Logistyx’s cloud transportation management system (TMS) for parcel shipping with Business Intelligence enables shippers to glean insights on their own shipping patterns, usage, and more with the ability to filter and identify specific characteristics to better understand impact. With the ability to analyze real time shipping data, shippers can better understand how factors such as distance, speed to delivery, package size, and density affect spend within their transportation landscape. Shippers can also highlight savings opportunities across attributes such as origin-destination, carrier services, modes, accessories, and more.

Once shippers run simulations to consider potential impacts and how to counter them, they can align strategy and budget to particular scenarios. Accessing and analyzing available data can help shippers truly evaluate carrier performance, ensuring carrier selection is better informed and they’re at an advantage when it comes to carrier negotiations.

Optimize Shipping Costs with the Right Parcel TMS

Surviving 2020 was the end goal for many over the past year, but now the focus is on recovery in 2021. Retailers, manufacturers, and 3PLs need to keep a watchful eye on carrier rates so they can prepare for whatever the new year brings, and a TMS for parcel shipping with advanced Business Intelligence can help. To learn more about how you can leverage Business Intelligence to optimize parcel shipping costs in 2021, watch our webinar: Make your Shipping Data Work for You.

 

Carriers Boost Flexibility to Aid in Rapid COVID-19 Vaccine Distribution

The availability of the long-awaited COVID-19 vaccines came just in time to lift holiday spirits. The global vaccine distribution campaign represents one of the most significant logistical challenges the world has seen in decades, and many in the logistics industry are working together to get the job done. The effort to vaccinate the globe relies on many people beyond chemists, scientists, pharmacists, and healthcare personnel. Factory workers, truck drivers, pilots, and carriers are hard at work ensuring safe and efficient delivery of these vital inoculations to locations across the world.

While parcel networks have already been operating in peak season-like conditions for months, carriers were prepared and pledged that vaccines would take precedence over delivering holiday orders. Carriers have reserved enough space in their networks to handle the expected shipments of vaccines, with many ensuring they get the fast-lane treatment meant for priority packages, with a commitment for next-day delivery. In the case of the Pfizer vaccine, carriers even waived some label printing requirements to increase the speed with which vaccines could be distributed.

On the heels of the Food and Drug Administration’s approval of the Emergency Use Authorization (EUA) for the vaccine, major carriers UPS and FedEx delivered 2.9 million Pfizer doses during the first week of availability in the U.S. Based on plans developed with the U.S. federal government’s Operation Warp Speed for vaccine distribution, FedEx and UPS have roughly divided the nation in two, with FedEx supplying the western states and UPS those in the east. Upon EUA of the Moderna vaccine, Operation Warp Speed also allocated 5.9 million Moderna doses and 2 million more Pfizer doses for delivery the week of December 21.

Since the beginning of the COVID-19 pandemic in mid-March, many major carriers have been active in their relief efforts leading up to their roles in vaccine distribution, including delivering personal protective equipment (PPE) and humanitarian aid shipments on a global level.

2020 has been full of unparalleled unknowns, many of which came to a head in the final month of the year with the fastest vaccine development and global rollout known to date, leaving supply chain leaders to act quickly. Undoubtedly, adopting an agile approach to shipping to create a flexible supply chain has helped these carriers work more effectively with pharmaceutical and healthcare shippers to put this massive vaccine distribution plan into action. The extraordinary steadiness from carriers supporting an unprecedented peak shipping season and vaccine distribution has heralded a happy holiday and a hopeful new year.

At Logistyx, we’re grateful to the more than 550 carrier partners within our extensive carrier services network for their part in the successful global distribution of these critical COVID-19 vaccinations.

FedEx Extends Peak Surcharges into 2021

As is so often true in times of crisis, the industries hardest hit by the COVID-19 pandemic are also the ones that people depend on daily: namely shipping providers like UPS, FedEx, and the United States Post Office.

Faced with extremely high demand for capacity and increased operating costs across its network, in August, FedEx followed the lead of UPS and the United States Postal Service by announcing new peak season surcharges, effective early November. Company officials said they did this not only to provide their customers with the best possible service during an understandably challenging time, but also to help mitigate risk from what was expected to be historic holiday shipping volumes.

These changes were expected to be in effect until January 17, 2021. However, with Christmas not yet here, the company has already announced they will be extending these surcharges long past their original date of expiration.

FedEx Surcharges and the 2020 Peak Season: What You Need to Know

When the surcharges were originally announced, FedEx indicated the changes would only apply to shipping customers reaching a certain package volume threshold. Specifically:

  • Customers had to ship more than 35,000 packages on average per week between October and November for surcharges to apply later in the year.
  • The amount of the surcharge would depend on how much more they were shipping during October and November than they were between February 3, 2020 and March 1, but residential shipments would see surcharges ranging between $1.00 and $5.00.
  • FedEx announced that even FedEx Smart Post (when FedEx hands packages to the USPS for crucial last-mile delivery) would see an additional increase of $1.00 per package for any items shipped between November 2 and November 29.
  • From November 30 to December 6, Smart Post surcharges would increase to $2.00 per package, after which the surcharge would go back to $1.00 until January 17, 2021.

Or at least, that’s how things were supposed to go.

As of December 22, 2020, FedEx is the first carrier to confirm they will not be ending their surcharges as originally planned – but few expect them to be the last. A large part of this has to do with ongoing market conditions that are making things challenging. Not only is FedEx dealing with limited carrier capacity, but they also have a significantly heightened residential delivery volume right now thanks to 2020 peak season demands. This, coupled with the fact that there are relatively few available carriers for parcel shipping, has created something of a perfect storm in the worst possible way.

According to FedEx’s own website, there are three surcharges that will officially begin on January 18, 2021, and that will continue “until further notice.” These are:

  • Peak – Oversize Charge Surcharge: This applies to U.S. Express Package Services, U.S. Ground Services, and International Ground Service, and comes in at $30.00 per package.
  • The Peak – Additional Handling Surcharge: This impacts all of the same parcel shipping services as outlined above and adds an additional $3.00 charge per package.
  • Peak Surcharge for FedEx Smart Post Package Services: This adds an additional $0.75 cents per package.

The announcement that FedEx Smart Post surcharges will continue is particularly bad news for smaller e-commerce shippers, as they’re the ones that tend to deal with higher volumes of lighter packages. Experts agree that businesses in the cosmetics and apparel industries are likely to feel the immediate impact of this announcement.

Some people speculate that FedEx surcharges are here because the company truly needs them. Others think this is a clear-cut case of “they’re doing it because they can get away with it.” Regardless, it’s safe to say that a multi-carrier shipping solution has never been more critical for reducing parcel transportation spend.  To learn more about multi-carrier shipping technology, watch the Logistyx webinar, Simplifying the Complexity of Multi-Carrier Parcel Management.