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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.

Sales Boom; Will Carrier Capacity Limitations Doom?

Hanukkah gifts. December birthdays. Organized holiday shoppers. Plenty of scenarios exist in which customers become disgruntled due to unforeseen e-commerce delivery delays in early December, but what happens if it keeps getting worse due to carrier capacity limitations?

Yesterday’s Wall Street Journal feature, “UPS Slaps Shipping Limits on Gap, Nike to Manage E-Commerce Surge,” detailed what happened this week when UPS stopped picking up parcels for not just these two brands but at least six large retailers and characterized the development as “an early sign that the pandemic-fueled online shopping season is stretching delivery networks to their limits.” According to the article, the internal UPS message called for “No exceptions.”

Total Retail offered its own take on the development, including the likelihood that the situation, “only figures to intensify as we get further into the holiday shopping season.”

Sales are booming

According to Digital Commerce 360 and Adobe Analytics, “Ecommerce sales crossed a record $5 billion on Thanksgiving, surged 21.6% on Black Friday and increased 15.1% on Cyber Monday. All of this growth follows a much-busier-than-usual start to November, driven by retailers trying to proactively offset this Cyber 5 crunch by offering more aggressive deals much earlier in the season than usual to get customers shopping sooner.

Still, big retailers should not be surprised about this. Not only have analysts, media and a wide range of other retail and fulfillment experts been predicting this change in consumer behavior for most of the year. The carriers have also been proactive in alerting retailers this difficult reality was likely to take shape; many of Logistyx clients were notified months ago.

Will carrier capacity limitations be dooming?

It depends almost entirely on each retailer’s preparedness. Retailers only prepared to tap the services of one carrier could struggle mightily to satisfy customers quickly if they exceed daily carrier capacity for multiple consecutive days. Without any lull in parcel shipping volume, the backlogs will grow, and a growing volume of parcels could sit on the dock for increasingly long wait times as the month goes on.

Retailers who embraced multi-carrier parcel shipping and the benefits of real-time rate shopping, or those who prepared diligently to adopt this model in 2020 prior to peak season, find themselves in a much more manageable position. Given yesterday’s news, those retailers are positioned to consume whatever capacity UPS has to offer them, tap into other national carriers to effectively ship the rest, leave nothing on the dock, and start tomorrow with a clean slate. Retailers using Logistyx can even continue to rate shop to contain costs to the extent possible.

Fearing all national carriers would eventually limit capacity during the holiday season, many retailers went further, incorporating more local last-mile and regional carrier services into the mix, such as LaserShip, OnTrac, and Speedee Delivery. This provides more capacity inventory to rate shop, in addition to another failsafe should more carriers enact daily parcel limits.

Most of December and January still loom

With three weeks still remaining before Christmas, the situation looks grim for unprepared retailers, who likely know a growing volume of returns awaits them on the other side of the holidays.

Communicate clearly to limit customer losses

While much can be done to prepare for future peak seasons, shore up fulfillment capabilities, and better care for customers going forward, retailers should allocate some resources for damage control right now. When delivery delays cannot be avoided, clear communication will likely be their best client retention tool.

Refine delivery estimates. Avoid over-promising. Be realistic. Consider make goods and special offers that can turn disgruntled customers into long-term supporters. Commit to doing better for customers in the future.

2020 has truly been a year like no other, and unprepared retailers are pinning some of their December wishes on customers understanding the unprecedented difficulties in shipping products quickly this year. While other merchants worked hard to prepare in 2020 to maintain impressive fulfillment timelines throughout the holidays, consumers just might be swayed to forgiveness if retailers give it to them straight and commit to doing better in the future.

COVID-19 Still Wreaking Havoc on Shipping: FedEx Announces APAC Surcharges

COVID-19 continues to wreak havoc on supply chains and shipping around the world, and an e-commerce-focused peak season is only piling on. Following FedEx’s previously announced rate increases and late fees set to take effect in 2021, the shipping giant implemented another surcharge increase for parcel and freight shipments originating in Asia Pacific (APAC).

“Beginning Nov. 30 through Dec. 27, the surcharge amount for FedEx Express international parcel and freight shipments originating in Japan, Korea, Hong Kong and the Philippines will increase as will the surcharge amount for FedEx Express international parcel shipments originating in China. On Dec. 28, these surcharge amounts will return to current levels. Updated amounts can be found here.”

According to FedEx, the reasoning behind the increased surcharge is limited air cargo capacity and incurred incremental costs related to COVID-19.

As Logistyx previously noted: As consumers increasingly turn to omnichannel shopping to safely buy goods during and beyond the pandemic, shipping volume has increased exponentially, putting increased demand on carriers and leading to the rollout of these surcharges and increased rates to offset costs.

New call-to-actionGrowing 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. 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 advice and solutions for shippers seeking to adapt to these changes and effectively manage costs; check out the following blog posts:

And white papers:

To learn more about how a multi-carrier shipping system can help your business optimize parcel shipping to help control costs, contact us today.

Preparing Global Logistics for COVID-19 Vaccine Distribution

As several experimental COVID-19 vaccines approach late-stage testing, their manufacturers have begun working diligently with technology partners, carriers and others involved in the logistics of distributing a potential vaccine to populations around the globe to assemble the necessary processes, procedures and instruments to safely and effectively move and disseminate the eventual inoculations.

In addition to some of the early considerations for shippers, manufacturers and other industry professionals relating to the scale, distribution and shipping requirements of a potential vaccine, DHL and other carriers have started making adjustments to prepare. They’re adding cargo service routes, increasing flight schedules to provide crucial transport infrastructure and taking other steps to prepare in anticipation of the potential global delivery of a COVID-19 vaccine.

On top of having the transport infrastructure in place, many carriers and pharmaceutical companies have been shoring up equipment and technology that will meet the complex set of protective measures required for maintaining the efficacy of a vaccine during transport, including precise refrigeration and temperature settings. According to The New York Times, many of the vaccines under development will need to be kept at temperatures as low as minus 80 degrees Celsius (minus 112 degrees Fahrenheit).

Managing global distribution strategies for such a critical product on such a scale creates considerable operational challenges. That’s why many pharma companies and global carriers have turned to transportation management technology providers to help enhance their preparations to transport the highly temperature-sensitive COVID-19 doses.

Just as Logistyx was on the forefront to help Gilead move its investigational drug against the novel coronavirus that causes COVID-19 to medical facilities in continental Europe, we’re helping another leading pharmaceutical manufacturer effectively execute its vaccine release. From rigorous temperature-controlled storage and transportation to uninterrupted logistics management information and real-time status updates, this pharma company has a unique set of carrier service requirements. Logistyx is working around the clock with the pharma leader and its carrier services network to ensure the uninterrupted availability of a quality vaccine by building a custom network of carriers capable of playing a role in this critical task.

ebook logistyx future-proofing-supply-chainPlanning now for the eventual availability and distribution of a COVID-19 vaccine allows logistics experts, pharmaceutical distribution specialists and global carriers to prepare for any potential hiccups in the process. Likewise, cloud technology like Logistyx helps decrease supply chain risk, an incredibly important initiative when it comes to something as vital as the multifaceted distribution of an initially limited supply of a life-saving vaccine. Logistyx TME helps optimize parcel shipping by improving the speed, accuracy, and flexibility of the supply chain, and a digitized supply chain improves a company’s ability to anticipate risk, improve transparency and coordination across the supply chain, and manage any issues that arise from increasing complexity. When it comes to the global distribution of vaccines or parcels of any kind, TME helps shippers minimize disruptions and solve those that do arise more quickly.

For more information about how Logistyx’s cloud TMS for parcel shipping can help you effectively plan for and manage supply chain challenges, contact us today.

Three Delivery Trends Set for Growth: Ken Fleming Talks to Parcel and Postal Technology International

Driven by a shift in consumer expectations to a ‘delivery from anywhere, to anywhere, at any time’ mindset, Ken Fleming, President of Logistyx Technologies, discussed three trends that are set to offer increased convenience for customers, carriers, and companies with Parcel and Postal Technology.

Saturday delivery for no extra charge

In the summer, UPS announced it would launch a Saturday service across eight European countries at the same price as weekday delivery.  As its rationale, the company cited research from IMRG Capgemini Online Retail Index, which said reported ecommerce sales in the UK grew by a third (33%) in May.

ebook logistyx future-proofing-supply-chainHowever, Ken sheds some additional light on why this is set to be a growing trend: “There are potential cost implications in offering a six-day standard service, but operationally it is not a massive burden. It will help flatten couriers’ weekly peak, whereby parcels from shippers that have a Saturday collection, but no delivery until Monday, stack up at the courier’s warehouse.  I would be very surprised if the trend doesn’t continue across the industry, especially due to the recent increase in e-commerce sales, which shows no sign of dropping off.  If carriers don’t start to add Saturday, or even Sunday delivery at a standard weekday rate, capacity in the industry may not keep up with demand.”

Increased on-demand changes to delivery

While it isn’t new in itself, it is significant the UK’s Royal Mail added in-flight options to its delivery service in July.  Due to the volumes it handles, this announcement represents a massive and challenging undertaking for the organisation.

Ken comments: “On-demand delivery changes tend to be more common with standard two to five-day services.  After all, if you want guaranteed next day delivery, you will likely pay for it and be happy to ensure you are available to receive the parcel on that day.  However, not many people want – or are able – to be available at any time over several days or to have to queue up to collect a non-delivered parcel from a depot, even at the best of times.  The huge spike in e-commerce means more carriers will have to give on-demand flexibility, or they will risk losing business to competitors who can offer it.”

Delivery from store

An increasing number of large and big-brand retailers are moving towards ship from store.  From the retailer’s point of view, it is both extremely efficient and – by reducing the movement of the stock – a greener option.  At the same time, it enables retailers to offer same day delivery via courier, particularly in urban areas.

“There are two key factors which must be in place to enable retailers to provide ship from store: accurate inventory systems, and a carrier management system which is intelligent enough to suggest delivery from store as an option when the order is placed.  From a customer perspective, they may not even realize their item has been sent from a store rather than an RDC,” comments Ken.

To facilitate same day delivery from store, it’s likely shippers will need to introduce new carrier contracts – including local couriers, who can deliver by moped, bike, or electric vehicle – or even potentially by drone or robot.  By shipping local to local there can be a significant reduction in miles traveled, reducing the environmental impact of the delivery.

The recent increase in e-commerce versus in-store transactions isn’t likely to go away any time soon and seems set to help the parcel shipping industry move from ‘fast and free’ towards transparent, customizable delivery options, putting the convenience of the customer at the heart of the service.

For more information on parcel shipping trends, check out the Logistyx Research Solutions.

 

FedEx Announces 2021 Rate Increases

Retailers can continue to expect rising prices for shipping parcels beyond peak season 2020, as FedEx recently unveiled rate increases and late fees set to take effect in 2021. Starting in January, FedEx will raise rates an average of 4.9% for its Ground, Express, and Home Delivery services, along with charging a 6% late fee to U.S. FedEx Express and FedEx Ground customers who don’t pay invoices within their agreed upon payment terms.

These latest rate increases come on the tail of FedEx and other major carriers levying surcharges in advance of the 2020 holiday shopping season. All together, these recurrent carrier rate increases point to the continued growth of e-commerce, propelled in large part by the COVID-19 pandemic and consumers’ shifting shopping behaviors. According to a consumer insights survey by Radial, for example, 66% of U.S. shoppers anticipate they will increase their online purchases during the 2020 holiday season, with 60% planning to shop less in-store this season due to fear of COVID-19 exposure.

As consumers increasingly turn to omnichannel shopping to safely buy goods during and beyond the pandemic, shipping volume has increased exponentially, putting increased demand on carriers and leading to the rollout of these surcharges and increased rates to offset costs.

As retailers continue to face these rate increases in tandem with higher levels of online orders, they’re challenged with the need to manage these volumes successfully and offer cost-effective ways to meet rapidly evolving customer demands. Growing their carrier network can help any merchant effectively tackle these challenges by introducing more options and capacity into the parcel delivery mix.

New call-to-actionImplementing and optimizing a multi-carrier parcel shipping strategy serves as a key component in cost control for retailers and their ability to quickly react to carrier surcharges and rate increases. By leveraging a cloud multi-carrier shipping system, retailers 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.

To learn more about how a multi-carrier shipping system can help your business optimize parcel shipping to help control costs, contact us today.

Peak Season 2020: 6 Parcel Shipping Best Practices

As a result of the COVID-19 pandemic, the retail landscape in 2020 barely resembles that of years past.  Supply chains worldwide have been disrupted and increases in e-commerce have limited shipping capacity and impacted delivery times. Many experts are also predicting a second wave of COVID-19 cases this fall and winter, creating uncertainty and unease everywhere.

Given this landscape, retailers are preparing for an unprecedented holiday shopping season, most of which may take place online.  According to May 2020 data from daVinci Payments, 71% of U.S. adults are planning to do more than half of their holiday shopping digitally this year.  Should this prove true, retailers will be on the order fulfillment end of record levels of online orders, and to manage these volumes successfully, necessary extensions in operations, fulfillment capacity, and customer service should be soon underway (if they’re not already).

To help plan, we’ve pulled together six best practices for shipping parcels during the 2020 holiday season:

1. Plan for Earlier than Usual Holiday Shopping

Experts say the combination of retailers’ decisions to close stores on Thanksgiving, questions about the timing of Amazon’s Prime Day, and the tremendous opportunity for e-commerce sales this holiday season could create a new holiday shopping calendar, wherein sales occur earlier and big, in-store sales at the end of November play a much lesser role in holiday revenue – if at all.  In fact, some of the biggest retailers are planning for a surge as early as October:

  • Target announced it will launch its holiday sales in October. “Historically, deal hunting and holiday shopping can mean crowded events, and this isn’t a year for crowds,” it said in a blog post.
  • Macy’s CEO Jeff Gennette said, “But when you think about a Black Friday, if you think about the 10 days before Christmas, what does that mean in terms of traffic if people are nervous about gathering with crowds?” He anticipates the holiday shopping season will begin after Halloween.

2. Use Regional Carriers

If you’re competing against retailers that offer one-day and same-day delivery, adding regional carrier options can help lessen their competitive advantage.  Regional carriers can be the key to faster, cheaper, and more flexible delivery services, usually offering next-day ground delivery within 400 miles of a shipment’s origin – often at a lower rate and with fewer surcharges than the national carriers. In comparison, the next-day footprint of the national carriers’ ground service is only 200 miles.

3. Leverage a Cloud Multi-Carrier Parcel Management System

To manage high volumes of parcel deliveries while maintaining on-time delivery, retailers need to leverage multiple carrier services.  A cloud multi-carrier parcel management system will quickly access different carriers’ (including regional carriers’) shipping rates through a single system, enabling retailers to quickly compare rates and select the optimal carrier service for each shipment according to business rules.

Retailers can also integrate their multi-carrier parcel management system with their e-commerce platform to give online customers the ability to choose from various delivery/cost options at the point of check-out. This can decrease the workload for order fulfillment teams while improving the purchase and delivery experience for customers.

4. Offer Free Shipping

In a 2018 survey by Internet Retailer, shipping charges were cited as the most common reason shoppers abandon their carts. And similar findings were echoed in NRF’s quarterly Consumer View 2019 report, in which 75 percent of consumers reported they expect free shipping, including on orders less than $50.

For retailers looking to increase online sales this holiday season and recoup in-store losses caused by the pandemic, this is likely unwelcome news.  After all, absorbing shipping costs reduces margins.  And the alternative,  wherein a retailer simply embeds the shipping cost into the purchase price of the product, runs the risk that consumers will find the same product at a lower price elsewhere.

One way for retailers to give consumers the shipping offer they want while protecting the bottom line, is to secure the most cost-effective carrier service. Again, a multi-carrier parcel management system  ensures the best carrier service is used for every parcel, and it can also help retailers avoid unexpected custodial fees incurred by bad addresses and non-compliant labels.

5. Take Steps to Ensure On-Time Delivery

One of the easiest ways to mar an otherwise good online purchase experience occurs in the final mile. Whether the delivery is late, damaged, or lost, retailers can easily lose a customer and even sustain a reputation hit from poor online reviews and/or word-of-mouth when the delivery experience fails to – ahem – deliver.

New call-to-actionA sophisticated multi-carrier parcel management system will include a Control Tower, which means retailers can proactively manage against unwanted delivery events and provide shoppers with delivery transparency. Specifically, the system will send early warning signs when there are parcel delivery issues or “exception events,” empowering customer service teams to proactively trouble-shoot the exception event and communicate delivery updates to the customer in real time. For example, perhaps the product can be sent from a different distribution center to arrive on time. Or perhaps the customer is willing to retrieve the product from a nearby store or locker. Customers can even track and trace shipments on company websites without the need to visit carrier sites, reducing inbound calls about shipment status to customer service and increasing the customers’ browsing behavior on the retailer’s website, which (fingers crossed!) could lead to additional purchases. Consider too that tracking delivery exception events enables retailers to capture accurate carrier performance data – improving carrier service measurement and better informing carrier contract negotiations.


6. Put a Returns Strategy in Place

Consumers will appreciate a fast, efficient returns process and will be more likely to generate repeat business if their returns experience is a good one. The key to winning this customer loyalty is to make the returns process simple.

Forward-thinking organizations who put the customer experience first employ a variety of creative methods for simplifying returns, including dual-use labels (labels that serve the purpose of both the outbound shipment and return), peel-off labels (where the outbound label easily peels off to expose a return label), and perhaps most notably, accepting returns of online orders in stores. This last approach is popular among omnichannel retailers that have both online and physical stores, but it was also adopted by Amazon, who has partnered with a large retail chain to accept, process, and ship returns at no cost to the customer – they simply initiate the return in the app and take the item to the store where it’s scanned, processed, and held until shipment.

The 2020 Holiday Shopping Season is Here

Looking ahead to October, retailers should have a parcel shipping strategy in place that delights customers and increases business.  To learn more about simplifying the complexity of high velocity parcel shipping, contact us today.

Carrier Surcharges in Advance of the Holidays: What You Need to Know

To say the ongoing COVID-19 pandemic has been a challenge is, at this point, likely a bit of an understatement. But one of the industries hit the hardest is also the one on which most people are now incredibly reliant: parcel shipping.

In early March, at the onset of the pandemic, FedEx actually suspended its 2020 profit outlook, citing the “significant impact” of the Coronavirus moving forward. As was true with so many carriers during this time, FedEx looked to cut costs in any way they could to remain profitable while shipping a record number of parcels, and they levied their fair share of surcharges as one way to boost the bottom line.

Unfortunately for carriers, these record shipping volumes show no signs of slowing.  The shipping landscape has yet to return to “normal” at this point, and industry experts predict it may not ever.  And with a record number of consumers now conditioned to – and comfortable with – e-commerce, all signs indicate this extraordinary year could very well be punctuated by an extraordinary peak season.  As a result, many carriers are planning ahead, and turning once again to surcharges as a way to protect their profits.  In fact, organizations like UPS, FedEx, and even the USPS have already announced they are adding a variety of holiday carrier surcharges to their prices.

Holiday Parcel Surcharges: Breaking Things Down

USPS

The United States Postal Service has made major headlines in the last few weeks, to the point where it can be easy to forget they were actually the first to announce proposed (and unprecedented) holiday surcharges. In anticipation of a massive holiday-driven demand for e-commerce parcel shipping, the proposed surcharges will go into effect from October 18, 2020 to December 27, 2020, and add anywhere from $0.24 to $1.50 more per package shipped, no exceptions.

It’s important to note this is a step the USPS has not actually taken before – in the past, it was limited mainly to carriers like UPS and FedEx. However, the new Postmaster General, Louis DeJoy, said this was a direct result of higher-than-expected demand and would directly impact shippers sending more than 25,000 packages per week during the holiday season.  And while it’s absolutely true the USPS’s holiday surcharges are higher than expected, they’re not nearly as high as what FedEx and UPS are planning…

UPS

Also bracing for a historic peak holiday shipping season, UPS has announced they will be adding surcharges ranging from $1.00 to $3.00 per package, depending on the carrier service. This will begin with the onset of peak season on October 4 and will affect all customers shipping more than 25,000 packages per week.

Under these new rules, any customer with peak volumes exceeding more than 110% of their average weekly volume dating back to February of 2020 will pay $1.00 per package extra on all ground residential deliveries. If using residential air delivery, this number will increase to $2.00 per package in addition to what they were already paying. Likewise, an additional $1.00 will be added to the cost of SurePost – which is where UPS hands packages to the USPS for last-mile residential deliveries.

As was true in the case of the USPS, a spokesman for UPS said these surcharges were designed to “balance the company’s capacity needs and costs with projections for holiday demand.”

Note, UPS has also indicated there will be a new $5.00 surcharge on all packages requiring “unusual and labor-intensive processing.” Large packages typically requiring special handling are those with a length exceeding 96 inches, or a combined length and girth exceeding 130 inches. Shipments exceeding UPS’s own “maximum limits” will pay an additional $250 surcharge.  All UPS surcharges will run until January 16, 2020.

FedEx

Finally, FedEx indicated it will also implement similar surcharges in an effort to “continue providing our customers with the best possible service during this challenging time.” Their surcharges go into effect from November 2, 2020 to January 17, 2021, and customers must once again reach a certain volume threshold to be impacted.

New call-to-actionFedEx’s holiday carrier surcharges are actually a bit more forgiving than the others, only impacting customers who ship more than 35,000 packages on average per week in October and November. The total charge will vary depending on how much the shipper shipped during this period compared to how much they were shipping from February 3 to March 1, 2020 – prior to the onset of the pandemic.

According to FedEx’s own website, residential shipments could see a surcharge added to each package ranging from between $1.00 and $5.00 depending on the circumstances. FedEx SmartPost – which is where FedEx hands shipments to the United States Postal Service for last-mile delivery – will see an increase similar to UPS’s of an additional $1.00 per package from November 2 to November 29. At this point, the surcharge actually increases to $2.00 per package until December 6, before decreasing back to $1.00 until January 17, 2021.

Respond Now to Carrier Surcharges

If your current shipping capabilities don’t provide opportunities to optimize parcel shipping such as parcel consolidation and carrier invoice auditing, you’re likely missing potential savings and impeding your business’s ability to quickly react to carrier surcharges. To learn more about the latest parcel shipping tools and technology, contact us today.

What is a Multi-Carrier Parcel Management Solution?

The term “multi-carrier parcel management solution” has become more widespread as companies digitize their supply chains to successfully execute an omnichannel order fulfillment strategy and ship parcels competitively.  But what is a multi-carrier parcel management solution?

According to Gartner:

“Multicarrier parcel management solutions help companies select the appropriate (best) parcel carrier from among all contracted carriers. This selection is based on order characteristics (such as weight and dimensional properties), delivery rules (such as delivery time and delivery zone) and carrier performance, while considering the cost differentials of various carrier offerings. These tools also enable shippers to manage the creation of labels, create shipper manifests, provide status messages to customers or customer service representatives, and manage carrier rates.”

In addition, multi-carrier parcel management solutions often integrate with a company’s ERP system and/or a warehouse management system (WMS) to create a single, efficient, supply chain ecosystem. Orders flow seamlessly between the technologies in the ecosystem, creating organizational alignment, decreasing the time from order to delivery, and yielding benefits such as:

  • Decreased transportation spend and increased profits per parcel
  • Time savings
  • Improved customer satisfaction
  • Informed decision-making
  • Simplified collaboration with supply chain stakeholders
  • Cost-effective operational scale

Choosing the Right Multi-Carrier Parcel Management Solution

ebook logistyx quadrant Choosing a TMS for Parcel ShippingEvery shippers’ parcel shipping operations are unique.  And the truth is, so too are the multi-carrier parcel management solutions on the market.  Some offer basic rating, rate shopping, and labeling, while others offer more advanced functionality such as returns management and Business Intelligence. To reap the benefits listed above and quickly generate an ROI, it’s important to choose the solution that’s the best fit for your business.  The first step is to understand the direct impact of each feature within the technology and then determine whether it can improve your specific shipping environment.

According to Gartner, most multi-carrier parcel management solutions offer basic features that unlock potential for improved operational efficiencies and increased visibility throughout the supply chain.  These may include:

  • Parcel Contract Management
  • Carrier Compliance
  • Parcel Consolidation
  • Label and Document Creation
  • Parcel Execution
  • Real-Time Parcel Visibility
  • Reporting/Analytics

While a shipper’s top priorities are usually cost optimization and the ability to work within a large carrier services network, capabilities outside of the basics listed above can enhance the entire shipping process, deliver better customer service, and utilize data more effectively. These advanced features may include:

  • Parcel Optimization
  • Procurement and Bid Optimization
  • Automated Rate Shopping
  • Parcel Freight Payment
  • Mobile Solutions
  • Last-Mile Delivery
  • Returns and Claims Management

With so many features and functionality available in multi-carrier parcel management solutions, even the most seasoned industry expert can become confused when looking to implement a new solution.  Our best advice is to remember the right solution for your business will be the one that expands and contracts with your business, so you always have the features you need to execute your order fulfillment strategy.

The Difference Between a Cloud and an On-Premise Multi-Carrier Parcel Management Solution

Multi-carrier parcel management solutions can be installed and accessed in different ways. The traditional way, and the one used by many early adopters of transportation technology, was on-premise.

An on-premise multi-carrier parcel management solution delivery model is exactly that – the solution is hosted on your premises (aka your servers). This means the system is reliant on your network and your IT resources. While this can mean faster LAN speed and file access, it also means you need the right infrastructure in place to manage your system’s security, maintenance, IT, upgrades, and support.  Many companies find that as they scale (think e-commerce), they quickly become underwater.

In contrast, a cloud multi-carrier parcel management solution is accessible to users via the internet and is managed by a third-party vendor. Rather than installing and hosting the software locally on your servers, you basically “lease” it on a fee basis.

Gaining in popularity, a cloud delivery model improves scalability, accessibility, and security – seamlessly connecting people, processes, and third parties to your parcel shipping operations in real time, regardless of location and with minimal upfront costs and IT investment. All users can execute, track, and analyze parcel shipping in a single solution – improving reaction time, collaboration, and decision-making accuracy.

And since the solution provider hosts and maintains the cloud multi-carrier parcel management solution, the software doesn’t monopolize space on your servers or consume your IT resources. The solution provider is responsible for all upgrades, repairs, and support, which means the solution deploys faster and enables you to realize a return on investment quickly — without the hit of an initial investment and with the benefit of accelerated implementation and integration processes.

Also important to note: an additional benefit of a cloud model is security. A reputable cloud multi-carrier parcel management solution will potentially provide more robust data security than you could yourself – particularly if you lack deep IT resources, staff, controls, or expertise.

How Can a Multi-Carrier Parcel Management Solution Decrease Transportation Spend?

Whether your parcel shipments are crossing borders or arriving next day, a multi-carrier parcel management solution lowers shipping costs by:

  • Comparing Carrier Rates:Multi-carrier parcel management solutions enable shippers to automatically access all of their negotiated carrier rates in one system, choosing the optimal rate for each shipment according to the shipper’s business rules and ensuring every shipment is in compliance with each carrier’s labeling and communication standards, as well as with any applicable trade regulations.
  • Paying Carrier Invoices Correctly:Carrier invoice auditing is another way to save on total transportation spend.  For shippers shipping large parcel volumes, auditing carrier invoices is crucial. Mistakes can, and do, happen. For example, a carrier may bill for a service level promised, but not received, or a carrier may add an unexpected accessorial. These errors can add up quickly and can have a surprising impact on the bottom line.By leveraging a multi-carrier parcel management solution, shippers can automate carrier invoice auditing.  All transportation data, from carrier contracts… to delivery events… to carrier invoices, is captured and normalized in the multi-carrier parcel management solution, which then flags any discrepancies between expected costs and carrier invoices – giving shippers greater control over their transportation spend.And the savings don’t stop there.  In addition to the direct cost savings carrier invoice auditing achieves, shippers also benefit from “soft cost” savings by eliminating resource intensive tasks such as opening mail, sorting invoices, verifying rates, auditing and approving invoices, paying carriers, and performing cost accounting.  By removing these soft costs, accounting teams can focus their efforts on more strategic initiatives.Furthermore, carrier invoice auditing provides shippers with an overview of invoiced carrier costs versus carrier agreements, enabling them to ensure their carrier procurement is aligned with strategy and to verify they’re receiving the delivery outcomes for which they’ve paid.  A sophisticated multi-carrier parcel management solution will model and compare selected carrier services against actual carrier performance to find routing alternatives with lower cost implications and/or faster delivery times. The solution can also reveal even more advanced optimization strategies, such as effective ways to position facilities and inventory around the globe.
  • Improving Visibility:Shippers leveraging a multi-carrier parcel management solution improve visibility into their supply chain operations.  All stakeholders use a single platform to see delivery status updates, receive alerts to delivery events, and make real-time adjustments to keep the supply chain running smoothly and customers happy.  For example, in the event of a delivery disruption, the shipper can take steps to send the product from a different distribution center to arrive on time. Or the shipper can communicate with the customer: is he or she willing to retrieve the product from a nearby store or locker to receive the product on time? Customers can even track and trace shipments on company websites without the need to visit carrier sites, reducing inbound calls about shipment status to customer service and increasing the customers’ browsing behavior on the shipper’s website – which (fingers crossed!) could lead to additional purchases. Consider too that tracking delivery exception events enables shippers to capture accurate carrier performance data – improving carrier service measurement and better informing carrier contract negotiations.

Capitalize on Supply Chain Opportunities

Multi-carrier parcel management solutions like Logistyx TME help companies capitalize on supply chain opportunities by increasing end-to-end supply chain visibility, controlling transportation spend, and leveraging analytics to optimize order fulfillment strategies.  And since Logistyx TME is built on the latest cloud technology, it can be implemented quickly to yield a rapid ROI.

Contact one of our experts to learn more about Logistyx TME today.

3 Practical Tips to Eliminate Hidden Shipping Costs

Many companies have significantly reduced their parcel shipping costs by implementing multi-carrier shipping software that allows them to compare carrier rates and automate labels and document production.  However, you can realize even greater savings by ensuring your multi-carrier shipping software is configured to preempt many common issues that result in hidden shipping costs.

Here are three practical improvements to increase profits per parcel:

1. Correct Shipping Addresses

When is the last time you checked your carrier invoice to review charges related to incorrect shipping addresses?  Address inaccuracies rarely get the attention they deserve, and left unattended, the dollars can quickly add up.

Costs related to incorrect delivery addresses can be huge and accumulate in several ways:

  • Incorrect delivery addresses: Say, for example, a customer accidentally types an incorrect street address for his or her ship-to address. Generally, the carrier will fix the issue with the delivery address, but you’ll pay for this service.
  • Residential delivery erroneously classified as commercial: A common and costly error occurs when residential deliveries are erroneously classified as commercial deliveries. Again, the carrier may fix it, but at a cost per package.
  • Increased customer service costs: Besides carrier surcharges, you as the shipper bear additional internal labor costs every time your customer service and shipping department employees interrupt their daily routine to resolve address-related problems.
  • Unhappy customers and canceled orders: Delivery address problems also lead to frustrated customers, order cancellations, and even the loss of a customer. An interruption or delay makes it too easy for the impulse shopper to decide they don’t really need the product after all.

Solution: Ensure your Multi-Carrier Shipping Software Includes Address Verification Functionality

The easiest way to prevent additional charges and lost customers is to leverage the address verification functionality in multi-carrier shipping software.  A shipping system specialist can help you evaluate your current shipping system and determine which multi-carrier shipping software best fits your needs, asking questions such as:

  • Does your current shipping system allow you to designate shipments as residential or commercial?
  • Does your current shipping system validate addresses at the street level, city, and/or zip code level?
  • Does your current shipping system detect multiple or near duplicate address matches?
  • Does your current shipping system allow the user to view and/or choose address details?
  • What is the address validation source used by your current shipping system?
  • Does your current shipping system require Delivery Point Validation (DPV)? DPV enables you to verify an address actually exists.

The bottom line?  This seemingly small problem adds up to huge costs for many companies.  If you are absorbing extra shipping costs due to incorrect delivery addresses, the right multi-carrier shipping software can eliminate the problems.

2. Add the U.S. Postal Service to your Multi-Carrier Shipping System

As many shippers know, postal shipping via the U.S. Postal Service can be an extremely cost-effective solution for small parcel deliveries.  The U.S. Postal Service also offers several cost-cutting benefits for small parcel shippers:

  • Flat-rate products to simplify shipping: Priority Mail Flat Rate service can be a simple, timesaving alternative for both domestic and international shipments. Designed for shipments up to 70 pounds, there’s no weighing, no researching zones, and no calculating postage.  Multiple box sizes are available to accommodate a wide range of products.
  • No fuel surcharges: Given the volatility of fuel charges, business shippers have a strong interest in this USPS advantage.  The USPS does not add fuel surcharges.
  • Saturday and residential delivery at no extra charge: Currently, the USPS delivers packages on Saturday at no additional cost, giving you up to 52 extra surcharge-free delivery days a year.
  • The USPS doesn’t charge extra for residential delivery: Compared to carriers who charge extra per residential delivery, the savings can really add up.
  • Largest delivery network in the U.S.: The USPS has the largest delivery network in the U.S. and is the only carrier that delivers to P.O. Box and APO/FPO military addresses.
  • Comprehensive delivery tracking: The USPS has significantly enhanced its delivery tracking capabilities for postal shipping. Shipments are now scanned more frequently to track package movements, providing a high level of visibility to the shipper and their customer.

Solution: Add the USPS to your Multi-Carrier System

Your shipping system vendor should be able to help you assess the cost savings you may achieve.  The U.S. Postal Service also provides consulting services for shippers.

3. Leverage Regional Carriers to Reduce Parcel Shipping Costs

Consider using regional carriers to handle some of your deliveries.  This can be extremely cost-effective for companies with a concentration of customers in certain geographic areas.

Regional carriers can be categorized in a number of ways.  Some focus on small parcel delivery, while others offer less-than-truckload (LTL) services for heavier shipping.

Certain regional carriers provide multi-state solutions, while others are couriers or “micro-regionals” that cover smaller geographic regions such as cities or a partial state.  There are hundreds of regional carriers operating in the U.S., providing shippers with plenty of opportunities to find those who offer the right rates, services, and technology.  Regional carriers offer numerous benefits:

  • Lower shipping rates: As a result of lower operating costs, regionals can often pass significant savings to customers compared to some of the major carriers’ pricing. How?  Most regional carriers transport packages via truck hubs instead of airlines, and trucking can be as little as 10% of airline costs.
  • Fewer surcharges: Many regional carriers don’t assess the same delivery surcharges that national carriers do.
  • Negotiating power: Adding regional carriers places shippers in a better negotiating position with their national carriers.
  • Responsive service: Regional carriers may be willing to take on special shipping requirements and have more flexibility in terms of the kinds of services they can offer.

Comparing and Choosing Regional Carriers

ebook logistyx quadrant Choosing a TMS for Parcel ShippingIt’s important to make sure your multi-carrier shipping system will accommodate the addition of regional carriers.  Some vendors already include a wide range of regional carrier integrations.  Perform a carrier cost/service analysis to determine if/where it makes sense to add regionals to your delivery network.  It’s important to assess the carrier’s financial stability, service territory, rate structure, etc.  Your shipping solution vendor should have the expertise to help you with this analysis.

Take Advantage of the Benefits of Multi-Carrier Shipping Software to Address Hidden Shipping Costs

By taking advantage of the benefits of multi-carrier shipping software, you can take advantage of tremendous opportunities to reduce shipping costs.  Of course, you achieve the greatest benefit by 1) ensuring all of the data input into your shipping process is accurately maintained and 2) optimizing your carrier portfolio to include the most cost-effective rates/service to accommodate your customers.

Contact us today to learn more about how multi-carrier shipping software is designed to manage a wide range of shipping scenarios.