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PARCEL

SEPTEMBER-OCTOBER 2012 www.PARCELindustry.com

Credit where credit is due Stamps.com introduces invoicing for USPS postage ®

page 31

Implementing same day delivery page 20 Shippers’ usage of regional carriers — results unveiled! page 14 How to calculate your shipping costs to minimize the impact on your bottom line page 24

#1 IN USPS TECHNOLOGY ®


PARCEL

CONTENTS

SEPTEMBER-OCTOBER 2012 | volume 19 | issue 4

Features

Departments 05 Editor’s Note

On with the Show! By Amanda Armendariz

07 Going Global

Getting Started on Exporting — Part Two By Tom Stanton

08 Regional Alternatives

The Peak Season Solution By Mark Magill

10 Parcel Perspectives

Painting the Trucks — The Opportunity and the Challenge of Leveraging Carrier Acquisitions

14 Survey on Shippers’ Use of Regional Carriers — Results Unveiled!

Regional carriers can be a wonderful component of a shipper’s strategy, but this survey revealed some surprising findings. By Rob Martinez

By Peter Starvaski

12 Ship Right

Four Tips that Can Yield Big Benefits for Large Shippers By Christine J. Erna

Extras 27 Sustainable Parcel Spend Management Case Study

28 SPOTLIGHT

What to see at the PARCEL Forum

30 Automation for the Parcel 20 Same Day Delivery…. And how you can make money at it.

By Terry Harris

24 Calculating Shipping Charges

How to figure these costs— and what to actually charge. By Tim Sailor

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SEPTEMBER-OCTOBER 2012 | www.PARCELindustry.com

Sorting and Labeling Industry Application Article


EDITOR’S NOTE AMANDA ARMENDARIZ

On with the Show! slightly corny title, perhaps, but it accurately conveys my excitement as we head into October. The PARCEL Forum is always a great time — even if the weeks and months leading up to it are a bit hectic. But somehow, everything seems to fall into place, and the sessions, exhibit hall, receptions and other events are once again a hit with our attendees. I expect it to be exactly the same this year. If you’re attending the show (October 23-25 at the Hyatt Regency O’Hare in Chicago), I hope you’ll stop by PARCEL’s booth. I, and many other staff members, will be in attendance, and we’d love to chat with you! Whether you have a suggestion about how to improve PARCEL or just want to stop and say hello, please come on by. We’re also looking to expand our wonderful base of writers, so if you’d be interested in providing content for PARCEL in an editorial capacity, you’re the person I want to see. You may also notice that our magazine is sporting a new look. We decided it was time to shake up the design end of things and update our theme. Our designer did a wonderful job — we hope you are as impressed with it as we are. And what better place to debut our new look than at the PARCEL Forum? But rest assured that the changes are only cosmetic — beneath the new color palette and font changes, there’s still the same great, relevant, up-to-date information we’ve been dedicated to providing for almost two decades now. And speaking of content, as we come upon 2013, we will have some new material in addition to our regular departments and features. So be on the lookout for the January/February issue to see the changes we have in store.

Did you miss our e-alerts? PARCEL is dedicated to providing the most up-to-date information to our readers, and our subscribers thanked us profusely for getting out the news of FedEx unexpectedly announcing its 2013 rates during an investors’ conference call, within hours of it happening. We did the same when DHL announced its rate increases a few days later. Did you miss these e-alerts? Never fear; they’re on our website, www.PARCELindustry.com, which is a fantastic resource for anyone in the shipping industry. Just scan the QR codes below!

DHL

FEDEX

Are you signed up for our e-newsletter? If not, what are you waiting for? As of press time, these were some of our most popular articles from recent e-newsletters: Ÿ Returns Can Be Hazardous and Costly Ÿ Analyze Your Logistics Services Provider’s Intent Before Negotiating Ÿ Are There Some Nasty Little Surprises in Your Supply Chain? To get great articles like these emailed to you on a monthly basis, just scan the QR code below, or go to www.PARCELindustry.com and click on the “Newsletter” tab at the top of the page.

But, let’s not get ahead of ourselves. First we have the forum to attend — and it’s certain to be a hit. I hope to see you there! As always, thanks for reading PARCEL.

CONNECT WITH US Like us PARCEL FOLLOW @PARCEL_media Join PARCEL Magazine Group


president

chad griepentrog

publisher

marll thiede

editor

circulation director

amanda armendariz

[ amanda.c@rbpub.com ]

rachel chapman [ rachel@rbpub.com ]

marketing creative director advertising

cierra bauer kelli cooke ken waddell

[ 608-442-5064 ] [ ken.w@rbpub.com ]

Josh Vogt [ 785-320-7950 ] [ josh@rbpub.com ]

PARCEL PARCEL (ISSN 1081-4035) is published 9 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2012 Š by RB Publishing Inc. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, RB Publishing Inc. or its staff becomes the property of RB Publishing, Inc. The articles in this magazine represent the views of the authors and not those of RB Publishing Inc. or PARCEL. RB Publishing Inc. and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine. SUBSCRIPTIONS: Free to qualified recipients: $12 per year to all others in the United States. Subscription rate for Canada or Mexico is $35 for one year and for elsewhere outside of the United States is $55. Back-issue rate is $5. Send subscriptions or change of address to: PARCEL, P.O. Box 259098 Madison WI 53725-9098 Allow six weeks for new subscriptions or address changes. REPRINTS: For high-quality reprints, please contact our exclusive reprint provider. Scoop Reprint Source, 800-767-3263 ext. 307, www.scoopreprintsource.com. 2901 International Lane Madison WI 53704-3128 p: 608-241-8777 f: 608-241-8666 www.PARCELindustry.com

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SEPTEMBER-OCTOBER 2012 | www.PARCELindustry.com


going GLobAL By tom stanton

getting Started Exporting Part 2 n last year’s NovemberDecember edition, we presented a case study of exporting some fruit juices to Canada. At the close of that article, we promised to go a little deeper in a future issue. In this article we will come through on that promise with part 2 of “Getting Started Exporting.”

Dimensional weight In the November article, we used a shipper of non-perishable fruit juice under normal environment conditions as our example. We noted that this product would ship at 16 lbs. if shipped via ground service since the shipment is less than 5,184 cubic inches but it would ship at 18 lbs. for international express shipping. Dimensional weight can be a significant factor and may be worth examining if your cargo has a lot of items shipping at dimensional weight. Larger shippers are sometimes able to negotiate higher dimensional factors, thus reducing their freight costs with small package carriers. If your packages are sturdy enough for double stacking, you also may be able to negotiate better dimensional factors with an LTL carrier. Dimensional factor negotiation is not as common in air freight unless you are shipping air container loads. Professional packaging advice from the small package carrier or a packaging consultant can also be an important resource in reducing the dimensions of your packages while maintaining the protective covering you need.

shipment ConsoliDation anD nRi

shipment, classification, duty payments, and payment for the goods kept on file for seven years after the data of Customs clearance.

In the November article, we also reviewed shipping costs and concluded that larger volume shipments such as palletized loads were more economical than small package shipments. Many shippers to Duties Canada begin by shipping individual Duties on shipments to Canada are calcuorders via small package and then con- lated on the transaction value or the price solidating the shipments for movement paid for the goods. If you do not have a across the border via truck with final Canadian corporation, your price for duty delivery via Canadian small package car- purposes is the price you charge the conriers or Canada Post. This also makes signee exclusive of the freight charge. If Customs clearance less expensive per you have a Canadian entity, you can sell unit when one clearance is made for all the goods from the United States to your Canadian corporation at a transfer price the items in one consolidated shipment. In order to make one Customs clear- rather than the end sale price. The details ance work effectively, the shipper can of transfer pricing are beyond the purview become the importer of record into of this article but it can result in legally Canada as a Non Resident Importer, or paying less duties on the goods transNRI. By taking this step, the shipper and/ ferred to your Canadian affiliate. or his agent can easily compute duties and taxes for the Canadian consignee summaRy and make it easier to quote the “landed This article is part two of a three part series cost” or “delivered cost” to the Canadian focusing on exports to Canada. The initial customer. Information on how to set up article made a quick summary of dimenas a Canadian NRI is available at http:// sional weight, shipping costs, harmonized medey.com/pdf/Canada%20Non%20 classification and pricing. In this artiResident%20Importer.pdf and from a cle, dimensional weight, shipment connumber of sites sponsored by forwarders solidation and importing into Canada are reviewed in more detail. To read part one, and small package carriers. scan the QR code below or visit the content If your company becomes a Canadian library on www.PARCELindustry.com and NRI, it is important to read the tax go to the November/December issue. p and Customs rules and put a compliance program in place. Not long ago one customer of ours had to scramble Tom STanTon, International to obtain records and avoid penalties Analyst, AFMS, LLC can be from Canadian Customs because they reached at 503.246.3521. had not put a Customs compliance program in place. Canadian import records must be maintained with evidence of

september-october 2012 | www.PARCELindustry.com

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regional AlTernATiVes By Mark Magill

The Peak Season Solution t’s Friday, December destinations. This level of flexibility can 21 at 6:00 PM, and provide your company with a huge advanyou’re the distribu- tage over your competitors. The very largtion manager of a large est shippers are well aware of this and e-commerce company. The use regional parcel carriers accordingly. national carrier’s last truck The reason regional parcel carriers are has just pulled away from your able to offer this level of flexibility is distribution center dock and because they are not tied to huge intrayou’re wondering how you’re going continental line haul systems. Those to get all the packages you have yet networks often involve intermodal transto process delivered by Monday the port with limited departure schedules. day before Christmas. Cyber Monday The regional carriers operate on localized seems like a distant memory but you’ve hub and spoke systems that link major still got this last peak season hurdle to metropolitan areas like Minneapolis with surmount. What do you do? Chicago using tractor trailer line hauls While none of us has the luxury of a with frequent departures. time machine to go back and change Implementing the regional parcel carthings, one course of action you could riers is much easier than you might have taken was to add a regional par- think. They all have IT teams in place cel carrier to your carrier mix before the to help integrate with your shipping sysstart of peak season. The regional par- tems. And many of them have partnered cel carriers operate in most large popula- with multi-carrier shipping software protion centers and link the major cities of viders to create shipping modules that the US with next day delivery at Ground are the closest thing to plug and play rates at distances up to 600 miles from in the shipping system world. And if their point of origin. you are concerned about limited dock As their customers know, flexibility is door space, keep in mind that since the hallmark of regional parcel carriers. the regional carriers can pick up much One of the most competitive features they later than the national carriers, you can offer is much later pick up times than the arrange a time for them to come after the national carriers. That forlorn distribution national carriers have already departed manager could have had a regional parcel from your facility. carrier pick up at 8:00 pm and still have Now is the time to contact your local satisfied his customers with shipments regional parcel carrier. The clock is tickdelivered by Monday, December 24. ing; it’s now October and on the day In fact, some regional parcel carriers I wrote this article, there were only 55 offer their very largest customers pick- shipping days left until Christmas! p ups on Sunday with delivery on Monday to Zone 4 destinations over 500 miles away. They also offer midnight pick-ups Mark Magill is Director of Business Development, with deliveries that same day to Zone 2 OnTrac. Visit www.ontrac.com for more information.

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september-october 2012 | www.PARCELindustry.com

ParCel offers many educational webinars including some on regional carriers! if you’ve missed our webinars, don’t worry — they are archived on our site, so you can check them out at any time. Just go to www.PArCelindustry.com and click on the “webinars” tab at the top, or scan the Qr code below! And be on the lookout for more great webinars in the future.

got a creative itch you need to scratch? Then consider becoming a writer for PArCel! PArCel is always looking to add to our stable of writers; our industry experts provide wonderful insight to our readers, which makes PArCel the premier source for information in the industry. We are looking for writers on a variety of topics, including packaging, iT, e-commerce, warehousing and more! Contact editor Amanda Armendariz at amanda.c@rbpub.com for more information. And who knows — in 2013, your words could be gracing these pages!


parcel PersPective By Peter StarvaSki

painting the trucks

the Opportunity and the challenge of Leveraging carrier Acquisitions s a provider of multi-carrier shipping software, I am often explaining why there are geographic pockets where FedEx, UPS, DHL, TNT, or some other carrier cannot be supported with the carriers’ standard software. The reason is often due to the carrier expanding their footprint through an acquisition. Often the first thing the acquiring entity does is “paint the trucks,” and it can be many years before the acquired company moves onto the same technology platform as the parent company. This results in a software provider having to implement a separate set of compliance (rates, labels, manifests, etc.) for that region of the world. As just one example, FedEx has had six acquisitions in the last four years, in Hungary, China, India, Mexico, Poland, and France. The biggest recent news in the area of acquisitions is UPS’s $6.5 billion bid for TNT. As of this writing UPS has extended the offer through to November 9 in response to the European Commission’s investigation taking longer than originally anticipated. More than likely, the investigation will result in UPS having to divest certain holdings in some EU countries in order to maintain a competitive landscape. Back in March, UPS’s CFO Kurt Kuehn told analysts that the integration of the two companies would take four years and an additional one billion dollars. That can buy a lot of brown paint. What’s interesting 10

is that TNT itself grew through acquisi- system?” Answer: “One that works.” For tions in Spain, China, Brazil, and Chile. all of these reasons, a carrier is reluctant So, while all of this provides for greater to go into an acquisition and completely infrastructure, in order for the shipper to remove the legacy systems. utilize the full footprint, they are actually Many shipping software providers, in adding the equivalent of multiple carri- the configuration of a parcel carrier, will ers on their software platform. How easy allow the customer to give the carrier is that to do with your current software? entity a “friendly name,” which is the one What if it’s a carrier that is not ‘out of the used when interacting with the software. box’ software? If your company wants to These are often the carrier codes that are be able to ship globally, your software sys- used in other parts of the operation (an tem needs to be able to provide tools that upstream WMS passing UPSGND43, for allow you, the customer (not necessarily example, to indicate a particular UPS the software provider) with the ability to Ground account). As the name of an on-board new carriers quickly. The ship- acquired company changes, it can often ping software should enable bringing on be a simple enough act to perform the new geographies (or new products or new software equivalent of painting the truck customers) that require new carriers, in a by changing the friendly name of the carquick and efficient manner. rier in the configuration screens, if you are The reason that carriers do not quickly already using a carrier that is acquired. A convert the technology platform to the recent example of this is last year’s sellparent company is due to the high cost ing of DHL Canada’s ground division to of re-tooling. Often the labels are based TransForce; TransForce will certainly drop on scanners and other devices used both the DHL branding (it’s going to market as in the field and the hubs. Manifests Loomis Express). Anyone that had been are often linked to other software used shipping with DHL Ground in Canada for planning and tracking shipment sta- should be able to go into their software tus. As we all know, software evolves and paint the truck (figuratively). p as capacity increases, as the physical structures involved change and either increase or condense. There’s an old say- peter starvaski is Director, Product Management ing, “What’s the definition of a legacy at Kewill.

september-october 2012 | www.PARCELindustry.com

Bottom line:

Make sure your shipping software has the ability to allow you to onboard new carriers quickly. Taking advantage of the fact that one of your carriers just expanded their footprint shouldn’t cause you to wait four years before the technology converges.


SHIP right By Christine J. erna

4 tips that Can Yield Big Benefits for Large Shippers tHeRe’S a SaYINg tHat gOeS: “Faster, better, cheaper — pick any two.” But today, shippers can gain all three: faster delivery, fewer returns and overall savings. Here are four helpful tips on how to ship to your advantage, adding significant efficiency to your operations.

Invest in address quality How big is the issue of address quality? One shipper we know recounts receiving a data file from a customer for pick-and-pack. The file hadn’t been subjected to address-quality review, and a full 20% of the 30,000 parcels shipped were returned. Each of those returned packages had to be processed and reshipped. Customer satisfaction declined as deliveries were delayed. And, for packages with address errors that UPS or FedEx could and did resolve, the shipper incurred an address correction fee of as much as $10-15 per package. Running data through CASS Certified software and NCOALink (the National Change of Address database) before turning over that pick-and-pack list could have given a dramatic boost to that list’s performance: CASS typically ensures accuracy in the 96-100% range — and the NCOA database contains address updates for 80% of movers.

“If It Fits, It Ships” New Regional Options With this program, shippers gained a new way to save time and money. Using USPS-supplied boxes, shippers send packages at a flat rate without needing to invest the time to measure the exact weight and affix required postage. That program has expanded. The USPS recently completed a successful pilot of Priority Mail Regional Rate Boxes — and this program is now available nationwide. With Priority Mail Regional Rate Boxes, the closer the package destination, the bigger the savings. The difference in cost between the closest and farthest zones ranges from $4.48 to $30.58 per package, depending on the box size selected. The Priority Mail Regional Rate Boxes are available directly from the USPS at no charge — and the savings for shortrange shipping are tremendous.

ask for “the Last Mile”Last-Mile Parcel Select is an

Let the USPS Help with Your Return Mail The FirstClass Package Return Service expedites return mail and gives high-volume shippers an easy way to track status on return shipments. Pricing is scanned in based on a merchant average, reducing the time and labor required to weigh each package and affix exact weight-based postage. As a part of this process, a USPS Merchant Returns label tool gives several ways to create shipping labels, each of which adds convenience for customers. These labels also help to ensure that the address, postage, and tracking information is complete and accurate. Returns take just two to four days. p

1

2

excellent example of USPS innovation at work. LastMile Parcel Select Shipping represents collaboration between Fed Ex, UPS, DHL, other couriers, and the USPS. With it, shippers can use a courier service to get a parcel close to a remote destination, delivering to a nearby post office rather than the final address. Then USPS, with its exhaustive daily delivery routes, takes the parcel “the last mile.” Particularly in rural areas where distances are long and the numbers of parcels are few, Last-Mile Parcel Select is key to cost-efficiently expediting deliveries. This is an increasingly popular program — in 2011, it accounted for seven percent of shipments, and the USPS reports that it is growing at 20% per year. Shippers should be sure to check with their couriers to see if Last-Mile Parcel Select is available and whether it is used to help expedite their shipments. 12

september-october 2012 | www.PARCELindustry.com

3

4

CHRIStINe J. eRNa MDP, aQS, is Enterprise Postal Consulting, Pitney Bowes. Visit www.pb.com/Management-Services/consulting/postal-and-return-mail.shtml or call 888.245.PBMS for more information. *For mailable items up to 70 lbs. Visit USPS for details.


Survey

on Shippers’ Regional Carrier Usage —

Results Unveiled By Rob Martinez

Thirty-nine percent of survey participants come from smaller businesses with revenues under $25 million, 32% between $25-500 million, and 29% greater than $500 million.

$25-$99 million 09%

39%

$100-$499 million $500-$1,000 million

15

%

%1+ billion

18%

On average, how many parcels do you ship monthly with all carriers?

14

SEPTEMBER-OCTOBER 2012 | www.PARCELindustry.com

08%

05%

r

10 0,0 00 +

50 ,00 099 ,99 9

25 ,00 049 ,99 9

10 ,00 024 ,99 9

5,0 00 -9 ,99 9

Un de r5 ,00 0

he Ot

Ed ho uc les ati ale on al, go or vern no m np en Ot rofi t he t rb us i sh nes ips s w pa hic 3P rce h ls ve L, ca nd rr i or er to or sh ot Ins ipp he ur ers r an ce or ins fina tit nci ut al ion

il o rw ta Re

Ma

nu

fa

ctu

rin g

06%

13%

14%

13% 06%

07%

12%

14%

<$25 million

20%

PARCEL’s survey on regional carrier usage generated hundreds of participants from a variety of industries and company sizes. Nearly two-thirds of survey participants ship B2B (63%) compared to 37% B2C.

28%

29%

What best describes your company?

What is your company’s annual sales/revenue?

54%

When it comes to parcel delivery, FedEx, United Parcel Service (UPS), and the United States Postal Service (USPS) are clearly the dominant players in the US. However, a growing number of shippers are using regional parcel carriers to complement the service of the national providers. The regional parcel carriers advertise many benefits over national carriers including cost savings, additional service options, and same day delivery as well as custom/specialized solutions. Is your business a candidate for regional carrier services? What is the service experience and how much can you save? Are there any downsides to consider? To better understand the regional carrier market, its advantages and potential disadvantages, Shipware and PARCEL teamed up to survey PARCEL readers.


Who is your primary parcel carrier

National Ground parcels by zones

(greater than 51% of outbound shipments)?

(Source: Shipware, LLC)

45%

The numbers of inner zone distribution for Shipware’s customer database are even higher. Of the hundreds of millions of shipments in our customer database, we found that 64% are shipped between Zones 2-5, and only 36% to Zones 6-8.

31%

35.6%

Zones 6-8

Zones 2-5

72%

What benefits have you realized from regional carrier usage?

Approximate % of all parcel shipments delivered within 500 miles of origin? 1%-10% 12%

18%

11%-20% 13%

16%

21%-30% 31%-40%

24%

17

%

41%-50% More than 50%

Imp

rove

d re

por

Oth

er

ting

02%

09%

11%

12%

14%

16%

17%

25%

44%

53%

Larg Cos er n t sa ext ving day s deli very foot prin Few t Bet er s ter u r c or n har om ges inim um cha rge Sam e da Imp y rove opt ions d cu stom Spe cial er s ized ervi /cu ce stom Bet s ter olut dim ions ens iona l di viso Bet ter r bill ing term s Bet ter sale s re p

Migration from long- to short-haul distribution has long been a secular trend in distribution. This trend is based in part on the supply chain strategy of moving distribution facilities closer to end customers to meet increasing customer demands of faster delivery at lower costs. Since regionals operate in a concentrated geographic market, many are able to offer transit improvements over FedEx and UPS. As an example, regional carrier Eastern Connection, based in Woburn, MA, handles deliveries from Maine to Virginia, all included as “next day” delivery points. Using FedEx and UPS Ground service, the same coverage area extends to five zones for 1-4 day delivery. We asked survey respondents to report the percentage of parcel shipments delivered within 500 miles of origin. Nearly half of survey respondents (48%) ship at least one third of all packages within 500 miles of origin. Only 12% of respondents ship less than 10%, and 18% ship more than 50% of parcels within 500 miles of origin.

We also asked survey respondents that have used regional carriers to list the benefits received over the national carriers. Lower costs led the list with 72% reporting cost savings.

23%

02%

03%

US

Fe dE xS ma rtP os t

PS R pa egio rce na lc lC on arr so ie lid rs UP ato or or S Su rs UP re S M Pos ail t, U Inn PS ov Ba ati sic on s

Fe dE x

UP S

04%

14%

64.4%

How are regional carriers able to undercut deep-pocketed competitors like FedEx and UPS? While national parcel players operate costly airline fleet and multibillion dollar hubs, regional carriers maintain a lower cost of operation through their regional focus, direct loading and transportation primarily via truck. As a result, regional carriers are able to pass along to their customers cost savings as much as 40% over UPS and FedEx. As an example, St. Cloud, MN-based SpeeDee Delivery Service’s pricing starts at $3.79 for next-day delivery of a one-pound package. Compared with minimum charges of $5.49 for UPS and FedEx ground services, shippers would save 31%. Compared with FedEx Priority Overnight and UPS Next Day Air — even taking into account a 50% discount — savings are approximately 65%! SEPTEMBER-OCTOBER 2012 | www.PARCELindustry.com

15


Moreover, regional carrier pricing often includes lower minimum charges, better dimensional divisors, and far fewer surcharges — an important point of comparison when you consider that “accessorial” fees can make up to one-third of all UPS/FedEx costs. In general, regional carriers are less likely to assess charges common to UPS/FedEx like weekly service fees, Saturday delivery, additional handling service, large package surcharges, residential delivery fees, and delivery area surcharges. Moreover, it may be easier to negotiate discounts and/or waivers with the smaller and hungrier regional carriers. We asked survey participants to report cost savings with the regionals. An interesting point is 10% of shippers do not derive any savings, but use regionals because they prefer the service over the national providers.

17.84%

17.40%

Same day Next day Other 60.56%

In addition to next day service, many regional carriers also offer same day delivery solutions. While the majority of survey participants (61%) use regionals primarily for next day service options, 18% utilize same day delivery services, and 17% use “other” services including lockbox deliveries and inbound freight.

Mo re tha n3 0%

16 % -3 0%

5% -1 5%

Le ss tha n5 %

pre No fer sav the ing se s, w rvi e ce

10%

11%

18%

20%

41%

If you use regional carriers, what kind of cost savings are you realizing over FedEx and UPS?

If you ship via regional carrier, indicate % of shipments that are ‘Same Day’ vs. ‘Next Day’

Shippers that make the switch to regionals report better customer service and a “try harder” attitude. “When it comes to customer service, the national carriers simply cannot compete,” said Jacob Day of Natura-Like Dental Lab in Bedford, TX. The company uses Lone Star Overnight (LSO) for all shipments within the LSO delivery footprint. Jeff Carpenter, Distribution Manager at restaurant supplier AceMart in San Antonio, agrees. “We think that the regional carriers notice our business more day in and day out. The national carriers tend to forget about accounts that are working well.” Several shippers reported lower damage rates with regionals, the result of reduced package handling. AceMart’s Carpenter concurs. “The advantage of using a regional carrier like Lone Star Overnight as opposed to a national carrier is the fact that the packages are handled less and more carefully. We ship products like glassware, china, appliances that could be damaged if the boxes are thrown from truck to conveyor or into a truck that is being loaded. We feel that a regional carrier will handle our shipments better.” 16

september-october 2012 | www.PARCELindustry.com

Seattle-based health and beauty products retailer Super Supplements partners with OnTrac for faster West Coast deliveries. Kyle Faino, Director of Marketing & Ecommerce, views OnTrac’s same day and next day delivery as a competitive advantage. “There are very few ways to differentiate ourselves between our competitors. Just keeping pace with ‘free shipping’ incentives is not enough,” Faino said. “We now have to offer faster shipping to be able to compete.” Despite the myriad advantages of regionals, shippers are largely unaware these carriers exist. Despite the fact that many regionals are growing 9-10% annually, they still make up less than five percent of the overall parcel market. FedEx and UPS spend billions to build and maintain brand awareness. In fact, both brands cracked the Top 100 Global brands in the 2012 SyncForce ranking (UPS was #65, FedEx was #89). With limited budgets, regional carriers struggle with limited brand awareness. Thirty-nine percent of shippers in our survey were “not very familiar” or “totally unfamiliar” with regional parcel carriers. Only 29% were “extremely” or “very familiar” with regional carriers (as shown below).

Are you familiar with the services offered by regional parcel carriers?

Extremely familiar

18%

Very familiar

24

%

11% 15%

Somewhat familiar Not very familiar

31%

Not at all familiar


Do you use regional carriers today?

30%

Yes

Only 30% of our survey respondents currently use regional carriers.

If you use regionals, what percentage of your overall parcel business is given to regional carriers?

35.7%

10%

Mo re tha n5 0%

10% 31 % -5 0%

16 % -3 0%

5% -1 5%

Le ss tha n5 %

Are you open to exploring the use of parcel regional carriers for your business?

17%

19%

45%

70%

No

Even more surprising are adoption figures: of the 30% of survey respondents that use regionals, nearly half (45%) ship less than five percent of their overall packages via regionals. Only 10% of that group — that’s a mere three percent of all survey respondents — gives more than half their volume to regional players.

64.3%

Yes

Despite poor market adoption, the future looks bright for regional carriers: twothirds of shippers not presently using regionals are open to exploring them as a replacement or complement to the national carriers.

No

SEPTEMBER-OCTOBER 2012 | www.PARCELindustry.com

17


Rank the factors that drive your parcel procurement decisions We asked shippers to rank the most important factors in their purchasing decision regarding parcel services. Cost and service were the top drivers with 97% of participants designating the factors as “important,” “very important,” or “most important.” Convenience was the third most important factor (68% of respondents). Interestingly, single source solution was “not very” or “not at all” important to 59% of shippers.

Cost savings required to switch some or all business to a regional carrier?

Category

Most Important

Very Important

Important

Not Very Important

Not at All Important

Service

47%

38%

11%

3%

0%

Cost

50%

42%

5%

2%

1%

Single-source solution

4%

7%

28%

51%

8%

Convenience

3%

15%

50%

30%

2%

Other

4%

1%

7%

9%

79%

Has there been a downside to using regional carriers? Are there potential disadvantages to parcel regional carriers? Survey results indicate there are drawbacks. Number one on the list (21% of survey participants) was “limited delivery area coverage,” which ironically is the regional carrier’s point of differentiation over the national carriers. 11%

12%

12%

While a regional delivery specialization offers advantages for many shippers, conversely it might eliminate potential shippers that prefer the “one stop shop” convenience of single source options. The chart at the top of the page corroborates this finding, with 68% of participants naming convenience as an important driver of their purchasing decision. It would almost appear that shippers would prefer if the regional carriers weren’t so… well, regional. On the prospect of a “super regional alliance” in which regional carriers would in essence merge to provide a near national solution, 70% of survey respondents would be “somewhat,” “very,” or “definitely” interested in exploring the solution. 18

september-october 2012 | www.PARCELindustry.com

05% er Oth

Lim i areated de cov livery erag le im e age n o Lac t up k of to p ship ar pin ga uto ma tion Trac Inco k ing nsis not ten on p t se ar rvic Los e /tim s of ely disc deli oun very ts w ith UPS or F edE Rep x orti n gn Cus ot o tom np er s ar ervi ce n ot o np Sal ar es r ep n ot o np ar ehic

Driv er/v

tha n2 5%

Gr ea ter

21 % -2 5%

16 % -2 0%

11 % -1 5%

6% -1 0%

At lea st 5%

06%

05%

13%

06%

07%

09%

10%

19%

19%

21%

23%

21%

When asked to specify the cost savings required to switch business to a regional carrier, 29% of shippers require at least 10% savings, 38% want to save 11-20%, and 34% would justify a switch if the cost savings were greater than 21%.

“Super-regional” alliance… How likely would you be to explore that as an alternative to FedEx and UPS? 09%

Definitely

19% 21%

Very Somewhat

17%

Unlikely 35%

Not at all


When it comes to bank balances, it’s not a fair fight: the top several regional carriers generate a combined $500 million a year (Shipware estimate). Contrast that with the $96 billion in revenue between FedEx and UPS, and it’s easy to understand why many regional carriers struggle to compete with their deep-pocketed national competitors on brand recognition, driver/vehicle image, technology, manifesting automation, website integration, reporting, product sophistication, and service consistency. While all carriers — regional as well as national — incur shipment delivery delays, package damage, misdeliveries and/ or lost packages, FedEx and UPS consistently deliver millions of packages every day with service reliability into the high nineties. In spite of recent FedEx and UPS videos (that went “viral” on the Internet) of isolated instances of obviously unacceptable delivery practices, both FedEx and UPS are widely admired for their professional drivers and consistent delivery service. To keep costs down, many regional carriers use contracted drivers for pickup and delivery. These drivers may or may not be uniformed, and may lack the intensive training for which UPS is famous. Contract vehicles may or may not include the regional carrier’s company logo decal. Twelve percent of survey respondents indicated the regional carrier’s “driver/vehicle image was not up to par” with the national carriers. FedEx and UPS sales reps are trained to emphasize the value of their brand and to raise the question, “When your customer receives a package in a purple (or brown) envelope, what does that say about the quality of your company?” Of course,

the less than subtle message is: “If your customers get a delivery from an unknown delivery company, the driver is chewing gum and not in uniform, and the rusty van he’s driving isn’t marked with a decal, what does that say about your company?” Nine percent of survey respondents expressed concern that they could lose revenue-based discounts with FedEx/UPS if they siphon off a percentage of their packages to a regional carrier. FedEx and UPS encourage single sourcing by tying pricing incentives to revenue thresholds: the higher the revenue, the greater the opportunity to improve discounts. However, the opposite is also true: if volume decreases, incentives will decrease. Shippers should carefully evaluate the potential impact on discounts of package migration to a regional carrier. Conversely — as competition enhances leverage — it is also possible that engaging regional carriers may be an effective strategy to obtain better pricing with the national carriers. Unfortunately, many shippers are totally unfamiliar with regional carriers, a reflection of the limited marketing budgets of many regional carriers. But shippers could be missing an opportunity: 72% of survey respondents that use regionals listed “cost savings” as one of the top three benefits with savings up to 40% over FedEx and UPS, not to mention the other benefits discussed. p

ROB MARTINEZ, DLP is President & CEO of Shipware LLC, a parcel auditing and consulting company based in San Diego, CA. He welcomes questions and comments and can be reached at rob@shipware.com.

SEPTEMBER-OCTOBER 2012 | www.PARCELindustry.com

19


Same da

delive

and how you can make mo

WHY? Doesn’t it make sense? There’s lots of stuff we want soon, like today — that new high-tech gizmo, medicine we just took the last of, the how-to business book we plan on reading tonight to get a leg up on the competition tomorrow. Ok, we don’t need everything today, but enough of us want “some things” today that it makes a market… a set of customers that want their stuff today badly enough to pay a little extra. Consumers don’t plan; we’re impulsive. Needs crop up out of the blue, randomly. At the B2B level, companies hate to carry inventory and supplies. Same Day Delivery and reducing leadtimes in general are the same time-compression strategies that have driven much economic activity for decades. In some channels, products are bought largely because they’re available immediately; witness all the impulse items in the grocery store check-out line. In addition to serving this natural time-responsive need, Same Day Delivery is one more application of the market making proposition: If you built it, they will come! AMAZON It seems as though Amazon has stepped into Same Day Delivery in a significant way. The company is settling suits with states and will begin collecting additional sales taxes, eliminating a price advantage that’s served them well. Then Amazon can have a physical presence in the state, put a warehouse near a metro area and provide Same Day Delivery from it. Take Dallas, for example. Amazon has promised to add 2,500 jobs and spend $200 million in its tax settlement with Texas. It has announced two new facilities in California. Amazon calls its Same Day Delivery service Local Express Delivery. It’s available in 10 cities — Boston, New York, Baltimore, Philadelphia, Washington D.C., Indianapolis, Chicago, Las Vegas, Phoenix, and Seattle. Order cut-off times range between 7 and 11 AM. Notably absent on this list are Atlanta, Dallas, and Los Angeles — all sizable markets. Amazon provides Same Day Delivery for certain addresses and certain items only — obviously for items stocked in a nearby warehouse. They charge $8.99 plus $0.99 per item for a Same Day Delivery order. 20

SEPTEMBER-OCTOBER 2012 | www.PARCELindustry.com


ay

it should be easy to figure out; just look at the fast movers. Identify the items customers previously paid extra for to get the next day. Some of those very same customers, and others, would have paid even more to get these items the Same Day!

ery... By Terry Harris

ney at it

That Amazon is willing to collect sales taxes and forgo its previous price advantage says a lot about its confidence in Same Day Delivery. It believes it will make up for the price hit plus the added cost and then some. How else could Amazon justify it?

reQuirements What does it take to pull off Same Day Delivery? Here’s the list in order of difficulty, starting with the easiest: inventory It takes an on-hand inventory in a location — warehouse or, perhaps, a store — available to promise against random orders placed in the early part of the day on the Internet by customers Fulfillment You have to pick on-hand items quickly, package them, and get them outbound Delivery You need to transport orders to customers. Practically, there are only two options: 1. A locker or “drop-box” would receive orders and dispense them to customers coming by to pick up their stuff. 2. A carrier delivering to the customer’s address. Couriers appear to be best organized to accomplish this. Geography The inventory has to be “close” to the customer that ordered it. Perhaps 100 miles away is the limit. Here’s a generalized time-line at a location:

Cut-off Time

Received by Customers

Pick Pack Sort Deliver........... inventory We, as merchants, can identify those “some things” consumers will pay extra for — medicine, electronics, the baby’s diapers, the cool outfit she plans on wearing to the party tonight. Actually, if we didn’t know what they were,

FulFillment Many warehouses and some stores are nimble enough to process orders quickly now. Those that don’t may be able to make a few process changes in their existing facilities. The need for speed comes in the middle of the day, say from 9 AM to 1 PM — an under-utilized period in many facilities.

Delivery A locker has to be well-located — at a grocery store, convenience store, or the like. They could be your stores if you have them, which may generate more traffic to shop for other merchandise. However, the locker method inserts another business entity or location into the supply chain that would have to receive, hold, and dispense individual orders. It’s slightly more complex than the delivery approach that gets the merchandise right to the customer’s desired address — home, office, workplace, whatever. You would think the volume of shipments Amazon does with traditional parcel carriers would motivate it to invest in the resources needed to pull-off fast local delivery. If not many local couriers will jump at the chance to partner with an Amazon-like shipper. They’d pick up orders in the late morning or early afternoon at the shipper’s warehouse or store and make deliveries from there. In New York City, for example, Amazon delivers through Dynamex, a well established courier service provider. In Times Square alone customers can choose from 20 nearby locker locations. FedEx advertises its nascent Same Day service as available in 20 cities. Applicable Zip Codes are listed at this link: http://images.fedex.com/us/services/pdf/ZipCodes_FSDC.pdf However, neither UPS nor FedEx deliver Same Day themselves. They sub-contract to couriers. UPS has invested $2 million in a British-based service called Shutl with plans to enter the US market next year. Shutl is a web-based broker matching retailers and couriers for deliveries within hourly windows as soon as 90 minutes after placing an order. There is not enough time to move parcels from a warehouse to a carrier’s facility, sort them there, and wait for structured outbound routes. A courier goes door-to-door — they can pick up at the shipper’s location and bypass other facilities. Sorts into outbound routes should be done in the warehouse and be based on each day’s order backlog at the cut-off time.

GeoGraphy So if geography is important, how many locations should you have and where should you put them? Well, clearly they should be “close” to your customers. To illustrate this, we’ll use the US population as an example customer pattern. For many merchants, this is a good representation of their actual customer pattern. (If not, perhaps it should be!) In any case, any pattern could be used. You could even use your competitors’ sales patterns and simulate the market you’d like to penetrate more. To answer these positioning questions you need to place locations smartly, preferably “optimally.” You can’t put a september-october 2012 | www.PARCELindustry.com

21


warehouse in Montana and hope to serve much of the US population in the same day. You need a technology, a tool, to specify smart networks of different sizes — one location, two locations, three, four, five, …and so on. We used our technology and found the first 30-location networks closest to customers represented by the population. For example, the optimal 10-location network is Northeast NJ, Miami FL, Lakeland FL, Gainesville GA, Chicago IL, Dallas TX, Denver CO, Alhambra CA, Tacoma WA and Oakland CA. On average it’s 184 miles and 1.04 days away from customers. No other 10-warehouse network is closer or quicker to customers. (See http://www.chicago-consulting.com/10best.shtml.) For these optimal networks the questions become: How many locations do we need? What fraction of our customers can we serve the same day? We can answer these with the following chart:

Proximity to customers Percent of customers

70

40 miles 60 miles

60

80 miles 100 miles

50 40 30

seLLING more Not even covered above is the added advantage of selling more by providing Same Day service, let alone the spill-over branding benefit to other parts of your business. Consumers may be motivated to buy just because of same day service when they wouldn’t have otherwise — the “grocery store check-out line” effect. Such an enormous benefit; the margins earned on additional sales, likely 20 to 50%, will overwhelm any shipping profitability, probably 10 to 20%. Is it plausible there’s a sales growth component at the individual consumer level too — that customers get “hooked” and shift their normal future purchases to Same Day once they’ve tasted its convenience? Do they buy even more than they would have otherwise? Has Amazon discovered these effects? It certainly has the data to do so. What are you waiting for? p

20 10 0 0

2

4

6

8

10 12 14 16 18 20 22 24 26 28 30

number of oPtimally Placed locations } 34% of customers are within 100 miles of 10 optimally placed locations } 20 optimally placed locations gets within 40 miles of 28% of customers } It will take 30 optimally placed locations to get within 50 miles of 44% of customers Accordingly, a reasonable number of well-placed locations serves a sizable portion of customers in the same day. It’s likely that Amazon’s customers are more urban and less rural, and they are even more concentrated into denser metropolitan areas. This characteristic makes the percentage relationships even stronger for them and others with this urban focus — they’re able to serve an even bigger portion of their customers than specified in the purely population-driven results above.

ecoNomIcs The undiscounted UPS tariff prices a Zone 2, five-pound package at $6.25 for Next Day Delivery. At Amazon’s $10 Same Day price, it seems as though there’s enough money to cover costs and then some, leading the way to making money on Same Day Delivery shipping. 22

Beyond price, obviously shipping profitability will depend on how any same day system is designed — what delivery partners are used, how inventory performs, fulfillment details, and so on. As with most supply chains, however, transportation costs will make or break the economics of your same day system. The volume of packages, orders, and their geographic concentration will play the defining role in the profitability of any same day system. It won’t work for a small number of geographically scattered orders. It will work for a number of orders that utilize a vehicle and driver delivering to a reasonably tight geography in the afternoon. The tighter the better. Of course, additional order volumes can be assigned to additional routes, making the outbound delivery that much more logistically efficient.

september-october 2012 | www.PARCELindustry.com

Terry Harris is Managing Partner of Chicago Consulting. There he designs supply chains for manufacturers, distributors and retailers fitting together components such as sourcing and inbound logistics, networks of plants and warehouses, inventory deployment, transportation, operations within warehouses and customer service. He can be reached at terry@chicago-consulting.com or 312.346.5080.

product spotlight Stop Paying Parcel Auditing and Recovery Fees Why pay a third party auditing firm to identify and recover overcharges for your parcel shipments? Now you can perform an in-house audit quickly and easily with our parcel auditing software. And keep 100% of the savings for yourself! National Traffic goswald@natraf.com www.trafficprosoftware.com


calculating shipping charges How to figure these costs — and what to actually charge. By Tim Sailor

Is shipping a cost or a profit center for your company?

03

%

30%

In today’s shipping environment, many shippers struggle with controlling and allocating their shipping costs. In an effort to identify an industry standard, PARCEL and Navigo Consulting Group recently conducted a survey asking shippers how they calculated their shipping costs and developed policies for charging customers for shipping. What we found was that there was no clear industry standard or methodology. However, we found a cross section of approaches to these issues. The one thing that did stand out was that overwhelmingly, respondents saw shipping as a cost center for their organizations.

On average, how many parcels do you ship monthly?

01% 17%

Cost center

07%

Profit Center Unanswered

50,000-99,999

10,000-24,999

100,000+

25,000-49,999

Unanswered

13%

45%

19%

Who is your primary parcel carrier?

september-october 2012 | www.PARCELindustry.com

UP

SS

02% d

PS

sw ere an Un

UP ur S Ma ePo il I st, nn Ba ov sic at o ion r s

03%

05%

Re ma gio rtP n os pa al C t rce arr l c iers on o so r o lid th ato er rs

Ex

dE

xS

Fe d Fe

ere d sw an Un

$1

+

bil

lio n

02%

04%

10%

9%

16% illi on $5 00 -$ 1,0 00 mi llio n

$1 00 -$ 49 9m

n

mi llio n $2 5$9 9

llio mi 25 <$ 24

07%

55%

The carrier mix was also fairly consistent with overall market trends. Forty-eight percent of the respondents use UPS services while 34% utilize FedEx and 10% use the USPS.

32%

What is your company’s annual sales/revenue?

15%

37%

The overall responses ranged from companies with $25 million in revenue to companies over $1 billion with shipment count ranging from under 10,000 parcels to over 100,000 parcels. Our respondents were predominantly B2B shippers (61%) with 35% B2C shippers.

Under 10,000

US

67%


68%

03%

16%

We charge a shipping & handling fee on all purchases We charge the customer for actual shipping costs

40% 23%

We provide free shipping & handling

18%

Unanswered

What we also discovered was that there was no one clear methodology for how to calculate shipping charges but rather many across the board calculations. This suggests that the way shippers arrive at shipping charges may have less to do with shipping being a cost center than other factors.

How do you arrive at the amount to charge?

r he Ot

ea Ar ery

De liv

We charge a shipping & handling fee based on purchasing factors

Ne

ts

hip

pin

gc

os

t

What statement most closely describes your customer shipping policy?

Su rch ar Re ge sid en tia lA dd Di me -O n ns ion al Ch ar ge Ad s dr es sC orr ec tio ns Fu el Su rch ar ge

07%

39%

58%

64%

65%

What do you include when calculating your net carrier transportation cost?

91%

Despite the wide variances in size, carrier mix and other characteristic, 2/3 of the respondents confirmed that shipping was a cost center for their organizations. While many people might think that “free shipping” offers were to blame, our findings did not reflect that. Only 16% of our respondents provided free shipping. When asked how they would describe their customer shipping policy, 40% based their policies on purchasing factors, 18% charged shipping on all purchases, while 23% charged the customer for actual shipping costs.

While the vast majority of shippers may think they are calculating total cost of shipping using net carrier charges, they may not be. As the chart above shows, there are a significant number of shippers who don’t include some costly accessorial charges. Only 64% of shippers include Delivery Area Surcharge, but this add-on charge is applied to 54% of all ZIP Codes and costs an additional $2.00 to $3.25 per shipment. Only 68% of shippers factor in fuel surcharges, which fluctuate monthly and hit a high of 34.5% in 2008. Another critical area is dimensional weight charges. Only 58% of shippers include dimensional weight charges in their net carrier transportation cost. Similarly, when establishing customer shipping charges, only 56% of shippers factor in dimensional weight costs.

20%

When establishing customer shipping charges, do you factor in dimensional 02 weight? 10 %

13%

14%

We don’t charge customers 32%

No

10%

11%

14%

14%

%

56%

Yes

Fla t (pu G fee r bli os sh s c ed ar rat rie (in es r clu N de et c ) s s ar urc rie ha r co Ot rge st he s) r, p lea se Sli din spec ify on g sc a Sli dolla le b din r v ase alu d g e pa scal ck e b ag as e w ed eig on ht Un an sw ere d

pe

rce Cos nt t + ag e

04%

Unanswered

While it seems there is no right or wrong way to establish policies for charging customers, it does seem that shippers need to do a lot more calculations if they don’t want shipping to become a cost center to their organizations.

This could be a major contributor to shipping becoming a cost center. Not only are these charges applied after shipment processing, but the carriers continue to increase the cost of dimensional charges by lowering the dimensional factor for both domestic and international shipments. In 2011, carriers lowered the domestic dimensional factor from 194 to 166 and the international dimensional factor from 166 to 139. This increased shipment costs on average by 18%. Shipping costs may be a broader issue than some realize. While most shippers seem to struggle to figure out net shipping costs, they may be missing the bigger picture. september-october 2012 | www.PARCELindustry.com

25


06% ns ur ret

09% y tor en inv

or lab

pa ck ag ing

g sin ou reh wa

ne

t( ac ca tua rri l) er

14%

29%

43%

92%

What costs does your company include when you calculate total cost of shipping?

Only 43% of shippers include packaging in calculating total cost of shipping, and only six percent include returns. Both can be significant spend areas and should be considered when calculating shipping costs and when establishing shipping policies.

KEYS TO SUCCESS Given that there seems to be no consistent and obvious way to establish shipping costs or policies for charging customers, how can shippers avoid making shipping a cost center? One possible solution is to more regularly review and update your customer

26

SEPTEMBER-OCTOBER 2012 | www.PARCELindustry.com

shipping and handling policies. When surveyed, over 26% of shippers only changed their policies after more than one year. Given that the carriers impose GRI rate increases and other accessorial changes every January, shippers are almost guaranteed to lose money if they donâ&#x20AC;&#x2122;t update their policies at least annually. Another possible approach is to make sure your organization involves finance people when establishing policies for charging customers. Our survey found that only 38% of respondents utilized the expertise of their finance department. Getting their help up front in setting policies may help mitigate un-recovered shipping costs down the road. Perhaps the best way to ensure that you are balancing shipping costs with your policies for charging customers is to reconcile your customer shipping charges with your carrier invoices. By doing so, you will discover any disconnect between what you think you are paying the carriers and what your true costs are. This will also capture all the accessorial charges such as re-weighs, DAS fees, Address Corrections, Residential add-ons, etc. which can contribute as much as 20-30% to your overall transportation costs. p

TIM SAILOR, DLP has been in the transportation industry for 25 years and founded Navigo Consulting Group in 1995. Navigo specializes in providing analytic support and transportation spend management for their clients and has produced cost savings of between 20%-30%. Tim can be reached at Tim@NavigoInc.com or 562.621.0830.


CASE STUDY

Sustainable Parcel Spend Management Green Mountain Consulting partnered with a well-known retailer with store and internet sales channels to develop and deliver a sustainable parcel spend management solution. GMC prepared a short and long term road map for reducing cost and improving their customer experience while taking into consideration their network constraints and strategic objectives. THE SITUATION From a centrally located distribution center, the client shipped primarily packages weighing less than 10 pounds with a service commitment of five days or less to its customers. Ground service was utilized primarily for the deferred shipments and Next Day 3 PM Air for customer upgrades. Common to many shippers, the company was constrained by the ability to make drastic transportation management system changes in the short term. However, over the long term the company had a goal to move from a single carrier network to a multi-carrier parcel network.

THE SOLUTION GMC developed a roadmap for the client that provided for immediate savings through implementable network and package enhancements, while also providing longer term savings opportunities through a complete network overhaul. In the short term, GMC identified the following opportunities to implement:

Ÿ Changing packaging characteristics (size and material) would allow the company to lower the weight of the existing shipments and minimize dimensional weight impacts Ÿ Shifting air packages to ground where transit time was the same Ÿ Consolidating multiple packages being delivered to the same store addresses on the same day Ÿ Eliminating address corrections to recurring bad destination ad dress entries For the long term, GMC identified the optimal ship mode for packages based on package profile and transit time requirements. GMC partnered with the client to develop a process to procure the proper contracts with two carriers that would optimize overall parcel spend. As a result, the client selected a postal consolidation solution to support less than eight pound shipments within five days transit, as well as returns. A parcel carrier was selected for the higher zone shipments, in addition to greater than eight pound packages and air / export services. The savings were significant.

Green Mountain Consulting, LLC, provides our clients with a customized, sustainable parcel spend management solution.

TACTICAL EXCELLENCE + STRATEGIC INSIGHT Tactical excellence in our best in class parcel audit and invoice payment services provide the foundation for delivering ongoing strategic insight for our clients through advanced analytics, network optimization, visibility solutions, and strategic project and contract management support. GMC’s business model is to strategically partner with the mega volume parcel shipper (greater than 4 million parcel shipments annually) by becoming an extension of their existing resources, learning their business, and working weekly to deliver value within a sustainable parcel spend management solution. We bring our clients a view of the market, proprietary analytical tools, expertise, and a bandwidth they would not or could not reasonably possess on their own. We charge a fee per shipment for our services and our clients keep 100% of the savings we help them realize. Contact us today by going to our website at www.GreenMountainConsulting. com and clicking on Contact Us.


Package Audits Control Costs.

spotlight

what to see at

PARCEL

FoRUM Overnight Delivery – California, Nevada, Arizona

B

10 ooth 3

Golden State Overnight (GSO) offers guaranteed next-day ground and priority overnight delivery to every address in California, as well as metropolitan Nevada and Arizona. GSO advantages include later pickups, earlier deliveries, and web-based package tracking, as well as customized point-of-delivery, unsurpassed customer service, and a 100% employee-based delivery model — all at a substantial cost savings over the national carriers.

B

10 ooth 1

Control your costs and save your company money with the most advanced and comprehensive parcel audit program in the industry. CTrak’s proven benefits include a complete automated Global audit and duplication prevention audit of all Freight and Parcel Costs, Reduced Shipping Administrative Expenses, and applied Accounting and Customized Reporting. CT Logistics sales@ctlogistics.com 216.267.2000 ext. 2015 info.ctlogistics.com

Yup! We can deliver that.

B

32 ooth 3

} Can Dunham Express deliver a 50 lb package at a 5 lb rate? } Can Dunham Express offer extended next day service ? } Will Dunham Express cut your regional shipping costs by 10-40%? } Guaranteed !!

Golden State Overnight 800.322.5555 www.GSO.com

It’s all in the delivery. Lone Star Overnight

Dunham Express 608.242.1000 www.dunhamexpress.com

B

31 ooth 9

Lone Star Overnight (LSO), a 22-year old carrier, has earned the best on-time record and lowest damage claim rate in the industry by doing things differently. We offer direct routes, live customer service and flexible shipping solutions. LSO serves Texas, Oklahoma, western Louisiana, southern New Mexico and, through partnerships, California and Mexico. Lone Star Overnight 800.800.8984 www.lso.com

Global Transportation Management

B

30 ooth 8

Get more visibility and control of your shipping operation. Designed to help your organization manage logistics more efficiently, SendSuite Live provides web-based services that allow the flexibility and power to effectively plan, route and manage shipments to provide a balance of service and cost reduction. Pitney Bowes 203.482.3306 info@pbsendsuitelive.com pb.com/sendsuitelive


Grow your business in Canada!

B

50 OOTH 2

Canada Post is the Canadian Postal Administration and has the nation’s largest distribution network and retail footprint, reaching 15 million consumer and business addresses everyday. We have solutions to integrate with every aspect of your business: delivery, fulfillment, returns, and direct mail marketing. For more information, please contact Scott Brunton.

Boasting the most reliable technology, award-winning support, and new USPS postage invoicing, Stamps.com is firmly positioned as the leader in online shipping. Come to booth #403 and see how more than 400,000 Stamps.com subscribers save time and money using Stamps.com and the USPS. Stamps.com Shipping Solutions 888.927.8267 shipping@stamps.com www.stamps.com/parcel

Canada Post Scott Brunton at 905.688.2615 ext. 2001 scottc.brunton@canadapost.ca. www.canadapost.ca

Up to 5,000- 7,000 parcels per hour.

Stamps.com PC Postage … now with postage invoicing!

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40 OOTH 0

Reduce Your Overall Shipping Costs.

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21 OOTH 4

ParcelMgr from Bell and Howell lowers the cost of parcel fulfillment and delivery by automating the tasks of reading, weighing, labeling and sorting parcels or flats. The fully automated system can handle the majority of parcel and flats postal pieces at speeds up to 5,000- 7,000 parcels per hour.

GlobalShip from Logicor is an enterprise-class, multicarrier shipping and TMS solution that utilizes a single point of execution for all small package (DHL, FedEx, UPS, and USPS + many more), LTL, and TL shipments — not only simplifying shipping processes, but also reducing your overall cost.

Bell and Howell marketing@bhemail.com www.bellhowell.net

Logicor 480.857.7900 www.Logicor.com

Win a Nexus 7 Tablet Register to win a Nexus 7 16MG Tablet and demo the latest version of ProShip Multi-Carrier Shipping Software. ProShip is an Enterprise Class, Multi-Carrier Technology Shipping Software Suite with the Fastest Transaction Speed.

Best Way Technologies 800.353.7774 sales@bestwaytech.com www.proshipsoftware.com

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IN THE NEXT ISSUE…

BUYERS’

WISH LIST

2013 A LOOK AT THE PRODUCTS YOU WANT


ApplicAtion Article

Automation for the parcel sorting and labeling industry Bell and Howell has teamed with SICK™, a world leader in factory and processing automation, and POST-IS, a logistics solution integrator, to introduce ParcelMgr™, a parcel sorting and labeling system for parcel and mail expediters. ParcelMgr lowers the cost of parcel fulfillment and delivery by automating the tasks of reading, weighing, labeling, and sorting parcels or flats. At speeds of up to 5,000 to 7,000 parcels per hour, this sorting automation solution can pay for itself in a very short time by displacing the need for extra manual labor.

AUTOMATED ENCODING AND LABELING The ParcelMgr solution is ideal for parcel and mail expediters who see their ‘last mile’ parcel and flats mail volumes growing. If you use the USPS® Expedited Services Network to create a direct injection into the USPS mailstream to reach the last mile destination delivery point, you should review the cost savings that the ParcelMgr solution offers. The fully automated system can handle the majority of parcel and flats postal pieces. Items up to 14” by 18” and a height of 15” with a variation of 6” between packages can be processed on the system. For example, small parcels such as pharmaceutical shipments in large or small plastic bags, most contents placed in plastic, bubble or corrugated bags or small containers can be processed effectively with the ParcelMgr solution.

EASY TO OPERATE This system requires only one or two people to operate. The workers place the parcels or flats onto a conveyor. Parcels are then transported on the conveyor and moved into position for automatic weighing, barcode reading and optional OCR reading. For parcels requiring dimension data for manifesting or truck/ airline load information, an optional dimension imaging module can provide the parcel dimension, and then an automated mailpiece label printer will label the parcel as required by the user’s manifest requirements for the USPS or other carrier. Once the parcel leaves the conveyor, it is deposited into the mailer’s preferred receptacle. Printers are positioned at the back of the transport to produce labels for the receptacles if required. ParcelMgr can also be integrated into an existing sorting system. Or, a high-speed sorting system is available as an option. We also offer a standalone version of the fully automated ParcelMgr solution, which is ideal in environments where the system is interfaced to an existing conveyor for manual sorting. A conveyor can be supplied for the manual sorting process. The ParcelMgr solution can apply virtually any carrier label to a parcel or flat. USPS Bound Printed Matter, Parcel, and

Parcel Plus labels are typical ParcelMgr applications. It also accommodates FedEx, UPS, DHL and other private-carrier labeling. An optional upgrade can even accommodate TSA international verification requirements.

HIGH ROI By automating the manual keying operations, we’ve found that some parcel expediters can realize full payback in as little as three months. For the USPS parcel induction market where USPS labels are required, our research shows that when automating the labeling process, labeling as fast as possible provides the highest ROI. We’ve found that a very high ROI can be achieved in environments where parcels are prelabeled and must be entered into a manifest payment system. ParcelMgr can scan, verify customer information such as weight and address, then load the applicable data into the customer’s manifest system in either batch or real time. Parcels outside the specifications can be outsorted or corrected with a new label. The biggest benefit mailers have realized with their mailing operation over the years has been automating their USPS barcoding requirements. This has been true with letters, flats and now parcel encoding. Bell and Howell, SICK and POST-IS are committed to providing a complete and proven technology solution for mail expediters. Together, we have many years of experience in serving the mail encoding and handling market. The ParcelMgr solution puts the best parcel sorting, encoding and labeling technology to work for you. ©2012 Bell and Howell, LLC. All rights reserved. Bell and Howell and the Bell and Howell logo are trademarks or registered trademarks of Bell and Howell, LLC. All other trademarks and service marks are the property of their respective owners. Specifications are subject to change. For more information, visit www.bellhowell.net, call 1.800.220.3030, or email marketing@bhemail.com.

Bell and Howell www.bellhowell.net marketing@bhemail.com


PARCEL September/October 2012  

PARCEL, September/October, 2012

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