Page 1

Part 2 OF OUR ANNUAL SURVEY RESULTS REVEALED!

PARCEL THERE’S NO SUCH THING AS

FREE... OR IS THERE?

How big retailers can consistently offer free shipping… and how smaller shippers can overcome the disadvantage. Page 22

Going Green? Tips to Make It a Seamless Transition. page 18

Getting Started Exporting: A Case Study. page 6

Cloud vs. Server— Which Is Best for Your Organization? page 8

NOVEMBER - DECEMBER 2011 www.PARCELindustry.com


NOVEMBER-DECEMBER 2011 | volume 18 | issue 5

PARCEL PUBLISHER Marll Thiede EDITOR Amanda Armendariz amanda.c@rbpub.com

DEPARTMENTS

CIRCULATION Rachel Spahr | rachel@rbpub.com PRODUCTION DIRECTOR Chad Griepentrog

6

Going Global

10

Getting Started Exporting: A Case Study BY TOM STANTON

7

8

Transportation ABCs

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Proposed Changes to USPS Mailing Services for January 2012 BY ELIZABETH LOMBARD

Fourth Carrier Launches for Small- and Medium-Sized Businesses BY ROB MARTINEZ

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Parcel Perspectives

13

Cloud vs. Server BY PETER STARVASKI

Ship Right

Packaging

Mastering Management

Four Steps to a Management Intervention BY MARK TAYLOR

Regional Alternatives

2901 International Lane Madison WI 53704-3128 608-241-8777 • Fax 608-241-8666 www.PARCELindustry.com

FEATURES Looking Ahead

Part two of our annual survey allows respondents to rank the carriers’ performance, give their insight on national issues and more! Do you agree with their assessments? BY AMANDA ARMENDARIZ

18

Green Shipping

What it is, why you should do it, and tips to make it a seamless transition. BY KEN WHITEMAN AND WOLF LIEBCHEN

22

There’s No Such Thing as Free… Or Is There?

This mid-year survey of e-commerce free shipping strategies analyzes the impact on the parcel industry. BY RON WIENER

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PARCEL Forum Recap

Our 2011 forum was one of our best yet—and attendees, vendors and speakers are already planning on coming back to next year’s show.

EXTRAS 05

Editor’s Note

28

PARCEL Counsel

Wrap Up

Offense, Defense and Special Teams BY MICHAEL J. RYAN

REPRINTS For high-quality reprints, please contact our exclusive reprint provider. Scoop Reprint Source • 800.767.3263 ext. 144 www.scoopreprintsource.com PARCEL (ISSN 1081-4035) is published 6 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2010 © 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.

Claims for Concealed Damage: Time Limits BY BRENT WM. PRIMUS, J

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ADVERTISING Ken Waddell | ken.w@rbpub.com Josh Vogt | josh@rbpub.com

Green Secondary Packaging Recap BY DENNIS SALAZAR

ExpresSanta Off to a Great Start BY ROB SHIRLEY & WAYNE AMMEL

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GRAPHIC DESIGN Kelli Cooke

Follow Us on Twitter @MST_ParcelMedia.


EDITOR’S NOTE AMANDA ARMENDARIZ

See You Next Year! As I type this editor’s note for the last issue of 2011, I’m already thinking ahead to what 2012 will bring. One issue that is perhaps at the forefront of many professionals’ minds is the current lawsuit against UPS and FedEx for their refusal to deal with third-party negotiators. It will be interesting to see how that plays out; I’m sure that many of our readers (especially those who are responsible for their carrier contract negotiations!) are wondering if that tactic is something they’ll be able to add to their toolbox in the coming year. PARCEL will keep you updated. Another sneak peek into 2012 can be found in part two of our annual survey, which begins on page 14. This survey is a chance for parcel industry professionals to give their insight on a variety of subjects, not the least of which is the carriers’ performances. It’s noteworthy that almost two-thirds of our respondents have used the United States Postal Service to deliver their packages within the past 12 months. While that number is nowhere near the number that use FedEx and UPS (72% and 82%, respectively), it’s heartening to see that the USPS is becoming a more commonly used player in the industry. For so long, small shipment professionals have felt restricted to using only the Big Two; now, with more and more shippers using the USPS, perhaps that is changing. After all, a good portion of our respondents felt that there was enough competition in the parcel industry to keep rates at a healthy level. Perhaps the increasing use of the USPS had something to do with that? Of course, the USPS’ service levels generally are ranked lower than those of UPS and FedEx, but as long as they keep improving, the small shipment industry should continue to flourish. And finally, what would our last issue of the year be if I didn’t mention our PARCEL Forum? We had a fantastic show. I know I say that every year, but this year was truly phenomenal. Our attendance was way, way up; our speakers were knowledgeable and engaging; the networking events and receptions were well-attended and enjoyed; and our Crate & Barrel Distribution Center tour was perhaps one of the most talked-about events at the forum. When the conference was over, I breathed a huge sigh of relief that we pulled it off so successfully; only to be jolted back to reality by remembering that it’s already time to plan next year’s! Ah, well, the work never ends, does it? Luckily it’s something the staff at PARCEL and EventEvolution enjoys! As always, thanks for reading PARCEL, and see you in 2012!

NOVEMBER-DECEMBER 2011 | www.PARCELindustry.com

5


GoinG Global with Tom

Stanton

Getting Started Exporting: A Case Study In previous issues, we have talked about exports with several different emphases. This issue, we are going to put these ideas into the perspective of a hypothetical new exporter/shipper just getting started. Let’s say a company is expanding business into Canada with a food supplement product of mixed fruit juices.

The Beginning: This product can be sold to health food

to be more economical as palletized and shipped via truck in North America or as ocean freight to international destinations. The logistics consultant advises the manufacturer/shipper to control shipping in order to minimize the number of transport companies they are dealing with and maximize the volume that can be applied to negotiating shipping rates. The consultant also advises her to obtain a corporate insurance rate for cargo insurance rather than utilizing the more expensive carrier rates.

stores and grocery stores with specialty health food sections in the US and Canada. The shipping carton dimensions are 15.5 x 11 x 13.5 and the carton typically weighs 16 lbs. The Harmonized Code and Trade Agreements: The VP of product is not heat-sensitive and is not considered “perishable” sales next calls a freight forwarder for advice on export shipping under normal environmental conditions. The initial question costs and paperwork requirements for Canada. The forwarder for exporting is, “How much does the product cost in Canada identified a harmonized number for the product 2106.90.54 for including shipping?” To answer that question, we must start fruit juice mixtures. Looking up 2106.90 in the NAFTA rules with the actual weight vs carton dimensions. of origin, they found that as long as no juice from other than US, Canada or Mexico is more than 60%, the mixture produced Dimensional Weight: To compute shipping charges, we in a NAFTA country will qualify for duty free entry. The shipper must compare the actual weight versus dimensions of the therefore completed a NAFTA certificate of origin stating that piece, which are rounded to 16 x 11 x 14. Multiplying these the product was made in the US and qualified for NAFTA. three numbers together gives a result of 2,464 cubic inches. Dividing 2,464 by 139 (current US international weight fac- Pricing and Payment: To compute the delivered price in tor) gives a quotient of 17.72. Therefore, freight charges will Canada, the shipper needs to know the destination postal code, be assessed at the dimensional weight of 18 pounds per car- actual weight and sales price for the goods. The VP of sales ton for international express shipments. However, with small decides to quote the price including transportation, insurance package ground shipping (both within the US and to Canada), (corporate insurance rate), duty (0) and taxes (5%) for “DDP the DIM factor only applies to shipments with a volume destination.” Sales commissions, base pricing, volume disgreater than 5,184 cubic inches. So this shipment would not counts and shipments under consignment — payment upon DIM as ground, but would DIM as international express since completed sales — are all options being considered for future three packages or more shipped at once would exceed 5,184 sales. Payment options such as a wire transfer from the concubic inches. signee upon arrival of the merchandise or payment within 30 days of receipt (net 30) will be discussed with the Canadian Shipping Costs: The shipping cases are small enough customer depending upon credit history. and light enough to move samples via ground or express small package services across the border to Canada. The VP of sales Summary: We have walked through an example of the quesobtains quotes on small package rates from small package tions that can arise with the introduction of a new product for carrier representatives and trucking rates direct from carri- export into the Canadian marketplace. Next time, we will look at ers and via truck brokers. She also obtains guidance from a pricing and payment issues more in-depth. logistics consultant to ensure her contracts, accessorial fees and shipping rates are competitive for her shipment volume. Some rates for trucking via Internet (class 60) trucking bro- Thomas m. sTanTon, international Analyst, AFMS, LLC can be contacted at kers turn out to be less than she was offered with the LTL car- 503-246-3521 or Tom.stanton@afms.com. riers directly. Larger shipments (20 cartons or more) are found 6

November-December 2011 | www.PARCELindustry.com


TRANSPORTATION ABCs with By

Rob Martinez

Fourth Carrier Launches for Smalland Medium-Sized Businesses It’s commonly known that shipping companies like FedEx and UPS extend deep discounts to volume shippers like Amazon, Dell and Wal-Mart. But what cost-effective shipping alternatives are available to the small- to medium-sized business? In November 2011, EquaShip — which positions itself as America’s fourth carrier — launched operations to provide low cost parcel services to small- to medium-sized businesses. According to EquaShip CEO Ron Wiener, the Seattlebased company was formed when shipping and retailing industry leaders — including veterans of UPS, Amazon and DHL — came together to create an affordable, scalable alternative to the majors.

“Our target customer is the small to medium-sized e-commerce sellers, manufacturers and distributors who struggle to compete in an environment where their larger competitors enjoy heavily-discounted shipping rates from UPS and FedEx,” said Wiener. EquaShip owns no planes or trucks itself. Packages are picked up, sorted and transported by a network of regional carriers used by Amazon and other brand merchants today. Packages are then tendered to the US Postal Service for “final mile” delivery to the home. Every EquaShip parcel includes $100 of insurance as well as package track and trace. “Smaller shippers have historically lacked access to the lowest-cost form of residential parcel delivery — postal consolidation. Nearly a billion packages a year are now picked up by consolidators like FedEx SmartPost and UPS Basic, with ‘final mile’ delivery to the consumer performed by the US Postal Service. EquaShip breaks that barrier down, allowing any shipper — no matter how small — to gain access to postal consolidator rates, with full insurance coverage, first-class customer service to both sender and

recipient, and convenient drop-off locations plus pickup service,” said Shawn Childs, EquaShip board member and former UPS and Amazon executive. EquaShip claims its rates are 26%-77% below UPS or FedEx residential retail ground rates. International service, scheduled to begin in January 2012, is supposedly 70% to 88% less than FedEx, UPS and DHL air express services. EquaShip has one rate schedule for all customers and requires no volume commitments or contracts. Published rates and Service Guide can be downloaded at www.equaship.com. A unique part of the EquaShip business plan is low-cost customer acquisition through innovative partnerships. The company has integrated with Vendio, ShipWorks and other e-commerce and shipping software platforms that enable EquaShip to appear as a fourth carrier option alongside UPS, FedEx and USPS on the shipping screens of millions of online merchants, manufacturers and distributors. There is presently an application and approvals process to become an EquaShip customer during a “beta” launch phase. Pick-up service is being rolled out regionally with eventual coast-to-coast pick up coverage anticipated. p

RoB MARtinez , MQC, CMDSS, is President and CEO of Shipware LLC, a transportation spend management firm specializing in carrier contract negotiations, audit & pay and information management to help shippers reduce costs 10%-30%, guaranteed. Rob also serves on the EquaShip Board of Directors. He welcomes questions and comments, and can be reached at 858-879-2022 or email rob@shipware.com. Follow him on Twitter @shipware.

November-December 2011 | www.PARCELindustry.com

7


Parcel PersPectives with Peter

Starvaski

Cloud vs. Server

People often ask for a comparison of premise-based and cloud- if the data is correct? A premise-based system provides a solid based parcel shipping applications, so here it is in a nutshell. foundation for the reconciliation of invoices. Premise-based systems provide all of the compliance Data Privacy: Cloud hosting tends to be not as secure as required for processing a shipment on a server that sits behind maintaining your own security standards on your own server, your firewall. For each transaction there is no need to go out behind your own firewall. through an external network. Cloud-based systems utilize one or more external servers to The Pros for a Cloud-Based Solution Are: provide the compliance (that is, labels, rates, tracking num- Low Entry Fees: Since the main application and compliance bers, etc.) for each transaction. Often there is a hosting layer engine are not on site, there are no upfront capital equipment that sends requests to the individual carriers’ websites to purchases. Often there are no license fees, just a monthly bill obtain the compliance. that is often based on usage. There are some obvious pros and cons to each of these and some not so obvious. The pros of one tend to be the con Lower Cost of Ownership: Maintenance of the hardware of the other. and software, including all compliance updates, is done by the service provider.

The Pros for the Premise-Based System Are: Dedicated Response Times: This is very important today for customers who are tuning highly automated warehouses. These high-volume, high-speed warehouses do not want to go out through one or more web servers for each transaction, as performance can vary as different tenants compete for the same resources. The in-line scales, tied to in-line labelers and conveyors with deflection systems, are often so finely tuned that a few hundred milliseconds difference can cause disruptions during their peak periods.

Simplicity: Premise-based systems tend to be more robust, allowing for a variety of integration methodologies. For start-ups and customers without a complicated operation, simpler may be better and the bounded integration methods that are being used by all the customers is the most cost-effective option.

Reliability: If the shipping system is a mission-critical component of the business, often the IT staff will want to own the server, the premise being that they will use their best-of-breed technologies for the high availability architecture and be able to respond quicker than an outsourced group. Moreover, there are no outages due to external networks.

This is a snapshot in time and reflects the opinions of the professionals I interact with today. Over time I believe the security issues of the cloud and the performance issues will diminish. Moreover the ability to maintain your own rates within the cloud may also level the playing field for reconciliation. Only time will tell, but for now I think both technologies have a fit in today’s market. p

Invoice Reconciliation: A premise-based system provides a standard that the customer maintains. If a customer negotiates a multi-year contract involving surcharges and other fees, how can any real checks and balances be performed if the rates and shipping data are being maintained on the carrier’s system? Are you going to ask the same people that invoiced you

8

November-December 2011 | www.PARCELindustry.com

Scalability: While many premise-based systems are scalable, they tend to not be able to scale as quickly as a cloudbased solution.

Peter starvaski has over 10 years in the parcel shipping industry and is a recognized industry expert in parcel shipping, having authored numerous articles and whitepapers. He  is currently Director, Product Management for Kewill’s Shipping Products. 


REGIONAL ALTERNATIVES with Rob

Shirley and Wayne Ammel

ExpresSanta Off to a Great Start Walking into the exhibit hall at this year’s PARCEL Forum, which showcased 61 exhibitors with another 18 not able to fit in, was like kids going to a great theme park. The panorama of technology, carriers, equipment, shipping supplies and consulting expertise was fantastic. It has the familiarity of family in that we know dozens of people (even if we haven’t seen some in years) and some we just met. Deals were being cut everywhere: at exhibit booths, in the hallways, restaurants and private settings. We met folks operating in every corner of North America from the Caribbean to British Columbia. Shippers, carriers, consultants and technologists from expert to novice all had something to gain. Regional carriers were out in full force, and we talked to many that were exhibiting or attending: Dunham Express, Eastern Connection, Express Carrier Assoc., First Choice, Fusion Logistics, Golden State Overnight, Hackbarth, Lone Star Overnight, On Trac, PITT OHIO, Prestige Delivery, Purolator, SpeeDee, TransTek, United Delivery and United Express. Southwest Airlines was making its case that it not only provides free luggage for travelers, but is also in the business of moving packages rapidly. We were there to network and to promote our ExpresSanta initiative for the first time. Essentially, our vision is to utilize the enormous $3.5T global supply chain to help kids have a better holiday experience. Manufacturers, distributors and retailers would donate toys — both technical and simplistic. Using various modes of transportation, logistics firms would move these gifts to volunteer charitable organizations that already help kids. The businesses would all enjoy great exposure, the spirit of giving and a charitable write-off. An excellent team of ambassadors, with eight now on board, for the states of CO, FL, ID, IN, MN, OH, TX and WI are giving their expertise to the cause. Some early examples of what is beginning to develop: Lance Healy, President of Banyan Technology, has 4500 trucking companies in his network in North America. They are so technically integrated that a price change by the carrier is reflected in real time to a shipper. Lance is going to build a charitable offering that will provide these trucking compa-

nies the option to gift x $1000s for free usage in specific lane segments. Lance is Ambassador of Ohio. Stuart Hyden, President of Fusion Logistics, a newly created powerful logistics firm, has been providing toys to kids for years and has created a charitable foundation. This foundation will certify the gift, whether a product or service, for tax writeoffs. Stuart is Ambassador of Florida. Chad Griepentrog, President of RB Publishing (PARCEL and Mailing Systems Technology) provided time for ExpresSanta to present ahead of the keynote luncheon to 200 supply chain executives during PARCEL Forum. Chad is the Ambassador for Wisconsin. Tom Oliver, former CEO of Intercontinental Hotels and former COO of FedEx, is now the Ambassador for Idaho. Lynn Olson of Merrill Corp. heard the ExpresSanta presentation and asked Larry Kelly, Ambassador of Minnesota, to meet with her traffic club of Minneapolis/St Paul that has 160 members. ExpresSanta is in the formative stages and hopes to accomplish these objectives by spring of 2012: • Provide gifts to some kids in the 2011 holiday season (for example, $10k in donations would provide three pallets of toys (4’ x 4’ x 8’) to four major markets). • Provide technology that streamlines the process with logistics firms beginning to sign up to donate service. • Create a website that keeps interested parties informed. • Maintain a growing list of superior Ambassadors — we have 42 states and two countries open to cover North America. This is truly a case of deliberately starting small to build the foundation for expansion, with the winners being kids. p

Rob ShIRLEy is President and WAyNE AmmEL is EVP of ExpresShip, Inc. a strategic technology partner in the global supply chain. Rob and Wayne have formed Express Charity and ExpresSanta focused on helping kids. Contact them at rsxpship@gmail.com and waxpship@gmail.com.

November-December 2011 | www.PARCELindustry.com

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SHIP RIGHT with Elizabeth

Lombard

Proposed Changes to USPS Mailing Services For January 2012 The Postal Regulatory Commission has approved new pricing for USPS services, which will go into effect on January 22, 2012. Mailing Services, also called Market Dominant products, includes First-Class Mail, Standard Mail, Periodicals, Package Services (i.e., Library Mail, Media Mail, Bound Printed Matter and Parcel Post) and Extra Services such as Certified Mail and Delivery Confirmation. Shipping Services (also known as Competitive Products) will also change on January 22, but those changes have not yet been announced. To that end, this article will discuss potential changes that impact packages within Mailing Services. While actual percentage price increases for various products and services varies, the overall average price increase across all Mailing Services products is capped, per the Postal Accountability and Enhancement Act (PAEA), at the rate of inflation as measured by the Consumer Price Index rolling average for 12 months, or 2.133 percent for this proposal.

PERCENTAGE OF PRICE CHANGE BY CLASS OF MAIL Class

First-Class Mail Standard Mail Periodicals Package Services Extra Services

Percent Change

2.133% 2.124% 2.133% 2.133% -0.663% (with the exception of Delivery Confirmation and Confirm®, most Extra Services prices increase about 2.1 %)

is primarily a result of “no fee” for Delivery Confirmation service of several parcel categories.

MACHINABLE PARCELS The Postal Service has also proposed to change the dimensional requirements for all machinable parcels from the current 34 inches x 17 inches x 17 inches to 27 inches x 17 inches x 17 inches, and the maximum weight (with the exception of Parcel Select and Parcel Return Service) from 35 to 25 pounds. The purpose of this change is to align the standards for machinable parcels with mail processing equipment capabilities.

STANDARD MAIL There are a number of changes specific to parcels within the Standard Mail class.

Marketing Parcels The category of Not Flat-Machinables will be discontinued and be replaced with a new Marketing parcels category. The target application for this new category would be product samples. Marketing parcels will include both commercial and nonprofit pricing, and according to the proposal, Marketing parcels will have minimum dimensions of 3.5 inches in height by five inches in length and 0.009 inches in thickness. Maximum dimensions will be nine inches in height by 12 inches in length, two inches in thickness and a weight less than 16 ounces. These parcels will use alternate forms of addressing, such as including “Or Current Resident” along with the mailpiece’s address.

Fulfillment Parcels Regular Standard Mail machinable and irregular parcels, comAs noted above, the average price increase by class is about monly used for mail order fulfillment, will be moved to the 2.1%. However, certain prices within classes or mail and Extra Competitive products category and will be known as a new Services increase or decrease to a greater degree. For example, Parcel Select Lightweight category. prices for retail First-Class Mail parcels increase almost 11% Nonprofit irregular and machinable parcels will remain in (10.882%). The current postage price for a retail FCM parcel market dominant Standard Mail and must be large enough to weighing no more than three ounces is $1.71. Upon approval, accommodate the postage, address and other required elethat price will increase to $1.95. The additional ounce rate ments on the address side of the piece, and can be no larger after three ounces will remain 17 cents. As it applies to than 108 inches in combine length and girth and must weigh smaller increases, the overall decline in Extra Services pricing less than 16 ounces. 10

November-December 2011 | www.PARCELindustry.com


PACKAGE SERVICES The overall increase for Package Services is 2.133% but more specifically, pricing for Parcel Post will increase 2.472%, Bound Printed Matter parcels only 1.886% and Media Mail and Library Mail 2.581%. The three-cent barcode discount on Package Service machinable parcels will be eliminated. There have been slight price changes for Extra Services but the most notable is that electronic Delivery Confirmation service will be free for commercial parcels. In closing, here are a few actions to consider in preparation for January (assuming the proposed changes are approved). Note the contents and business purpose, i.e., marketing or fulfillment, of your Standard Mail Not Flat-Machinables and parcels to identify the potential new category in which they may fall and any associated changes to physical characteristics. Also, since in certain classes of mail, postage and preparation are dependent on machinability, match your parcels against the proposed standards for Machinable parcels, and perhaps redesign your packaging if needed. And when possible, leverage free electronic Delivery Confirmation service for qualifying parcels.

To read the entire USPS filing with the Postal Regulatory Commission, see http://www.prc.gov/Docs/76/76795/Notice%20 of%20Rate%20Adjustment%20Final.pdf I look forward to talking with you in the next edition of PARCEL regarding the anticipated proposal of Shipping Services products. p

ELIZABETH LOMBARDÂ Manager, Postal-Carrier and Certifications, Pitney Bowes Inc. Contact Elizabeth at elizabeth.lombard@pb.com.

Need a refresher on First-Class Package Service? Read the whole article by scanning this QR code.

NOVEMBER-DECEMBER 2011 | www.PARCELindustry.com

11


PACKAGING with Dennis

Salazar

Green Secondary Packaging Recap As they say, it’s been great. I have sincerely appreciated the opportunity to contribute to PARCEL for over a year and this makes my tenth issue I have written for. I have received some interesting comments from readers and also made new friends as a result of these articles, but it is time to move on and try something different, elsewhere. I was a bit stumped as to what I could write for my final issue and decided what might be most beneficial to readers is to recap some of the topics and things we have discussed along the way.

“Land Filler” Secondary Packaging A few articles that seemed to draw a lot of attention were the ones I wrote about “not so green” packaging products. I exposed a few popular ones for what they are, which is basically sustainability dead ends. The two that are prime examples are paper mailer envelopes cushioned with poly bubble lining. Both materials being used are good and recyclable but not when they are laminated together. Another product I criticized is packaging peanuts, especially the so-called eco-friendly ones. In my opinion, all of the peanut variations fall short of true greenness because of how expensive they are to store and ship. The carbon footprint they leave behind is enormous and the low price per cubic foot is undoubtedly designed to mislead users from the true total cost of use. It might be different if customers loved them but in nearly 40 years in the industry, I have never met anyone who rejoiced when they discovered their package was filled with peanuts.

Green Products by Design and by Use In early issues, we also had the opportunity to discuss green from a broader sense. What is green and what is not; and more importantly why. We also reviewed how a packaging product is used and ultimately disposed of may be more important than where it came from. Another very popular article was when I explained the difference between varying categories of recycled waste including 100% recycled content and 100% PCW (post-consumer waste). We have tried to offer application-focused solutions that at times are completely unexpected from a career packaging sales person like me when I suggest using less packaging. For example, when I proclaimed that sometimes the best box for an application is not a box at all. Mailer envelopes are frequently the lowest cost, and greenest option for soft goods and other non-fragile products. 12

November-December 2011 | www.PARCELindustry.com

You CoulD Be FAmous! Well, at least among those in the parcel industry! We are looking for a new writer for this column. If interested, please email editor Amanda Armendariz at amanda.c@ rbpub.com and include some general packaging topics you are qualified to write about. We look forward to hearing from you, and we’d like to say thanks one last time to Dennis for his wonderful contribution!

Products and More In most cases when we discouraged the use of one product, we offered multiple greener alternatives. Shippers have many more options available to them than most realize. We also strove to provide enough information so readers could make an informed decision. For example, we’ve discussed water activated tape versus plastic tape, paper versus plastic void fill solutions including a whole articled devoted to inflatable void fill products such as the new “bubble on demand” products. We have also tried to keep readers ahead of the newest trends with articles on reusable packaging and when they can save a company a lot of money. Reducing cost was also the purpose of an article on how packaging can help reduce oversized and overweight shipping charges. In the most recent issue we also discussed how secondary packaging (boxes, tape and void fill) can be custom printed to communicate a message as well as to reinforce a brand. Making a positive, memorable impression is easy and low cost if you do it right. More than anything else, we suggest an open mind and a willingness to drive or accept change within your company. Simply put, if you are still packaging the same way, with the same products you were even a short three years ago, you are most certainly out of date and not as green as you could be. There are no magic bullets or “one size fits all” solutions but with minimal effort, you can usually accomplish both your sustainability and financial objectives. Good luck and thank you for your interest in green packaging. p

Dennis sAlAzAr is president and co-founder of Salazar Packaging, Inc. and one of the most prolific writers in the area of sustainable packaging. Contact him at dennis@salazarpackaging.com.


MASTERING MANAGEMENT with Mark

Taylor

Four Steps for a Management Intervention Are you challenged by people in your organization hoarding information, pushing their ideas through and making everyone else wrong? Do you have individuals on your team who have to win at all costs and never stop talking about how great they are? You may have what we call a Stage Three Culture. If it happens in your workplace, you are not alone. According to an extensive 10-year study of 24,000 individuals, 49% of employees are in this category. But you can mitigate this type of behavior.

1. Know Their Core Values. It may seem difficult, but it is important that you learn what this individual finds important in life beyond winning. If you listen to their stories, you can drill down to core values (a principle without which life wouldn’t be worth living). For example, Jim was sharing a story about a recent achievement. I asked him, “What value was honored that made your success so satisfying for you?” His answer was, “It was an acknowledgement of the contribution I made.” I followed up and asked, “Is making a contribution a core value of yours?” His positive response and body language confirmed that it was.

that will dramatically alter the way people look at them? Say, “I know you value learning [core value] and this is an opportunity for you to learn. It is also getting in the way of other people learning. I have had the opportunity to observe you and I want to tell you something that doesn’t work. You don’t listen to the people that work for you. I know you can listen because I see how good you are with clients but when it comes to your peers and employees, I see that they shut down, don’t tell you the truth, and they are not open to you. This is hurting you, your career and your opportunity to be a leader. For the next week, I want you to listen to those around you like you do with clients. This is not hard.”

4. Empty the Cup. This means to let the person verbalize his thoughts and empty them from his mind. You say, “Tell me what you think about this,” and then listen. The individual will bring up stories, excuses and blame others. You continue to listen and ask, “What else?” until they run out of steam. Wait a moment, and if there is nothing else, say, “What are you going to do?” and listen for a commitment to action. Finally, ask, “What can I do to help you?”

2. Create the Context. When you are ready for the intervention conversation, you This strategy is very effective for making an intervention with will want to set aside an uninterrupted time to meet with strong individuals that don’t see the damage they are doing the individual. Physically position yourself so that you are around them. You will know that you have succeeded when you sitting next to each other. Say the following, “There is see your Stage Three individual communicate with more transsomething I really need to talk to you about and it’s very parency and more often. You will see him credit the team for important. Frankly, it’s the sort of thing that defines careers. success rather than taking the credit. He will become more This is something I know you can handle. We both know gracious with others, even under pressure. The culture of that (core value) is important to you and to us; this is about your organization will become more collaborative, resulting in increased productivity and reduced stress. p unlocking it.”

3. Pierce the Armor. We call this the “pierce the armor” conversation because you want to be clear enough to get through to the person and yet you don’t want to overwhelm them. In other words, you want your sword to pierce the armor but not go so deep that you kill him. Prepare by answering the following question: What is the single very specific behavior change this person could make

MArk TAylor delivers workshops, keynotes and retreats for companies that want to facilitate corporate change based on the models and processes of Tribal Leadership. He is the Chair of several New York City “think tanks” composed of successful Manhattan CEOs focused on “outperforming” their competition. Mark holds an MBA, is a certified coach and Approved Tribal Leader. Visit his blog, www.vistagenyc.com, or contact him at 212-867-5849 or mark. taylor@vistage.com.

November-December 2011 | www.PARCELindustry.com

13


Looking

Ahead

Part two of our annual survey allows respondents to rank the carriers’ performance, give their insight on national issues and more! — By Amanda Armendariz —

A BreAkdown of the respondents

20% er ot h

rn

me

nt

05% ve

rv

se

(in

wh

ole

su ra

Go

vid er f ice , ban ina n k s, cia fir In ms du et l c.) , e st nt ry e (

di le/ sa

nc e

ibu str

ac uf Ma n

rta ho inm tel en s, le t, ga et l c.)

04%

06%

07%

14%

You are otherwise allied to the parcel industry.

Lp ro

05%

3p

You are a consultant within the logistics industry.

25%

05%

n

You work for a company that provides third-party logistics services (warehousing, fulfillment) that ships parcels.

tio

04%

br il (o ick n -m line or or ta r)

You work for a transportation company (fedex, dhL Global Mail, Ups, Usps, regional carrier, etc.)

ta

12%

re

You work for a company which sells products or services to companies that ship parcels.

19%

08%

g

You manage or supervise some part of the parcel process in a company that ships parcels.

tu

64%

Company Type

rin

Which best describes your position?

Company’s annual sales/revenue

$25-$99 million 37

%

06%

$100-$499 million

100,000-499,999

08% 45

%

07%

21

13%

$1+ billion

November-December 2011 | www.PARCELindustry.com

500,000-1 million 1-4 million

$500-$1,000 million %

<100,000

12%

<$25 million

23%

14

Annual volume of outbound parcels

28

%

>4 million


This survey always seems to be a draw for many of our readers; I think part of it has to do with the fact that it allows them to rate their carriers’ performance. After all, who doesn’t like to give their opinions on things that affect them? I know I do; no comment card in a store or restaurant is safe from my pen. I have opinions, and I’m not afraid to share them. It appears that many of our readers are the same way. What is interesting about these results, though, is that people seem eager to share both the good and the bad. I recall reading something during a marketing class in college; the author said that people will share a positive experience with approximately three people, while they’ll share a negative one with approximately nine. Yes, folks, we are three times as likely to complain about

a product, service or company (and let others know about our complaints!) than we are to share a positive story about the same item. So one might think that perhaps the people who are drawn to answering these surveys are those who want to share their negative experiences, but that doesn’t really seem to be the case. Oh, sure, people let us know when they’re unhappy with someone (almost a full fifth of our respondents rates UPS’ on-time delivery as “poor,” for example), but I thought it was interesting that many, many people ranked the carriers’ customer service, on-time delivery performance, etc. as “good” or “excellent.” Even with those rate increases rearing their ugly heads come January, people still seem satisfied with the Big Two, overall.

Part One: rate the Carriers Within the past 12 months for domestic shipping:

72%

82%

of our respondents used Fedex

63%

have used UPs

have used the UsPs

Customer Service Fair

On-Time Service Performance

Good

Excellent

Poor

%

08

Fedex

Fedex

Poor

%

20

Fair

Good

Excellent

%

05

%

10

%

%

48

34

%

%

51

%

12

UPs

UPs

25 %

16

%

06

%

11

%

%

35

32

%

%

52

%

16

%

41

%

UsPs

UsPs

37

%

13

%

31 % 30

21

%

23

%

24

November-December 2011 | www.PARCELindustry.com

15


Refunds for Late Delivery

Delivery Performance (Package Handling, Driver Courtesy) Poor

Fair

Good

Excellent

Poor

Fedex

%

14

Good

Excellent

%

16

Fedex

%

07

Fair

%

21

%

34

%

34

%

%

%

04

29 %

20

uPs

uPs

46 %

14

%

36

usPs

22

%

32

usPs

% %

23

%

30

%

%

46 12

%

27

%

%

37

%

43

18 %

%

26

08

Part two: Your oPinions on imPortant issues Which statement best describes your opinion on the U.S. Postal Service eliminating Saturday delivery?

15% 48% 08% 12% 17%

i support it, although it will be disruptive to our parcel delivery requirements or needs

Needed to achieve better pricing

i support it and it will have no effect on our parcel delivery requirements or needs i don’t support it because it will be disruptive to our parcel delivery requirements or needs i don’t support it because i personally like having saturday delivery i don’t care either way

It’s interesting to note that almost half of our respondents believe that ending Saturday delivery would have no effect on their parcel delivery needs; perhaps that is because they use the USPS on a less frequent basis than the Big Two.

16

If you have modified your PRIMARY carrier in 2011, what statement that best describes your reason for changing?

November-December 2011 | www.PARCELindustry.com

11%

Dissatisfied with service

03% 50%

22

%

05% 09%

Changed our level of service (i.e., air to ground) Diversified to use more carriers Reduced the number of carriers used Rebid transportation and a different carrier(s) won

A full 50% of our respondents needed to achieve better pricing and thus switched carriers — I suppose that the healthy competition that our respondents referenced in the following chart has some truth to it!


Claims Processing Fair

Good

Excellent

Poor

%

10

FedEx

FedEx

Poor

Pricing (published rates for service levels, willingness/fairness of negotiations)

%

20

Fair

Good

Excellent

%

13

%

29

%

43 %

%

26

23

UPS

%

21

UPS

%

19

%

26

%

38

22 USPS

%

25

USPS

%

30

%

%

%

36

%

27

%

12

%

29

%

%

35

%

12

Do you think that the cost of transportation will be a greater percentage of gross company revenue in 5 years than it currently is?

%

29

17

Do you think that there is enough competition in the parcel delivery market to keep pricing reasonable and service good?

%

36

22

38% 62%

Yes

No

The top three biggest complaints about the companyâ&#x20AC;&#x2122;s primary carrier were:

1 Accessorial Charges 2 Pricing 3 Fuel Surcharges

22%

78%

Yes

Miss part one of our annual survey? Scan this QR code to see the survey results instantly!

No

November-December 2011 | www.PARCELindustry.com

17


Green

Shipping What it is, why you should do it, and tips to make it a seamless transition. By Ken Whiteman and Wolf Liebchen

18

November-December 2011 | www.PARCELindustry.com


ustainability, efficiency and cost reduction are often closely aligned with respect to shipping. Greening your shipments can add to your bottom line while also generating customer goodwill and strengthening your brand with consumers. Being an early adopter of green shipping practices also gives companies an edge against their competition. This article provides an overview of sustainable shipping and presents some easy steps to make your shipments greener.

But why not change the speed of your shipment by asking your clients to change their ordering pattern. Do they really need everything tomorrow or a shipment every day? Amazon. com has the right idea: Slower shipping is free. If you want it faster, you pay extra. It’s good for the planet, good for the bottom line and good for your company. Finally, there is a lot of potential in collaboration and thoughtful planning. Reduction of empty miles, consolidation, load sharing, route optimization and filling trucks to capacity will help reduce fuel, emissions and cost.

Strategic Approach to Emission Reductions

Weight and Cube

The greenest shipment is the one you do not have to ship. A You are probably familiar with the terms static weight and volgood planning and forecasting system helps you to more umetric weight. As trucks or containers typically fill up voluclosely match supply and demand, so you don’t ship some- metrically (cube out) before they exceed their maximum weight thing that is not needed and might have to be returned later. capacity (weigh out), parcel carriers charge extra for boxes This can be combined with a postponement strategy, where the that are bigger by volume than weight. This means efforts you differentiation into product varieties (like different face plates spend on reducing your parcel cube will often save you freight for cell phones) is done as late in the process and as close to costs. Spending time and effort to reduce packaging sizes for the consumer as possible. In the end, the optimum is shipping your shipments and products will enable you to reduce your only what’s needed, where it’s needed. impact and save on shipping costs. Having a broader range of Another huge decision in this context is where to box sizes also allows you to optimize the box to the contents, manufacture or source your products from. A total reducing the use of packaging materials, as well as reducing landed cost approach is needed to determine whether costs. The potential in this area is huge! or not sourcing in Asia is still overall the best solution, or whether near shoring or local sourcing is better Mode Specific Efforts overall. From an environmental perspective, a shorter While your control of shipments is limited after they are sent, it (by miles) supply chain is certainly preferable and it should be of interest to you to see what your transport partners also helps you to be more nimble and flexible in are doing to reduce their emissions (and cost of doing busiresponding to market changes. ness). Talk to them and work with them — they might very well Finally, designing a network of ware- share their savings with you! houses closer to your customers helps Trucks are the main focus of optimization efforts (as most you to respond faster to their demand of the freight in the US moves on trucks). Some areas for and enables you to bridge most of improvements include more efficient engines (hybrids), weight the distance to them via more effi- reduction, tires, aerodynamics, speed limiters, idle shut offs, cient transport modes like rail. auxiliary power units, alternative fuels and route optimization. And don’t forget driver training — a small investment with huge pay back. Finally, the cube maximization and empty mile Shipping Distance and Speed It is important to understand the emission reduction (see above) also have a big impact. Other modes also have taken steps to reduce emissions, like profiles of the various transport modes. The mode(s) of transportation for your shipment has smarter flight patterns and light weighting (air), lower resistance an enormous impact on your overall emissions. On wheels and brake energy recovery (rail), or slow steaming, the average, moving one ton-mile of airfreight generates usage of larger vessels, and kites (ocean) are good examples. eight-fold the emissions than by trucks, which emit four times the emissions of rail, and rail emits three Measurement Approaches times the CO2 of ocean freight per ton-mile. With a well- One of the most commonly used metrics for measuring the designed distribution center network, you can reduce environmental impact of a shipment is the shipment’s caryour shipping distances, switch to more efficient modes, bon footprint. With shipping, the carbon footprint is generreduce costs and still achieve your shipping time goals. ated primarily by the consumption of fuel. Fuel consumption The most common mode conversions are air to truck and truck also represents one of the biggest cost drivers for shipping, to rail (domestic US), and air to ocean (international). Obviously thus making the carbon footprint one of the most relevant you want to make sure the shipments travel at the right speed measures of overall shipping efficiency. Measuring and evalu— some items from overseas cannot travel ocean, as you need ating your carbon footprint from shipping provides a valuable them urgently, or because of increased inventory carrying costs. tool for optimizing your supply chain.

November-December 2011 | www.PARCELindustry.com

19


Parcel shipping and third-party freight represent a unique challenge when measuring emissions. Typically your package(s) are loaded onto a truck with hundreds of other packages from other shippers. Simple emissions measurement approaches of saving fuel receipts or reading the odometer simply fall apart, because so many shipments are moving through different parts of the carriers’ supply chain. Thus it becomes impossible to allocate fuel consumption down to the package level. Fortunately, this problem has been addressed by weight-distance accounting procedures developed by the Greenhouse Gas Protocol. The weight-distance approach uses vehicle emissions factors that estimate the emissions generated by moving one ton over a one-mile distance. These factors are published by organizations like the US EPA. To calculate your shipments emissions, you simply multiply its weight by the distance it travels, and multiply that by the emissions factor for the vehicle type that is used. Multi-modal shipments can be calculated by adding each shipment segment together.

Emission Calculation Platforms Until recently, transportation emissions accounting had been a tedious, manual process. Sustainability consultants would descend on your company once a year and assemble a huge spreadsheet of assumptions and estimates. While the effort would ultimately produce a result, the data would be difficult to segment and analyze, and it was therefore difficult to create concrete plans to improve efficiency. Today, automated emissions accounting systems have finally started to hit the market. Some of them can extract data directly from your existing business systems to provide a realtime view of your transportation emissions and efficiency. The data can be segmented to provide insights into specific areas of your supply chain. Because the data is real-time, it allows you to develop reduction strategies and receive instant feedback on how they’re impacting your bottom line. Many of the tools also provide simulation functionality to help you develop and test reduction strategies before they’re ever implemented.

Carbon Neutral Shipping The optimization methods that were discussed earlier in this article can help make significant improvements in cost, efficiency and emissions. However, our transportation infrastructure will rely on fossil fuels for years to come and thus will continue to have a non-zero footprint. You’ve probably heard of carbon neutral shipping and may be wondering what that means, how it works and why companies do it. Carbon neutral shipping involves the purchase of carbon offsets to balance out the emissions generated by a shipment. Carbon offsets are carbon reduction credits that are generated through investments in carbon reduction projects such as solar power, wind power and methane capture. These projects result in measurable reductions of carbon dioxide emissions. Carbon offsets average just a few pennies for a typical shipment. There are several companies now offering these carbon neutral services. As shipping is often the most customer-facing aspect of a business, companies are choosing to ship carbon neutral as a 20

November-December 2011 | www.PARCELindustry.com

cost-effective way to show their environmental commitment to their customers. These programs often include branding and messaging to help communicate companies’ efforts.

Summary Shipping greener has to do with doing more efficiently, and by planning ahead. Along the way you can save money, make your clients happy and add to your bottom line. You can also get ahead of future carbon regulations, satisfy the demands of your stakeholders (e.g. shareholders, communities, employees) with regards to sustainability, and get ahead of your competitors! So what are you waiting for?

Ken Whiteman is the founder and CEO of GreenShipping.com. GreenShipping. com provides automated carbon accounting services for parcel and freight transportation and helps companies measure, analyze and improve their supply chain efficiency. Their GreenShipper program also provides a carrier-independent carbon neutral shipping platform.

Wolf liebchen is the owner of GREEN WOLF SCS, a green supply chain consultancy, helping clients set up green programs, determine their supply chain emissions and reducing those emissions through supply chain improvements. Check out his website www.gogreenwolf.com or email wolf@gogreenwolf.com.


22

November-December 2011 | www.PARCELindustry.com


There’s No such ThiNg as

FREE... oR Is ThERE?

This mid-year survey of e-commerce free shipping strategies analyzes their impact on the parcel industry By Ron Wiener

Free shipping continues to be the #1 sales promotion device employed by the top 100 e-tailers, and the trend continues to expand steadily. In this mid-year re-survey of the field we’ve discovered that an astonishing 62% of online retailers now offer some form of free shipping.

Tectonic Shifts in the Parcel Industry As the free shipping trend continues, the parcel carriers are experiencing at least two enormously consequential changes to their businesses. The percentage mix of residential-addressed versus commercial-addressed parcels is rapidly approaching the 50% mark. FedEx announced in its 4th Quarter FY2011 results that the SmartPost postal consolidator division has been experiencing 24% growth in daily volume, delivering an astounding 1.43 million parcels per day. Major e-tailers are clearly flocking to postal consolidators in order to remain competitive with free shipping offers. With nearly a third of FedEx’s parcels now being delivered to the household by a USPS carrier — and increasing steadily — the importance of preserving the USPS’s financial solvency has taken on a whole new meaning for the private carriers who both compete and partner with the Postal Service in the parcel business. The 13 postal consolidators, including FedEx SmartPost, UPS SurePost, DHL Global Mail, Newgistics, Streamlite and Blue Package Delivery, are wholly dependent upon USPS’s continued viability to process millions of their daily parcel deliveries. Inherently the USPS enjoys the lowest operating cost for final-mile delivery to residential addresses, and the major carriers, as well as the major e-tailers who have the qualifying volumes required to use a consolidator, have been figuring it out. See Figure 1.

November-December 2011 | www.PARCELindustry.com

23


e-commerce driven growth in B2C parcels Leads to increasing share of postal Consolidations

Millions of Ground Parcels per Day

5

FedEx SmartPost

All FedEx Ground

4

3 74% 2

80%

84%

84%

16%

16%

20%

26%

FY’07

FY’08

FY’09

FY’10

72%

1

0

28% FY’11

The increasing gap between what major retailers and smaller online merchants pay for shipping, and the average speed with which they can deliver orders to their customers is spelling doom for many who can no longer endure such stiff competition. FedEx and UPS have continued to offer deep discounts to their largest customers every year (75% to 80% or more is not unheard of), making it up by consistently raising retail rates to smaller shippers by an average of 6%-7% per year. The unintended consequence of this duopoly flexing its formidable pricing powers, always in lock-step, has led to an increasingly untenable business climate for smaller merchants. Economics 101 tells us that this kind of situation is a set up for reducing consumer choice and creating an unhealthy retail ecosystem in the long run and perhaps should be of concern to federal antitrust regulators. It certainly is something that Wall Street analysts have been paying a lot of attention to lately.

Figure 1: So much of the growth in parcels over the past 5 years has been coming from residential e-commerce that FedEx currently drops 31% of its ground parcels into the USPS network for final-mile delivery (as of Q4/FY’11).

insights on Free shipping trends From h2’11

The Existential Threat to Smaller Online Merchants We see from the carrier data that major e-tailers (generally those with 300+ shipments per day) have been gradually figuring out that they can reduce their shipping costs dramatically by switching their residential (“B2C”) deliveries to any number of postal consolidators. This is a terrific development for consumers who like to shop the major brands, for sure. But a healthy retail ecosystem must also continue to allow smaller merchants to thrive, and this is becoming more and more difficult against the backdrop of free shipping offers and rapidly increasing shipping costs. While consumers may love their free shipping deals from Amazon, they (and Amazon itself) may not love the withering numbers of viable small third-party merchants that sell through the Amazon Marketplace, eBay and many other outlets on the Internet, as they struggle to compete against their larger brethren. Let us not forget the economic doom that a new Barnes & Noble store brought upon the neighborhood bookstore. Not only do all merchandisers live off slimmer margins because they can’t buy inventory in the same volumes as big box and major online sellers, they incur shipping costs approaching 4x, 5x or greater compared to the Amazons or Walmarts of the world. To add insult to injury, the new mantra chanted by the big players is “Free Shipping, and Fast!” With their fulfilment warehouses scattered throughout the world major retailers can ship by ground (“cheapest way”) and get the goods out to their customers in one to five days, whereas small merchants with a single fulfilment location — which in many cases is a garage or spare bedroom — have to make some of their customers wait potentially as long as two weeks or more for their parcels to arrive. Using a premium service like UPS Ground, FedEx Ground or Priority Mail may not be affordable, yet small retailers’ daily package volumes typically will not meet the minimum requirements for doing business with a postal consolidator.

24

November-December 2011 | www.PARCELindustry.com

On this refresh of our regular merchant survey we found a number of interesting sub-trends worth noting. The chart below breaks out several different forms of free shipping offers that are currently being employed by the top 100 e-tailers. We expect the entire chart to continue to move to the right as we make our way through the hyper-competitive 4th Quarter.

Some Kind of Free Shipping Unconditional Free Shipping Free Shipping Limited Time Free Shipping Selected Items Free Shipping Order Minimun < $50 Free Shipping Order Minimum $51 - $100 Free Shipping Order Minimum >101 Prime, ShipVantage, ShipRunner, Club Rewards Free Shipping In Search Free In-Store Delivery 0%

10%

20%

30%

40%

50%

60%

70%

Figure 2: First Half 2011 - Breakdown of Free Shipping Offers by the Top 100 E-tailers source: eShippingNews.org


3 Search

engines and online marketplaces like eBay and 3 Four competitors to Amazon’s Prime membership proAmazon are getting ever-better at returning shopping gram are now offered within the ranks of the E-commerce search results including shipping prices. In addition, Top-100: Club Rewards, offered at $19.95/year; Williams deal-hunting sites are starting to offer “free shipping” Sonoma Reserve, offered at $30/year; and ShipVantage as a search criteria. A prime example is www.freeshipand ShipRunner offered at $79/year. Each is trying to ping.org, which lets consumers search their database of mimic Amazon’s famously successful Prime program, now over 4,000 merchants that have an active free shipping in its sixth year. offer. Not to mention what Google, Yahoo, Bing, NexTag, 3 Barnes & Noble offers free express shipping on millions of PriceGrabber, Newegg and other engines will surface on items, with their Barnes & Noble Membership of $25/year. the search term. They also have same day delivery in Manhattan. Given the space limitations in this article I’ve included a 3 Five additional merchants in the Top-100 have hopped onto to the free shipping bandwagon: L.L. Bean (return- link here to the full report (http://eshippingnews.org/eshippinging to their roots with 100% Free Shipping), Musician’s survey-results) for those readers who might be interested in Friend, Blue Nile, 1800contacts.com and ShoeBuy. deeper survey details or subscribing to our regular free survey Many, like ShoeBuy, also offer free shipping on reports. Also please feel free to email me at ron@equaship.com if you have any questions about the survey results. merchandise returns. 3 Eleven merchants that did not offer free shipping on their home page did have free shipping offers when “free shipping” was searched for on their website’s Ron WieneR is CEO of EquaShip. Contact him at ron@equaship.com. search function. Of the 62 merchants offering some kind of free shipping, only 16 of them yielded search results when “free shipping” was searched for on their website’s search function.

November-December 2011 | www.PARCELindustry.com

25


A Huge THAnks To our sponsors!

DHL Global Mail · DYMO Endicia · Inbound Logistics ·

2011 PArceL Forum—A Recap

By Amanda Armendariz

it was the opening night reception. But this year, the most talked about event was easily our Crate & Barrel tour of their distribution center, which took place during our pre-conference workshop on Monday. Attendees were so impressed by not only the friendliness of the Crate & Barrel employees (they met us at the DC with cookies — who wouldn’t love that?) but also their openness and transparency when it came to their operations. I went on the tour myself, and I have to say, I share the assessments of most of our attendees. The tour guides were accommodating and willing to answer all of our questions, and those on the tour had some great ones. I personally was amazed at how manual “Sessions were great! I learned more at this conference than any other one I’ve attended.” their operations were. A bin for each order would come to all the stations where the different products for that order were located, Jessica Martin | America’s Logistics Manager | Brady Corp. and an employee would select all the products that were found at It’s interesting that every year there seems to be one “big” that station and place them in the bin. They would then remove event at the Forum that attendees focus on, something that peo- the color-coded pin that corresponded to that station and send the ple continue to discuss long after it’s over. Some years, it’s been bin on to the next station (a different color-coded pin told them the mega-session on the last day of classes; other years, perhaps where the bin needed to go next). It was interesting to see, as so

Our 2011 PARCEL Forum surpassed our expectations — and from comments we’ve received, it surpassed those of our attendees and vendors, as well. In today’s economic environment, I think everyone was cautiously optimistic that it would be a good event. Needless to say, it was clear the industry considered it a great event. The session content was spot-on and spoke to the current issues faced by members of the small shipment industry; the exhibit hall was hopping; and the networking receptions were well-attended and much-enjoyed.

26

November-December 2011 | www.PARCELindustry.com


· Morgan Stanley · Newgistics · PARCEL · Pitney Bowes · PITT OHIO · United States Postal Service often, as I research different warehousing articles for inclusion in PARCEL, the focus of many writers seems to be on how to make your warehouse as automated as possible. While that may work for many operations, it was clear that the manual pick and pack operations of Crate & Barrel has served them well, in part because many of their products are fragile or irregularly shaped, so manual operations naturally work best for this type of operation.

"One of the best conferences I have attended in the past 10 years for truly useful content, knowledgeable speakers, and thought provoking discussions." Chris Emrick | Corporate Project Manager | Dorman Products

So it was no wonder that in the hallways between sessions, at lunch on Tuesday and Wednesday, and at the opening night reception, I heard many people talking about their experience on the tour — and more than once, I heard those who did not attend say they wished they had. Now the only challenge will be topping this experience next year; a tall order, to be sure.

“PARCEL Forum was single-handedly the most beneficial convention I attended all year for my business.” Jason Martin | Goldstar Courier & Logistics

But, lest you think that the tour was the only highlight of this year’s forum, think again. We got rave reviews on our content. Our speakers did an excellent job of providing relevant information in an engaging setting, and lots of Q&A was going on, which is something our attendees always like. And the exhibit hall was busy enough to give our vendors some great leads (and our attendees some valuable information), but not too busy to be overwhelming. So it’s no wonder that we’ve already put together our advisory board for 2012 and had some meetings; the staff at PARCEL and EventEvolution is excited to get going on next year’s conference! As always, it will take place at the Hyatt Regency O’Hare, so mark your calendars for October 23-25, 2012. Visit www.PARCELForum. com for more information. See you there!

November-December 2011 | www.PARCELindustry.com

27


PARCEL COUNSEl with Brent

Wm. Primus, J.D.

Claims for Concealed Damage: Time Limits The previous installment of PARCEL Counsel provided an overview of claims for concealed damage, i.e., claims to recover for loss or damage when the problem was not in plain view at the time of delivery and not reported on a delivery receipt. In this issue we will focus on the various time limits for filing these claims. Always keep in mind that various entities act in varying capacities when providing transportation services. They may be acting as a regulated motor carrier, a deregulated domestic air carrier, an international air carrier, or even as a form of intermediary. This is certainly true with respect to UPS and FedEx. Many parcel shippers use the services of motor carriers offering both truckload and less-than-truckload services. If these carriers are operating in interstate commerce, they are subject to provisions of a federal law that has been on the books for more than 100 years — the Carmack Amendment. The relevant part reads:

“A carrier may not provide by rule, contract, or otherwise, a period of less than 9 months for filing a claim against it under this section and a period of less than 2 years for bringing a civil action against it under this section.” Thus, the minimum period for filing a loss or damage claim that a regulated motor carrier can establish in its tariff, service guide or bill of lading is nine months from the date of delivery — including claims for concealed damage. Generally speaking, all of the motor carriers used by parcel shippers have established a tariff rule that requires claims for loss or damage to be filed within nine months. As discussed in the August issue, those that belong to the NMFC usually “incorporate by reference” the provisions of Item 300135 relating to claims for concealed damage. One interesting exception to the general pattern is the FedEx Ground Tariff, which has a provision that states: “In the case of a claim for concealed loss or damage that is not discovered at the time of delivery, the sender or recipient must notify FedEx Ground as promptly as possible after the discovery of the damage, and in any event no later than 21 days after the date of delivery.” The tariff also states “Failure to comply with any of the above conditions will result in the denial of a claim.” Since 28

November-December 2011 | www.PARCELindustry.com

this language appears to be in violation of the federal statute quoted above, I sought out the opinion of George Pezold, the Executive Director of the Transportation and Logistics Council, Inc. and Co-Author of the text Freight Claims in Plain English”, 4th Edition. According to Mr. Pezold: “To the extent FedEx declines a claim because a claimant failed to file “notice” of a concealed damage claim within 21 days, such a declination would be invalid. The Carmack Amendment allows a carrier to establish a period of not less than 9 months to file a claim. As long as the claimant submits its claim in writing within 9 months, then its claim will be timely filed and must be considered on its merits.”

Domestic air carriers have not been subject to economic regulation for many years. Generally speaking, their terms and conditions will be enforceable if incorporated by reference in the language appearing on the Airbill or other form of receipt given to the shipper when the carrier’s driver picks up a shipment. Even if space permitted examples of such provisions relating to claim filing requirements, I would hesitate to do so. This is because the only terms and conditions that are relevant to a claim are the terms and conditions of the carrier who transported the shipment.

International air carriers are governed by the Warsaw Convention, an international treaty. Under Article 26, a written complaint must be made to the carrier within seven days of the receipt of the goods. No distinction is made between claims for concealed damage and claims for non-concealed damage. Finally, it must be noted that the time limits we have been discussing are time limits for filing claims with the carrier. Time limits for filing a lawsuit to recover damages in the event that a claim is denied by the carrier vary depending upon the type of carrier. Generally speaking, they make no distinction between a lawsuit for concealed damage and one for non-concealed damage. All for now! p

BrENt Wm. PrimUS, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on the PARCEL website (www.parcelindustry. com). Your questions are welcome at brent@transportlawtexts.com.


SucceSS Story

A Faster, More Cost-Effective Transition

A Pitney Bowes customer had just secured a new contract for global parts distribution which was largely small parcels. The customer needed a solution that could be deployed as a “black box” in a print & apply environment. It also had to work with the client’s legacy systems – as well as a new SAP WMS platform.

Pitney Bowes collaborated with the client to swiftly resolve these challenges and implement a solution that met their needs—SendSuite Live. Pitney Bowes’ team of experienced professionals analyzed the customer’s requirements, formulated an implementation plan and managed the whole project from initial consultation through the final implementation The key benefits to implementing SendSuite Live for this customer include the ability to: • Manage multiple carriers with a single system • View and utilize domestic and/or international carriers – with labeling at point of origin • Import and export data from ERP systems, regardless of type and complexity • Gain visibility enterprise-wide into tracking and status • Team with a true partner for logistics automation

The company had all but decided on a vendor when they had one conference call with Pitney Bowes, who presented an alternative scenario that addressed each of the company’s business needs: • Small-parcel and option to support other transportation management functionality • Ease and speed of speed of integration with SAP • Ability to integrate into multiple data sources • A collaborative approach – including design workshops with operational and technical representatives from the customer and their client company • Ability to support growth (international, optimization, multilocation) process efficiencies • Systemic selection of best delivery options across all modes of transportation

This company realized that Pitney Bowes had the capability to work with them to address their challenges – and create a solution that streamlined processes, sped delivery, and enabled savings while minimizing the time and effort required for integration. Changing platforms is typically a long and painful process. Pitney Bowes’ approach made it possible to facilitate a faster, more cost-effective transition. Using design workshops that brought together technical and operational personnel from the customer, their manufacturing partner and Pitney Bowes enabled outstanding collaboration and quick resolution to these integration challenges.

Pitney Bowes, Inc 1 Elmcroft Road Stamford, CT. 06926 sendsuiteliveinfo@pb.com

November-December 2011 | www.PARCELindustry.com

29


Wrap up with Michael

J. Ryan

Offense, Defense and Special Teams The football season is in full gear, and there are many similarities between football and the parcel industry. Football is a sport that consists of three key areas: Offense, Defense and Special Teams. These three areas are overlapped by a Game Plan and Adjustments. Let’s take a look at these and see how they impact your parcel shipping.

Offense A great offense starts with knowing your play book and how you can match your talent to optimize your effectiveness of each play. Have you identified if you are a passing team or a running team (air shipper or ground shipper)? What have you identified in your shipping profile that gives you an advantage in your negotiations with your carriers? Do you put your business out to bid on an annual or bi-annual basis? If so, that’s a good example of an offensive move. Have you looked at innovative ways of improving service and/or reducing cost? Just like football, you need to be creative and aggressive to achieve your annual parcel goals — it’s like putting points on the board.

Defense We have all heard the old saying… Offense wins games but defense wins championships! This is a true statement if you follow any sports team. This is also true in the parcel shipping business. One of the biggest events on an annual basis with the parcel industry is the “General Rate Increases (GRI)” that happen at the end of each year. This is an offensive move that the carriers make on each shipper every year. What are you doing from a “Defensive” perspective to minimize these impacts to your 2012 operating budget? What are the carriers’ weaknesses that you can exploit to minimize this impact? Are you using all of your right players at the right time? There is an opportunity to use your senior management team members to help drive key negotiable items with your carriers.

Special Teams Big plays in football will often determine the winners in many games. Special teams include the kick-off team, kickoff receiving team, punting team, punt return team, field goal

30

November-December 2011 | www.PARCELindustry.com

team and the extra point team. Who are your special teams (IT, Accounting, Operations, Sales, Customer Service, Import/ Export, Compliance, Insurance, Engineering)? You have many indirect resources within your organization that can be part of your Special Teams and can bring value to your overall parcel solution. What kind of special projects do you have in the works? Do you survey your customers (internal and external) to determine their satisfaction with your parcel shipping solution?

Game Plan These three areas of football are the core of the game. However, the game plan will set the stage and pull all three of these areas together to win a game. The first part of an effective game plan is to have a scouting report on your competitor. What are their weaknesses and strengths? Who are their key players? What do we need to do to win? These same principles can be played out in an annual business plan. How can you use your parcel shipping as a strategic advantage to better serve your customer or your customer’s customer? Have you looked at all service options in the market? The parcel business is fragmented with smaller players outside the duopoly. How can you use all the tools of the industry to be a market leader?

Adjustments At half time of any game, the coaches are reviewing what they need to adjust to become more effective in the second half. Are you looking at ways to adjust to your game plan? Use all of your available resources to review and refine your plan; you will see some incredible results. Football is a team sport; no different than the parcel shipping business. For both sectors, it’s about achieving the desired result. p

Michael J. Ryan is the Director, Business Development at DSC Logistics and has been in the parcel industry for over 25 years. He can be reached at 847393-5862 or mike.ryan@dsc-logistics.com.


Parcel November/December  

Parcel Magazine, November/December

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