OPTIMIZE YOUR MATERIAL HANDLING & PACKAGING
IS YOUR WAREHOUSE PREPARED FOR TODAY’S E-COMMERCE WORLD? P.18 MITIGATING RISK AND MANAGING OMNI-CHANNEL GROWTH: IT’S A BALANCING ACT. P.26
HOW WILL UPS’S NEW FEE FOR SHIPPING CHARGE CORRECTIONS AFFECT YOUR BOTTOM LINE? P.10
CHALLENGES OF YOUR SMALL-PARCEL OPERATION
CONTENTS /// Volume 25 | Issue 4
14 18 20 22 06 EDITOR’S NOTE Preparing for Change By Amanda Armendariz
08 SPEND PERSPECTIVES Political Intervention and the Effect on International Supply Chains By John Haber
10 SUPPLY CHAIN SUCCESS UPS Implements New Fee Type By Keegan Leisz
12 OPERATIONAL EFFICIENCIES Prepping for the Busy Season By Susan Rider
18 OPTIMIZING YOUR WAREHOUSE IN TODAY’S E-COMMERCE WORLD The warehouse landscape is rapidly changing as more and more orders are e-commerce shipments. Here’s how to adapt. By Brian Neuwirth
4 PARCELindustry.com JULY-AUGUST 2018
20 THE UBERIZATION OF PARCEL Increasingly, the lines between retailers, carriers, technology providers, and group-sourced passenger vehicles appear to be blurring. Uber-like same-day delivery networks seem poised to change the parcel industry forever. By Bob Malley
26 A BALANCING ACT: HOW TO BEST MANAGE OMNI-CHANNEL GROWTH AND MITIGATE ASSOCIATED RISKS In our ever-changing industry, it’s critical to ensure risk to your supply chain is managed as effectively as possible without stifling growth. By Rick Brumett
30 PARCEL COUNSEL Per Piece or Per Shipment: What’s the Difference? By Brent Wm. Primus, J.D.
SPONSORED CONTENT: 07 GET READY FOR THE PARCEL TSUNAMI 14 PERFECTING PACKAGING’S PROBLEMS 22 HOW TO GET A BETTER HANDLE ON YOUR MATERIAL HANDLING 29 ROBOTS THREATENING MILLIONS OF JOBS? NOT WHEN IT COMES TO PARCEL PACKAGING.
PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ email@example.com ]
EDITORIAL DIRECTOR ALLISON LLOYD [ firstname.lastname@example.org ]
EDITORIAL INTERN KAYLYN GEIGER AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ email@example.com ]
CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (m) 608.235.2212 [ firstname.lastname@example.org ]
PARCEL PARCEL (ISSN 1081-4035) is published 7 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2018 Â© 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, ReprintPros, 949.702.5390, www.ReprintPros.com.
P.O. Box 259098 Madison WI 53725-9098 p: 608.241.8777 f: 608.241.8666 PARCELindustry.com
PREPARING FOR CHANGE
By Amanda Armendariz
he parcel industry is one that is perpetually in flux, as global trade and e-commerce continue to command an ever-growing portion of this segment. This growth can sometimes be difficult for shippers to manage even in the best of times, but in the wake of the US administration’s recent imposition of tariffs (and the associated retaliatory tariffs that have been imposed on the US), the parcel industry is more up in the air than ever. This uncertainty adds a whole new level of stress for logistics professionals. The recently imposed tariffs are especially troubling, given that they will lead almost inevitably to higher costs which must then be controlled. So, what can shippers do in the face of this uncertainty?
6 PARCELindustry.com JULY-AUGUST 2018
While there is no way to control what goes on in Washington (or other countries’ responses to these decisions), shippers aren’t completely powerless. Staying abreast of any political changes is a great place to start (no matter how nerve-wracking that can sometimes be!), as is remaining informed by reading industry trade publications like PARCEL. And one of the best ways to educate oneself on all the happenings in the industry is by attending our annual PARCEL Forum, which will be held this year September 24-26 in Chicago. Not only are the sessions top-notch, but the networking opportunities are phenomenal. If you want to discuss the changes happening in the industry with your peers, this is the place to come. If you haven’t already, you can visit PARCELForum.com to register. As the old adage goes, education is power, and you can ensure that you remain as up-to-date as possible by educating yourself via the many avenues PARCEL media has to offer. We hope to see you in Chicago! As always, thanks for reading PARCEL.
Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!
Why Are Carrier Package Minimums Important, and How Can You Make Sure You Get Your Full Discount? By Elise Cogar
Three Tips to Improving On-Time Performance for 2018 Holiday Peak Season By Megan Bishop
UPS Intra-Year Pricing Changes Deciphered By Keith Myers
Get Ready for the Parcel Tsunami You know what’s easy? Setting up an e-commerce web store. Shopify has 500,000 merchants, a number that’s grown 74% per year over the last five years, according to a January 2018 article in The Atlantic. You know what’s easier? Buying stuff from those web stores. You know what’s hard? Fulfilling orders cost-effectively from the stores while meeting the delivery promise to your customer. You know what’s even harder? Fulfilling that order across international borders, a trend that is rapidly gaining traction. Just as nature abhors a vacuum, markets abhor unmet needs. As global e-commerce grows, it is attracting service providers of all stripes to help e-tailers meet the needs of their global customers with cost-effective, on-time delivery. This trend is expected to result in what logistics experts are calling “The Parcel Tsunami,” coming to a shore near you.
And this is a concern for countries because the more easily taxable retailer or distributor goes away. The e-tailer is more elusive to taxing authorities, and the value amounts too “de minimis” for them to pursue. These disruptions are causing delays in the global e-commerce supply chain, and customers are noticing. In a recent post on Talking Logistics, Adrian Gonzalez discussed the “messy reality” of it all: “Many consumers are not loving the cross-border e-commerce experience, and most of the issues are not with the buying part of the process, but with customs clearance and final delivery.”
The Tide Is Coming In These days, the online store you ordered from probably doesn’t even have the item in inventory. The merchant may be relying on a supplier to ship it directly from where it was manufactured to the consumer’s door, The Atlantic article explained. One tiny parcel, shipped all the way from China, is like a ripple in a huge wave. According to a report by Pitney Bowes, “Parcel volume has grown from 44 billion parcels in 2014 to 65 billion in 2016, and the increase in growth shows no signs of slowing down, with the Index estimating parcel growth will continue to rise at a rate of 17 to 28 percent each year between 2017 and 2021.”
We’re Going to Need a Bigger Boat UPS, FedEx, and DHL are stepping up with services that span first mile, customs clearance, and last-mile visibility and delivery across borders. Ocean carrier Maersk recently announced its intention to “move inland.” Pitney Bowes’ Complete Shipping and Newgistics delivery services are set up for global injection into USPS’s delivery network, meeting expectations for faster delivery at competitive prices. These are all trends that in the long run could bail e-commerce merchants out. But they will need transportation management software to help sort through and simplify all of the complexities inherent in moving packages from first mile at international origins through to the last mile. Let the innovations begin.
Customs Is Drowning and Customer Expectations Are Underwater Cross-border parcel movements are massively complex. The consolidation and deconsolidation of parcels across international lines are putting stress on every aspect of the global logistics infrastructure. Customs operations that have traditionally been set up for bulk shipment movements now have to consider clearance, duties, and taxes for more frequent, smaller shipments. Moreover, the traditional import model completely changes with a direct-to-customer international e-commerce model.
email@example.com 508.630.1220 https://pierbridge.com
POLITICAL INTERVENTION AND ITS EFFECT ON INTERNATIONAL SUPPLY CHAINS By John Haber
hreats have now become a reality as global trade comes under attack. Actions such as tariffs and Brexit are risks that shippers must monitor vigilantly in order to adapt quickly to minimize any negative impacts on supply chains. As part of the current US government administration’s campaign promise to bring jobs back to the US, the US imposed tariffs on steel and aluminum imports from China, the European Union, Canada, and Mexico earlier this year. Since then, retaliatory tariffs have been enacted on the US. Political intervention in trade, such as tariffs, is a supply chain risk that is difficult to manage. While tariffs are nothing new in US history, the impact on today’s supply chains could be drastic and result in
8 PARCELindustry.com JULY-AUGUST 2018
the forced redesign of supply chains that favor regional versus global demands. A good example is the automotive industry. Typically utilizing a just-in-time supply chain model, inventory on hand is kept at a minimum and parts are often shipped from one country to the next via twoday shipping or other quick delivery method to ensure assembly is not disrupted in any way. In response to the June EU retaliatory tariffs, for example, Harley Davidson, the iconic US-based motorcycle manufacturer, announced plans to move some manufacturing to the EU to avoid tariff impacts as much as possible. In addition, those automotive parts that are shipped from one country to the next are often delivered by the major integrators: DHL, FedEx, and UPS. In many situations, the three integrators also handle the end-to-end shipment including fulfillment and transport — whether it’s air, ocean, road or rail — and customs clearance. Even though the Big Three will probably not suffer major volume losses stemming from the latest political interference, they could experience a shift in lane routes and higher demand for customs clearance services as shippers, carriers, and the international trade and political communities try to figure out the costs and impacts of a trade war. Another big political risk, Brexit, is one that could reshape European business
as the UK looks to end its membership in the European Union. More questions than answers continue as March 29, 2019, the day set for the UK’s leave, draws closer. Shippers’ voices are growing louder in frustration as resolutions such as the handling of customs remains unknown with just eight months (as of the writing of this article) remaining before the official exit. Because of all the unknowns, relocation threats from companies such as BMW and Pfizer grow louder.
Trucking is impacted as many transport goods from ports, but the effect is also noticeable in cross-border trade with Canada and Mexico. With NAFTA already in a questionable state, tariffs could financially impact revenues of leading US trucking firms.
Effects on Shippers’ Operations Political risks such as tariffs and Brexit usually involve a lot of unknowns including customs, costs to logistics providers as well as shippers, and the impact on downstream supply chains. In terms of tariffs, a maritime research firm, Drewry, estimates up to seven percent of Asia-to-US shipping is at risk and impacts one percent of total global shipping. From there, tariffs will have a ripple effect through supply chains. The ports will certainly feel the impact, in particular the ports of Los Angeles and Long Beach, which combined handle almost half of all US imports from Asia. Rails will also feel the effect. Class I railroad, Union Pacific, for example, has noted that 13% of its revenue is driven by trade with China because its trains carry goods inland from the ports. Trucking is impacted as many transport goods from ports, but the effect is also noticeable in cross-border trade with Canada and Mexico. With NAFTA already in
a questionable state, tariffs could financially impact revenues of leading US trucking firms. According to Bob Costello, chief economist for the American Trucking Associations, “NAFTA is critical to trucking, with cross-border NAFTA freight representing $6.5 billion in revenues annually for trucking firms and with 31,000 truck driver jobs completely dependent on hauling cross-border goods.” As global trade comes under political scrutiny, supply chains will need to be able to adapt more quickly
than ever before as changes in tariffs, Brexit, and other political announcements are made. Higher supply chain costs will likely be the end result of such interventions. Ultimately, such costs are passed down to the consumer in the form of higher prices for goods and services.
John Haber is the Founder and CEO of Spend Management Experts. Contact John at solutions@ spendmgmt.com.
JULY-AUGUST 2018 PARCELindustry.com 9
UPS IMPLEMENTS NEW FEE TYPE By Keegan Leisz
PS recently implemented a brand-new audit fee for shipping charge corrections. This new fee will be assessed if the average shipping charge correction in a week is greater than five dollars. If a shipper exceeds this limit, UPS will charge them the greater of one dollar per correction or six percent of their total corrections that week. These terms mean that for every shipping charge correction a shipper has that exceeds five dollars, it brings them closer to being hit by this new fee, while shipping charge corrections less than five dollars can help offset some of the larger corrections. For example, take two hypothetical shippers: Shipper A has $100 in shipping charge corrections with 50 total corrections; the fee is two dollars per correction.
10 PARCELindustry.com JULY-AUGUST 2018
Shipper B has two dollars in shipping charge corrections with one total correction; the fee is two dollars per correction. Both shippers have an average of two dollars per correction, so they would not be eligible for the fee. Now let’s add one correction for $10 to both shippers. Shipper A now has $110 in shipping charge corrections with 51 total corrections; $2.16 per correction. Shipper B now has $12 in shipping charge corrections with two total corrections, which brings the total to six dollars per correction. Shipper A is still below the threshold and would not be assessed the fee, but now Shipper B is above the threshold and would be eligible for the fee. This is because Shipper A had quite a few small corrections that helped offset the $10 correction, while Shipper B did not. Since the triggers for this fee are corrections that are high dollar values and not the number of corrections, we need to determine what causes large shipping charge corrections. Let’s look at a few hypothetical shipments on the next page. The first two shipments are identical packages, with the shippers in both scenarios not entering any dimensions for their packages. The only difference is the second package has negotiated discounts and a higher DIM
divisor. This allows the second package to remain under the five dollar threshold, while the first package exceeds it by more than eight dollars. The third shipment has an entered length that is off by five inches, but everything else is entered accurately. However, the shipping charge correction amount ends up being just under $100! This is because the five inches is the difference between being eligible for a large package surcharge or not. Large package surcharges get assessed an $80 fee, as well as a minimum billed weight of 90 pounds. So even though this shipper has negotiated discounts, a high dimensional divisor, and the length was only off by five inches, they end up with a $99 shipping charge correction. In the fourth scenario, the shipper has negotiated discounts, and the difference in weight is only five pounds. However, since the package is using an expensive service and zone, the correction amount ends up being well over the five dollar limit. All these examples highlight a few key points: 1. Inaccurately manifesting dimensions (or failing to manifest dimensions at all) can lead to large shipping charge corrections due to dimensional weight. 2. Negotiating strong discounts, as well as dimensional divisors, can help mitigate the impact of shipping charge corrections.
3. Mistakes (even small mistakes) on packages that lead to accessorials such as large package surcharges, additional handling charges, or over maximum limit fees can lead to large shipping charge corrections. 4. Mistakes on packages using priority services or expensive zones will lead to much higher shipping charge corrections. If you notice you have shipments that are having corrections with large weight discrepancies, corrections that lead to accessorials being applied, or corrections on expensive services or zones, you could see your shipping costs increase because of this new fee. The most straightforward way to mitigate this new audit fee would be to accurately upload weight and dimensions for packages. In addition to this, shippers can limit the severity of shipping
charge corrections by negotiating a custom dimensional divisor, strong base and earned discounts, and strong discounts on accessorial fees that are based on dimensions â€” such as large package surcharges, over maximum limit fees, and additional handling fees. Shippers could also take a more direct negotiating approach and negotiate the actual audit fee itself. As always, it is important have strong audit practices in place
to ensure UPS accurately bills any shipping charge corrections and to ensure the new audit fee is billed accurately.
Keegan Leisz is a Parcel Audit Analyst at enVista, a global consulting and software solutions ďŹ rm. In his role, Keegan is responsible for global freight auditing and specializes in analytics. You can contact him at firstname.lastname@example.org.
JULY-AUGUST 2018 ď€´ PARCELindustry.com 11
PREPPING FOR THE BUSY SEASON By Susan Rider
or many, August brings the onset of the busy season. Time to rev up the motor and get orders out to adequately meet the holiday demand! Many e-commerce companies see between 40-60% of their business during the holiday season. If your crystal ball was working, you might be able to know which one of your products would be the in-demand purchase for the season and prepare for the volumes accordingly. Unfortunately, there is really no way to truly tell whether your volumes will peak at a 15% increase or 60% increase, so the best way to prepare for the holiday season is much like how folks prepare for a weather emergency such as a tornado, hurricane, or natural disaster: Contingency plans are created for
12 PARCELindustry.com JULY-AUGUST 2018
every type of scenario. Here are some areas to review and some action steps you can take to help you get ready for the busy (and profitable!) season. People/Associates: This is your most important asset! Review your current associates to see if there is any need for cross-training. Are any associates in the wrong positions? Because the increased volume that pervades the holiday season will only worsen the impact of an associate who is under-preforming or cannot grasp the current task. Also, someone who is responsible for full case-picking may be able to perform the task when the volumes are low, but when volumes pick up, can they physically keep up? If they can’t, they will create a bottleneck in the facility. Based on volumes from both last year and this year (and possibly the marketing department’s projections), figure out how many fulltime equivalent (FTE) and part-time equivalent (PTE) employees you will need. Starting these new people a couple of weeks before the demand may be costly, but doing so will also help ease the pain when the tsunami of orders hits your facility. Review your directions and guides for completing work in every functional area. Are the instructions easy to understand by everyone employed? Many use detailed
sheets in English when over 50% of their workforce do not speak or read English. It is very important to use bright bold lettering and pictures for people that can’t read English. If a first grader can understand it, it will work well with all associates. Training: Does any of your existing staff need to be cross-trained? Review your training tools and cheat sheets. Are they colorful with pictures? Are they step-bystep with good directions that don’t leave any details questionable? Remember, in training, people need repetition. Going over everything in one to two days and then expecting the associate to pick up the job without hesitation on the third day is unrealistic. Post laminated pictures of the simplistic training step-by-step guides. Sometimes people don’t understand but don’t want to ask. This will ensure they can get the information without having to ask, and it will help them be more accurate. Tools: Too often, not enough attention is paid to tools that your order fillers, receivers, shippers, and other associates will need in the warehouse. Do an inventory on batteries, scan guns, tape, gloves, corrugate, knives, and any other tools being used in the facility. Do you have enough to get you through the busy season? There are inexpensive scan guns that can be used for
temporary associates if some are needed. Many are using inexpensive tablets for temporary supervisor stations, packing stations, and other functions that will need to be expanded this time of year. Storage: Storage is an area that is often overlooked and at a premium. Now is the time to make room in areas that will often become bogged down and congested. Move old, outdated product to other off-site buildings or trailers. Many use trailers in the yard for added space this time of year. They are harder to pick from and require a lot more walking and touch time. If you move outdated stock to the trailers, you can close them up for the season and create space in your existing warehouse for premium stock. Slotting: Reviewing the slotting of products by velocity and placing the fast movers in the best locations could
have the ability to increase productivity by 15% to 30%. Now is the time to look at consolidating locations and topping off each location to maximize space utilization and picking optimization. Software: There is a small window before the busy system to upgrade or implement any new features that will improve throughput or productivity. This is not the time to totally implement a new system, since getting the bugs out will fall smack
in the middle of your busiest season and set up the facility for failure. It’s time to look at the facility with an eagle’s eye to see how it can be improved and made ready for the busiest time of the year.
Susan Rider, President of Rider & Associates, Supply Chain Consultant, and Executive Life Coach can be reached at email@example.com.
MAY-JUNE 2018 PARCELindustry.com 13
Ah, packaging. Remember the good old days, when as long as a product was protected in its box, it didn’t really matter what the packaging looked like? How things have changed! Now, not only does the packaging impact the customer’s perception of the company as a whole (customers often want personalized, engaging, and environmentally friendly material showing up on their doorsteps), we also have dimensional weight charges to worry about, which can send the cost of delivering your package skyrocketing. Not to mention, not all companies can adopt Amazon’s fast-and-free shipping model, so packaging can be a way to differentiate oneself from the competition without breaking the bank. If you assume that all you need to do is ensure that the packaging protects the product, that would be a mistake — one that could cost you customer loyalty. In this special sponsored section of PARCEL, we take a look at some of the leading industry partners who could help you optimize your packaging operations. If you reach out to them, be sure to tell them you saw them in PARCEL.
PERFECTING PACKAGING’S PROBLEMS 14 PARCELindustry.com JULY-AUGUST 2018
and most important step of the supply chain is delivery. As such, ProShip offers Packcity Parcel Lockers. This delivery solution allows 24/7 access for customers to receive their orders when it is convenient for them, ensuring complete customer satisfaction. From packaging to shipping to delivery, ProShip’s powerful solutions enable goods to be delivered faster, more efficiently, and more cost-effectively than ever before. www.proshipinc.com
ProShip, Inc., a Neopost company, is a global provider of logistics software and product solutions, including enterprise-wide, multi-carrier shipping and manifesting software, automated packaging solutions, and intelligent parcel lockers. The company provides solutions for the entire supply chain to ensure a superior customer experience. With deep relationships with all major carriers, shippers using ProShip’s robust shipping software can automatically select the best shipping option for any parcel, saving time and shipping costs. This scalable software also pairs with ProShip’s CVP Automated Packaging Solution to package custom-fit parcels in seconds and reduce shipping volume by 50%. But once the order leaves the facility, ProShip knows the job is not complete. In fact, the company understands that the final
We don’t just sell products. Instead, we are a knowledge-based provider backed by thousands of scientists, engineers, equipment, application and industry experts, and state-of-the-art laboratories dedicated to delivering tailored solutions for our customers. We create a world that works better by eliminating waste throughout the global supply chain, including wasted material, energy, space, time, labor, and money. Products protected by Sealed Air packaging solutions ship faster and arrive safer because they’re backed by decades of powerful data science and unmatched engineering expertise. We believe that customer experience doesn't end with successful delivery. Attractive, protective, intuitive packages that open easily and can be reused or disposed of effortlessly have a lasting impact on customer loyalty and brand reputation — not just our brand, but our customers' brands as well. https://sealedair.com
a TRANSPORTATION INSIGHT Transportation Insight’s Enterprise Logistics Solutions help small package shippers increase business profitability by delivering maximum value realized across the end-toend supply chain. In an economy increasingly driven by e-commerce and customer service requirements, a thorough review of secondary packaging programs can ensure optimum use of packaging budget and yield opportunities to better protect your products and brand identity in the minds of the end customer. Outside-the-box solutions that improve packaging strategies and materials can deliver a significant impact to the transportation budget — especially for small package shippers seeking alternatives to the traditional cardboard cube.
While Transportation Insight’s parcel logistics experts leverage deep domain expertise and multi-modal insight to engineer supply chain solutions outside the box, we don’t forget about the box either. Strategically securing those materials at optimal cost through Transportation Insight’s group purchasing organization helps shippers improve spend management. Working as a strategic partner to retailers, e-tailers, manufacturers, and distributors, Transportation Insight leverages packaging expertise, market knowledge, specification/ service analysis, and an extensive network of supplier partners to procure and implement supply chain secondary packaging materials that improve clients’ packaging costs up to 25% while reducing damage claims due to packaging failures. www.transportationinsight.com/solutions/ secondary-packaging/
Since 1952, Valco Melton has been one of the world’s leading suppliers of adhesive application and quality assurance equipment. We specialize in the manufacturing, packaging, and sealing of items such as corrugated boxes, cartons, books, bags, and pharmaceutical products across the corrugated, packaging, envelope, folding carton, print finishing, nonwovens, tissue/ corewinding, wood, automotive, product assembly, textile, coating, laminating, and bag manufacturing industries. With world headquarters in Cincinnati, Ohio; direct sales, research, and manufacturing facilities throughout North America, Europe, China, and India; along with a network of dedicated distributors through every major continent throughout the world, Valco Melton is present in over 76 countries across the globe. Valco Melton is grouped into specialized research and manufacturing units to cover a wide variety of OEM, reseller, and end-user needs. Whether it's cold liquid dispensing systems, hot melt liquid dispensing systems, or quality assurance systems, our team is comprised of carefully selected specialists which have contributed to the long-standing success and forefront innovations of our company. Additionally, the members of our Engineered Products Group provide specialized knowledge and solutions for some of the industry’s most respected brands who often need equipment and systems custom-tailored to their most specific requirements. www.valcomelton.com JULY-AUGUST 2018 PARCELindustry.com 15
When you choose Victory Packaging, you have the confidence of knowing that you not only have the best packaging solution for your products, but for your business. We carry out full service packaging solutions that help you stand out, going above and beyond every customer’s expectations and every competitor’s capabilities. Victory Packaging's world-class Packaging Engineering and Design Solutions Team are problem solvers delivering real value to companies with unique packaging needs. Victory Packaging engineered solutions relieve packaging difficulties by (1) Optimizing outbound freight costs — optimal-sized packaging ships for less; (2) Improving structural design and packaging efficiencies — well-designed material neutral packaging delivers layers of cost savings including reduced loss, improved palletizing, reduced labor, and much more; and (3) Improving process flow — decrease labor costs and optimize your space with right-sized packaging customized to your
16 PARCELindustry.com JULY-AUGUST 2018
needs. Contact Victory Packaging and let us design your custom solution! www.victorypackaging.com
VISIBLE SUPPLY CHAIN MANAGEMENT
Founded as a fulfillment company with a single warehouse in 1992, Visible has grown to become one of the country’s leading providers of shipping, packaging, fulfillment, and logistics. Shipping 127 million packages a year, it now ranks second only to Amazon as a USPS reseller. This bulk buying power, together with Visible’s New Blue shipping rates and four bi-coastal warehouses, saves customers up to 41.2% on shipping costs. Custom packaging services further reduce costs by allowing them to rightsize packages, based on carrier size and dimensional weight brackets. Visible works with over 20,000 customers, shipping over a quarter million orders a day, to almost 140 countries, all with proprietary technology that gives customers end-toend transparent shipment tracking. It does
it all while maintaining a 99.84% fulfillment accuracy rate and a 99.90% on-time shipping record. Visible currently offers companies a free analysis to help them optimize their shipping process and costs. VisibleSCM.com
FEATURED PACKAGING SOLUTION PROVIDERS PROSHIP
www.proshipinc.com SEALED AIR
https://sealedair.com TRANSPORTATION INSIGHT
www.transportationinsight.com/solutions/ secondary-packaging VALCO MELTON
www.valcomelton.com VICTORY PACKAGING
www.victorypackaging.com VISIBLE SUPPLY CHAIN MANAGEMENT
By Brian Neuwirth
OPTIMIZING YOUR WAREHOUSE IN TODAY’S E-COMMERCE WORLD
-commerce is rapidly overtaking brick and mortar retail sales, with US online sales reaching $409 billion in 2017 and a projected $462 billion this year, as stated in a report by Statista. While sales are exponential in many e-commerce businesses, there are a number of issues that these companies still face, including: Last-mile delivery challenges to reduce costs and meet quicker delivery times Speeding throughput in the warehouse or distribution center Labor shortages Change of order type from shipping volume for distribution or storefront to keeping up with growing volume of orders of smaller items Improving efficiencies and productivity in the warehouse Managing the proliferation of stock keeping units (SKUs) Fulfilling orders that originate directly from the online customer is a much different proposition than replenishing
brick and mortar stores. Typically, merchandise is sent in bulk shipments to the stores to replenish inventory. On the other hand, online order sizes are very small, often a single unit. These orders are then shipped directly to the customer rather than in bulk to the store. A WHOLE NEW BALLGAME Initially, warehouses were built to carry inventory for stores, which was shipped in volume on pallets to the stores. The warehouses were not located close to customers, were quite large, and built in the middle of nowhere where land was cheaper. These traditional warehouses had storage areas, packaging stations, order fulfillment stations, and loading/ shipping docks where products were shipped out of the warehouse on pallets. These warehouses were not built with the speed required to meet the high-volume, rapid replenishment model. With the growth of e-commerce orders, distribution centers (DCs) have had to change their operating procedures. With storefronts closing, DCs that service only brick and mortar locations
must change their order fulfillment processes to keep up with the increase of picking greater volumes of individual items. In this scenario, all the resources of the supply chain are focused on transparently serving a single shopper who has placed a single order. Large warehouses are being retrofitted to handle e-commerce orders along with store replenishment. If orders are going to be fulfilled from an existing distribution center, retailers need to make sure they have enough room in the DC to handle this increase of single orders. Individual orders typically use carton flow or shelving systems, which are designed to present the product to the order picker so the worker can select an individual piece without interference. After being picked, the product is placed into a tote or master carton and transported via conveyor or cart to the next stage of the order picking process. A newly built e-commerce warehouse must carry a much larger volume of SKUs than the traditional warehouse, so there must be more storage space available, along with order picking
solutions to speed picking operations. Both of these approaches — retrofit or building new — improve on the efficiency of the e-commerce side of the business. However, the DC is still not located close to end customers, creating a transportation challenge. Amazon had struggled with this issue, especially with profitably fulfilling Amazon Prime customer orders with guaranteed fulfillment in one to two days. To address the challenge, Amazon and others have turned retail space into mini-warehouses where they can fulfill smaller orders. Because the stores are located closer to where consumers live, orders can be delivered more quickly. Consumers can either pick up their orders at the storefront or click and collect box, or have their order delivered to their home. This has proved successful with quick turnaround delivers. Specialized storage mediums are being implemented in both small and large facilities to speed picking operations. These units store more products in a smaller space to maximize space utilization. They also present SKUs directly
to the pick face so that order pickers can see them easily and pick them more quickly. If these units are located in the back room of a retail store, items can be taken off of store shelves and placed in a customer pick-up area where consumers can retrieve them. Consumers get the most value from retailers when they can get what they want, when they want it, and where they want it. Relocating distribution and warehousing closer to the customer has helped with these strategies. This has also helped with the proliferation of SKUs as items are spread out across multiple locations closer to the end customer. Amazon is testing different ways to fulfill orders more efficiently, more quickly, and for less cost. They are now buying smaller warehouse facilities near urban areas and testing different ways to use them. These facilities are closer to the customer, and some have automation and robotics, while some have storage units to handle a large number of SKUs. Amazon is also testing drones and autonomous cars to deliver goods.
New businesses are popping up where entrepreneurs are buying storage space, then renting it out as warehouse space. Many storage facilities are located closer to consumers, making it easier for e-tailers to get products in the hands of the consumer. Many of these storage units can be outfitted with storage shelves or carton flow units where orders can be stored and fulfilled more quickly. Whether renting, retrofitting, or building a new warehouse space, retailers need to optimize their space and improve picking processes to speed fulfillment for better customer satisfaction. When online orders are placed, it’s up to the retailer to deliver the goods to the right location at the right time.
Brian Neuwirth is President, UNEX Manufacturing, LLC. Founded in 1964, UNEX is the trusted industry leader in order picking solutions that maximize space usage, increase pick rates, and improve ergonomics. For more information, visit www.unex.com.
JULY-AUGUST 2018 PARCELindustry.com 19
THE UBERIZATION OF PARCEL Increasingly, the lines between retailers, carriers, technology providers, and group-sourced passenger vehicles appear to be blurring. Uber-like same-day delivery networks seem poised to change the parcel industry forever.
By Bob Malley
20 PARCELindustry.com JULY-AUGUST 2018
-commerce is driving parcel shipping growth at a rate of 10% per year, and rates are increasing at twice the rate of inflation. And it’s just the beginning: e-commerce currently represents only eight percent of the $5 trillion US retail market ($23 trillion globally). This growth means that everyone with access to a vehicle is competing to meet the demand for last-mile delivery. Regional carriers are seeing more residential shipping volumes. Amazon, Target, and Walmart are building out their own parcel delivery networks. Even the ocean carrier Maersk recently announced a five-year plan to move inland and compete with UPS and FedEx. Now, same-day delivery networks are emerging that use mobile technology to group source part-time drivers. Today, the “Amazon Effect” is shifting free and fast shipping from locations ever closer to the end consumer. Amazon continues to raise the bar, opening over 140 fulfillment centers nationwide to service 100 million Prime
customers in an apparent attempt to match Walmart’s ubiquitous proximity to consumers. According to The Economist, 90% of Americans live within 10 miles of Walmart stores. Lest they go the way of Toys R Us, brick and mortar retailers are scrambling to implement omni-channel shipping strategies like ship-from-store and ship-from-suppliers. Ultimately, it seems as if the goal is to ensure companies can ship from anywhere that will reduce the cost of delivery and meet the increasingly narrow delivery windows demanded by customers — and this goal is driving the new generation of same-day service providers. SAME-DAY ISN’T THE SAME Generally, these service providers are technology-savvy businesses that use web platforms and mobile apps to quote, schedule pickups, track shipments, send notifications, and confirm deliveries within specified delivery windows. One size doesn’t fit all. The diversity of innovative models ranges from pure technology providers to asset-based carriers.
Deliv: With financial backing from UPS, Deliv was an early entrant into the same-day, crowdsourced delivery market. It services more than 4,000 retailers and businesses in 35 markets. Recently, it expanded from retail into prescription deliveries with its Deliv Rx service. Roadie: A newcomer to the industry, Roadie views the universe of non-commercial cars and trucks as a potential delivery infrastructure. As long as a passenger car has the capacity, and the destination is “on the way,” there is the potential for booking a “gig” with the driver of that car. Bringg: Israeli tech startup Bringg has introduced a “delivery platform” that provides businesses with the ability to develop their own internal network of carriers. GameStop relies on Bringg to manage employee drivers, using GPS and mapping capabilities to assign routes to ensure efficient, on-time deliveries. Point Pickup and e-Courier also offer similar delivery platforms that enable businesses to maintain more control over their customers’ delivery experience. Farm Fresh: Recognizing that meal planning is often a same-day event (especially on “no-cook Wednesdays,” according to its spokesman), Farm Fresh delivers ultra fresh meals on demand to Manhattan residents. It is now planning expansion into the Brooklyn area. Instacart also provides grocery delivery services, offering personal shoppers to improve selection. Grand Junction: Last year, Target acquired startup delivery network Grand Junction for over $100 million. Grand Junction had been gaining traction with many retailers, helping them optimize same-day delivery routes with independent contractor drivers. Now, it is exclusively a Target delivery network that will enable Target to differentiate itself and counter Amazon’s same-day shipping fleet. It is inevitable that other retailers will need to respond if they expect to keep up with the competition. AxleHire: Combining cutting edge, on-demand delivery software development with its own fleet of carriers, AxleHire is an almost-four-
year-old business that now makes over 200,000 same-day deliveries within selected regions. Working with Amazon, DeliverOL also provides transportation assets to achieve last-mile delivery. SUCCESS ISN’T GUARANTEED Not all same-day delivery startups have been successful. While the parcel industry might be Uberizing, that trend will not include Uber itself. In March 2018, Uber announced that it would wind down its UberRush delivery service by the end of June. It will, however, continue its UberEats meal delivery service. After raising $50 million in 2015, Shyp also recently announced that it is shutting its doors, having failed to make its fixed-price delivery model work. Background checks, training, and customer safety will continue to present challenges as well. The traditional carriers are sitting up and taking notice. UPS and FedEx have each launched same-day services. UPS Express Critical deliveries range from lightweight to heavyweight shipments. FedEx SameDay operates 365 days a year. DHL Same Day offers worldwide services for emergency deliveries. Who will the winners be in the new same-day delivery market? Hard to tell, but if they expect to have any chance of success, they will need to step up to the challenge of absolutely, positively following through on shippers’ delivery promises to customers in the way that UPS and FedEx reliably have for so many years. According to Bringg, 76% of consumers view the delivery experience as an indication of how much a brand values its business. All of this suggests that the future of last-mile delivery won’t be all about free and fast — it will increasingly be about the quality of the customer’s delivery experience.
Bob Malley is CEO of Pierbridge, Inc. In this role, he has built a global organization that developed Transtream, the only multi-carrier management software that has earned both FedEx Diamond and UPS/ConnectShip Platinum level status for excellence and customer adoption. He can be reached at firstname.lastname@example.org. JULY-AUGUST 2018 PARCELindustry.com 21
a HOW TO GET A BETTER HANDLE ON YOUR MATERIAL HANDLING 22 PARCELindustry.com ď€ł JULY-AUGUST 2018
The material handling environment is changing and growing at a rapid pace, thanks in no small part to the e-commerce explosion, which means that shippers are facing many challenges that must be mitigated if they wish to remain competitive. Some of the most pressing issues that must be addressed concern the scarcity of labor in the distribution center as well as the inherent inaccuracy of manual sortation. Both of these factors can have far-reaching effects on a small-parcel operation, especially as it concerns customer satisfaction and loyalty. There is also the need for collecting dimensional weight data in order to better avoid the UPS and FedEx surcharges that were first imposed a few years ago. All of these challenges are driving the increased adoption of automation in the warehouse, and itâ€™s critical that our distribution centers are set up to embrace these new automated solutions. In this sponsored section of PARCEL, some of the leading industry partners share their solutions with you; if any of them stand out, be sure to give them a call and tell them you saw them in PARCEL.
BÖWE SYSTEC is uniquely positioned with decades of experience in the reading, sortation, and tracking of mail and parcels. BÖWE’s OptiSorter is designed for the automated sortation of a wide range of postal and parcel packages, utilizing Push Tray technology to sort products to containers, accumulation chutes, or conveyors. The Optisorter can sort to 300-plus destinations yet incorporates a low number of fractional drives and consumes minimal energy in its cost-effective low noise level design. Sorter Induction features can include dimensioning, weighing, and multi-sided scanning with industry-leading reading technologies. The system’s ability to process a wide variety of items up to 70 lbs., including apparel, parcels, catalogs, polybag products, and bulky goods makes this the ideal solution for logistics, e-commerce, warehousing, and distribution companies. The modular design and vast array of configurations include carousel, vertical, horizontal, dog-leg, or multilevel to meet operational and space constraints in line with business needs. Its flexible design allows you to customize and expand this sorting solution at any time. The Optisorter technology enables operations to increase productivity, minimize labor, and improve sort accuracy. www.bowesystecinc.com
For the past 30 years, Cubiscan has been driving ROI for several of the world’s biggest brands. From hard-earned experience, we understand the dimensioning landscape and the results our customers are looking to achieve. Leveraging that experience has guided the development of a wide array of dimensioning systems and software products to accommodate all types of work environments and objectives. Mobile parcel dimensioners, in-motion conveyorized measurement systems, and large-scale dimensioning machines for pallets and oversized freight provide flexible options for gathering dimensional weight data. Your company is unique, and we have a Cubiscan dimensioner to meet your specific objectives. Our customers typically recoup their investment through increased operational efficiencies within two to three months. With reduced shipping costs, fatter margins, and more efficient space management, a Cubiscan system quickly pays for itself. Look a little deeper into the largest and most successful companies in the world, and you’ll often find a Cubiscan. Dimensioning is all we do. Our business model revolves around using our products and experience to help guide your company to improved margins and increased efficiencies. www.cubiscan.com
Datalogic is a global leader in the automatic data capture and process automation markets, specialized in the designing and production of barcode readers, mobile computers, sensors for detection, measurement and safety, RFID, vision and laser marking systems. Datalogic solutions help to increase the efficiency and quality of processes in the retail, transportation and logistics, manufacturing, and healthcare industries. Datalogic is uniquely positioned as one of a few technology suppliers able to bridge the gap between point of sale and supply chain logistics. We offer retailers the unique opportunity to integrate the front of store and warehouse operations resulting in decreased cost, increased throughput, and optimum efficiency. We provide solutions that increase throughput, decrease costs, and achieve optimum efficiency for your entire supply chain. We have a long history of successful integrations across hundreds of systems
utilized by the world’s leading retailers and courier companies. Datalogic is a one-stop solutions provider that manufactures the widest range of high-performance products and solutions in the industry. As a total supply chain solutions provider, we provide the tools and technologies for parcel traceability, sortation solutions, inventory management, dimension, weigh and scan, and HAZMAT label detection. www.datalogic.com
Fluence Automation is a new company with a long history of providing innovative technologies to the mail distribution, logistics, and parcel automation markets. Formerly the Sorting and Parcels division of Bell and Howell, over the last 30+ years, Fluence has earned a strong position in the commercial sorting segment and delivered numerous solutions for various entities, including the USPS, the US government, other national posts, mailing service providers (MSPs), 3PLs, and many Fortune 500 companies in various segments. Over the last several years, Fluence has grown its footprint outside of mail processing, leveraging core imaging, linerless and high-speed automation technologies to address challenges in parcels automation. Fluence parcels systems (ParcelMgr systems and Raptor labeler) offer capabilities for high-performance imaging with optical character recognition (OCR), labelling, conveying, and sorting, backed by one of the best service teams in the industry. At Fluence, we look forward to being a key part of the mail and parcels automation community in the years to come, by serving our long term customers in the best manner possible, while growing with new customers. www.fluenceautomation.com
NPI has been designing mail sorters for over 30 years. NPI’s Xstream is a highspeed, automated flats mail and parcel sorting solution. With throughputs up to 30,000 articles per hour, a modular design that facilitates future expansion, and an ergonomic footprint, Xstream makes flat and parcel automation faster and more efficient. Xstream processes both incoming and outgoing articles with ease. Xstream sorts a wide variety of articles weighting up to 70 lbs. having dimensions up to 24” JULY-AUGUST 2018 PARCELindustry.com 23
long, 17” wide, and 12” thick. Xstream features two independent feed stations that easily accommodate plant rolling stock or may be alternately integrated with existing conveyor systems to expedite the presentation of articles into the process stream. Xstream features state-of-the-art Barcode Reading (BCR) processes operating in a user-friendly Microsoft Windows-based software environment. In its basic, dualsided configuration, Xstream features up to 120 sort destinations. Xstream is supported by time-tested software applications and utilities for system control and diagnostics, barcode processing, sort plan and report generation. With its ergonomic design, the Xstream is the perfect parcel automation solution for any processing environment. www.npisorters.com
E-commerce shows no sign of slowing, and it’s driving unprecedented demand for fulfillment operations. Because the work
24 PARCELindustry.com JULY-AUGUST 2018
is repetitive and requires high accuracy to reduce costly errors or returns, it’s ideal for automation. There are challenges, however. Warehouse processes such as order fulfillment require the ability to recognize and pick a wide range of items that are different sizes, weights, and materials, and that are often jumbled together in bins. And human workers are still needed for processes that are performed next to the packaging operation. With that combination, collaborative robots from Universal Robots fit the automation bill perfectly. “Cobots” offer flexible implementation and easy programming for changeable operations, and once a risk assessment is performed, cobots can operate safely right next to human workers. With low upfront costs and fast return on investment, cobots add value even in tight-margin operations. Area Sales Manager with Universal Robots, Brian Dillman, says the cobots will appeal to any operation trying to reduce picking fulfillment and intralogistics costs reliably at scale, while expanding production quickly with minimal capital outlay. “It’s encouraging
to see the supply chain industry embrace our cobots; we’re expecting significant demand from this sector in the near future, especially in regions with tight labor markets,” he says. www.universal-robots.com
FEATURED MATERIAL HANDLING PARTNERS BÖWE SYSTEC
www.datalogic.com FLUENCE AUTOMATION
www.npisorters.com UNIVERSAL ROBOTS
A BALANCING ACT: HOW TO BEST MANAGE OMNI-CHANNEL GROWTH AND MITIGATE ASSOCIATED RISKS
s companies grow, either organically or through mergers and acquisitions, leaders making pivotal business decisions must remain cognizant of the state of their industry in North America and the world. The pace of change in the business environment is reaching record speed, and added challenges are exacerbated by growing volatility in global economies. Relying on inaccurate, incomplete, or untimely data hinders the executiveâ€™s ability to make the most intelligent decisions that affect the bottom line. As a basis for mitigating the risk of less-than-optimal insight, forward-thinking leaders develop a platform that provides immediate feedback with access to real-time data from across
26 PARCELindustry.com ď€ł JULY-AUGUST 2018
BY RICK BRUMETT all elements of the supply chain and supporting business processes. The result is the acquisition of critical insight into what is actually happening inside and outside company walls. Real-time, current-state awareness can uncover barriers to success and vulnerabilities to risk. With advanced analytics in place and leading-edge technology driving improved process efficiency, market leaders create actionable, interactive business intelligence with customized views of data to develop and quantify continuous improvement strategies. STRUCTURE FOR IDENTIFYING ITEM-LEVEL PROFITABILITY (COST-TO-SERVE) Cost-to-serve is the analysis and quantification of all activities and costs incurred
to fulfill customer demand for a product through the end-to-end supply chain. More specifically, omni-channel margin management defines the underlying profitability of each item across various order dimensions: by channel, by service type, by customer segment, by fulfillment location, and by carrier. Integration and analysis of this massive amount of data into a cost-to-serve metrics program requires companies to have extensive financial resources and human capital on hand. Most important in the equation, though, is understanding what an optimal cost-to-serve measurement looks like. Creating a model for each of these activities in the supply chain network depends on accumulating and properly allocating all fixed and variable costs associated with each item. But having the expertise on hand that can help you benchmark costs against leaders in your industry is priceless. Once an accurate model is in place and gaps in cost and service have been identified,
company executives can make decisions about which markets, customers, and stock keeping units (SKUs) are contributing to profitability and which are not to effectively close those gaps between themselves and best-in-class organizations. In some cases, better aligning your shipping practices to the carrier networks available can mitigate some of the upward movement in these figures. By coupling accurate cost-toserve measurements with a cost-based pricing philosophy, companies are better equipped to maintain — and potentially grow — bottom-line profitability. STRUCTURE TO ENSURE YOU ARE GETTING WHAT YOU PAY FOR IN ALL DELIVERY CHANNELS It is no secret that errors can occur throughout the transportation invoice payment process, and exposure to loss of profitability amplifies with each untimely or inaccurate invoice, duplicate invoice, or miscalculated payment. Invoices often have incorrect information in the
address, quantity, contract number rates, or customer number fields. This can be especially problematic in the parcel shipping realm, where errors lead to overcharges linked to incorrect coding for size, weight and destination, or billing applied to the wrong account. Large-volume parcel shippers generally have a significant transportation budget. This spend, however, often goes unmonitored just because of the sheer amount of work required to track invoices and payments. Failing to place a system of checks and balances on your parcel operations can lead to a multitude of potential risks that could include duplicate payments of the same invoice, charges for services not rendered (e.g., shipments not arriving on a guaranteed date), or fraudulent use of account numbers by others for their own benefit. It takes a team of parcel logistics experts — and total visibility across your transportation operations — to mitigate these risks. Best practices for auditing your parcel operations require visibility into your
supply chain, diligent data collection, and smart analysis. More specifically, these best practices involve collecting myriad data points from parcel invoices to uncover duplicate charges, guaranteed service refund opportunities, packages manifested but not shipped, lost and damaged packages, declared value errors, and more. Further, the power of auditing technology delivers added accuracy and efficiency in critical areas such as: Automated general ledger coding Consolidated electronic billing Research and collection of refunds Rigorous parcel audit compliance services should assess invoices to the penny against client contracts to match program costs with services rendered. Auditing every invoice takes a tremendous amount of administrative effort; not auditing invoices leaves money on the table. Using a provider that maintains a rigorous platform of independently monitored process controls means complex invoices are inspected and unraveled to ensure
ARCHITECTS OF PACKAGING SOLUTIONS Victory Packaging is a full-service packaging solutions company that has mastered both the science and the art of packaging. We have the national presence to meet the requirements of the largest, most complex company, supported by a service program that empowers our local people to anticipate needs and exceed expectations. We also apply innovation and creativity to deliver customized solutions for every Victory Packaging customer. We believe that no other company can combine our level of expertise with our capacity for innovation to deliver unsurpassed quality and service. At Victory Packaging, we are Architects of Packaging Solutions. We create a solution that meets your individual requirements by focusing on your unique needs.
609.665.1200 | Fulfillment@victorypackaging.com JULY-AUGUST 2018 PARCELindustry.com 27
shippers are paying the proper amount to their service providers. The massive amounts of data collected from parcel shipping activities can be a catalyst to model what-if scenarios to enhance client programs for current strategies and future goals. These scenarios can address mode optimization, split shipment assessment, routing analysis, distribution center alignment and site selection analysis, mergers and acquisitions analysis, fulfillment models, and regional carrier analysis. The result is a parcel platform closely aligned with business goals grounded on fact-based analytics, robust audits, and industry expertise. Based on the large volume of invoices shippers generate, partnering with a logistics business strategist to complete financial settlement can lead to significant savings, both in cost and time. Auditing invoices with rigorous compliance controls in place provides additional in-depth analysis and peace of mind. Through a combination of error resolution, process automation and data analysis, audit experts can help shippers gain control and better manage financial-related risk associated with potential fraud, security, and compliance. STRUCTURE THAT EXAMINES UPSTREAM RISK IN INTERNATIONAL LOGISTICS In addition to the auditing of invoices after shipments have been delivered, it is equally important to focus efforts on getting the right products, at the right place, at the right time within the most economic cost structure. As companies reach globally to expand their markets or sourcing channels, they must deal with import and export compliance issues, making it imperative to initiate sound compliance practices. But the safeguards developed domestically don’t necessarily translate outside of US borders. Complex rules in the international shipping landscape create significant risk exposure. Companies must keep detailed records of shipment documentation for at least five years to meet US Customs and Border Protection (CBP) regulations. Incorrect or incomplete record keeping can lead to substantial financial penalties. And, the “I 28 PARCELindustry.com JULY-AUGUST 2018
did not know about that change” answer no longer works when the Automated Commercial Environment sits alongside the Reasonable Care standard. The Trade Facilitation and Trade Enforcement Act of 2015 gives and affirms CBP power in enforcing trade laws for the US. There have been numerous examples in the past few months where CBP agents have found importers and exporters in violation of trade practices, many of which reportedly had been unknowingly followed for years. To minimize international import/ export risks, leading companies perform an internal assessment of their international trade practices. These assessments identify lapses in process and documentation, and provide steps to alleviate the risk. DOES YOUR PLATFORM LOOK AT GROWTH STRATEGIES? During periods of slow economic growth, it is critical to establish plans for the future and execute against them, deploying resources and expertise as needed. This is especially true with the emergence of new revenue growth avenues, such as the booming e-commerce segment of the economy. Many businesses, however, underestimate the level of risk involved in expansion, and as a result, they unknowingly limit their growth. What if you enter the wrong market? What if you don’t have the right parcel and e-commerce platform? What if you need more warehouse space to hold your expanding inventory? Market size and revenue opportunities are important factors to consider when evaluating new markets, but “what if” expansion scenarios need to include extensive calculations to determine the financial requirements of entry, logistics, customer service, manufacturing, warehousing, distribution, and all other supply chain functions. More than just the capital investment incurred when setting up new facilities and services, an unsuccessful venture into a new geographic market adds risk that can strain existing operations, compromise product quality, damage customer satisfaction, erode supplier relationships, and tarnish your brand reputation.
Today, most progressive organizations include e-commerce channel growth as part of their strategic objectives. However, growth in e-commerce and the overall omni-channel creates challenges in many companies’ abilities to meet increasing demands for smaller orders shipped to a much broader audience in a shorter amount of time. Many companies are able to reduce risk in omni-channel and new market growth areas by working with partners that can expand reach with multi-modal (parcel, LTL, truckload) logistics services, position products in new markets with public warehousing alternatives, and provide technologies to automate and streamline business processes. Thorough supply chain data analysis can further mitigate risk and validate specific business decisions regarding site selection, sourcing and distribution alignment, inventory requirements and locations, and least landed costs. While understanding and utilizing a traditional risk management program can be sufficient for many companies, a more mature, better business value approach recognizes that risk management is a critical component of any corporate sustainability strategy. This tightly aligned approach takes into account all areas of the business, from the highest strategic levels deep into each contributing business process. It is no longer enough for organizations to maintain a complete understanding of their streamlined processes, LEAN improvement programs, and enterprise-wide communications. To grow and succeed, it is imperative that enterprise leaders effectively identify and demystify all layers of cost and risk in order to successfully expand into new markets, maintain a high level of customer service, and sustain a competitive advantage.
Rick Brumett is Vice President, Client Solutions, Transportation Insight, one of the largest and most experienced enterprise third-party logistics (3PL) providers in North America. Visit www.TransportationInsight.com for more information.
Robots threatening millions of jobs? Not when it comes to parcel packaging. The dwindling warehouse labor force and how companies are automating their parcel packaging process to overcome it. In our instant-everything world, customers want orders ASAP and at the lowest cost possible. This is becoming increasingly harder to do as parcel growth is expected to continue rising 17 to 28% each year through 2021. To make matters worse, the dwindling warehouse labor force is facing major skill shortages and an aging workforce. As companies search for solutions to overcome the labor crisis, parcel packaging is one of the fulfillment processes that continually gets overlooked. However, in reality, this step can be the most manual and labor-intensive part of the formula. To stay competitive, companies must investigate parcel packaging solutions that lead to higher overall cost savings and better efficiencies. Increase Efficiencies with Automated Packaging Solutions The CVP Automated Packaging Solution by ProShip, Inc., is an in-line autopacker that optimizes all steps of package fulfillment. The solution creates a fit-to-size corrugate box by measuring, constructing, taping, weighing and labeling each single or multi-item order every seven seconds. The CVP also only uses one operator and reduces or eliminates void fill materials to save on labor and material costs. Combat the Labor Crisis The CVP is engineered and proven to alleviate the laborintensive packaging process. This system saves an average of 88% in labor costs by eliminating 8 to 20 packing stations. Workflows continue to run smoothly and minimize labor needs, especially during peak production periods. The CVP ultimately allows companies to run a leaner packaging process while supporting shipping demand 24/7.
“Automation is crucial to our company as we work with short delivery times. And we have a lot of customers, about 35,000, who we serve with just 26 employees,” said Richard Rensen, owner of The Label Collective Group. “The CVP allows us to pack parcels much faster.” Reduce Shipping Costs to Save Thousands The CVP handles a diverse product mix and reduces the dimensions of every order by building the minimum-sized box required, saving an average of 29% in corrugate material. “Packaging is more efficient and cheaper. We don’t need any filler materials to protect the product,” said Rensen. “And as the CVP packs much tighter around the product, we have less damage.” Additionally, if shipping costs are DIM weight dependent, this innovative technology saves an average of 45% in shipping costs. This allows the per unit parcel cost to be significantly lower. Now Is the Time to Automate Your Manual Order Packaging Process Parcel packaging is logistically critical, especially with parcel growth on the rise. Not only does it deliver orders safely, but it also impacts the customer experience. With shrinking warehouse labor, success is directly related to fulfilling orders in a timely, cost-effective manner while creating better efficiencies throughout the warehouse. The CVP can transform order packaging in to a profit center, ensuring all steps of the fulfillment process are optimized. It’s your turn to expand your business with the CVP. Contact us now for more information about the CVP and its ROI opportunities to see how ProShip’s solution can save your business on labor, shipping and corrugate costs.
PER PIECE OR PER SHIPMENT: WHAT’S THE DIFFERENCE?
By Brent Wm. Primus, J.D.
n this installment of PARCEL Counsel, we will explore the effect of a limit of liability expressed as “$ _____ per pound, per piece” as opposed to one expressed as “$ _____ per pound, per shipment.” When there is a total loss of a shipment containing multiple pieces, that is, the cartons or packages on a pallet or a fully loaded trailer, the dollar amount of the recovery by the shipper is not affected by how the carrier’s limit of liability is expressed. However, when there is a partial loss, the manner in which the limit of liability is stated can mean the difference between a shipper making a full monetary recovery or only a partial recovery. The concept of limiting liability based on the weight of the individual package originated in the international treaties governing international air carriers. Under the
30 PARCELindustry.com JULY-AUGUST 2018
current treaty, the Montreal Convention, the liability of the air carrier is approximately $12.00 per pound, per piece. Prior to the deregulation of domestic airline carriers in 1977, the airlines paid the full value of losses up to $0.50 per pound times the total weight of the shipment. After deregulation, a majority of the air carriers adopted a limit of liability of $0.50 per pound and added “per piece.” With respect to motor carriers, when Congress passed the Carmack Amendment to the original Interstate Commerce Commission Act, the intent was to make carriers fully liable for cargo loss and damage with certain limited exceptions. However, beginning with the passage of the Motor Carrier Act of 1980 and continuing through today, motor carriers have published ever lower limits of liability in their tariffs… starting with $50.00 per pound in 1980 and continuing through the present time down to as low as $1.00 per pound. Additionally, the motor carriers have added language borrowed from the airlines and began stating the limit as a certain amount per pound, per piece. Here’s an example. Assume a shipment of: } 10 packages weighing 50 pounds each, with a total shipment weight of 500 pounds } The value of the products is $60 per pound, for a total shipment value of $30,000 } The value of one package is $3,000
Example One: If a $25 limit of liability per pound, per shipment applies: } If a total loss, then the carrier’s liability is $12,500 (500lbs x $25) } If just one parcel is lost, then the carrier’s liability is $3,000 (50lbs x $60) resulting in a full recovery for shipper… because less than total possible based on weight of entire shipment Example Two: If a $25 per pound, per piece limit of liability applies: } If a total loss, then the carrier’s liability is $12,500 (500lbs x $25) } If just one parcel is lost, then the carrier’s liability is $1,250 (50lbs x $25) resulting in a partial recovery for shipper It should be noted that the limits under discussion here need to be distinguished from those expressed as, for example, “$100 per package.” When this limit is in effect, neither the weight of the lost or damaged package nor the number of other packages in the same shipment is a factor. To conclude, shippers should try to negotiate a “per shipment” limit, while carriers will push for a “per piece” (per package) limit. All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Your questions are welcome at email@example.com.
PARCEL July/Aug 2018