HAVE YOU CONSIDERED REGIONAL/LAST-MILE CARRIERS? PAGE 20
IMO 2020: HOW WILL THIS IMPACT THE SUPPLY CHAIN? PAGE 8
IS IT TIME TO ADD OR CHANGE YOUR SHIPPING SOFTWARE? PAGE 28
7 INEFFICIENCIES SLOWING DOWN YOUR PARCEL OPERATION. PAGE 24
CONTENTS /// Volume 26 | Issue 3
14 16 22 24 30 06 EDITOR’S NOTE Don’t Overlook Potential Partnerships By Amanda Armendariz
08 SPEND PERSPECTIVES IMO 2020: The Trickle-Down Impact to the Supply Chain? By John Haber
10 SUPPLY CHAIN SUCCESS Being a Locavore: Regional Carrier Use and Why It Makes Sense for LTL Shippers By Eric Grice
12 OPERATIONAL EFFICIENCIES The Leadership Dilemma By Susan Rider
14 GUEST COLUMN Increase Your Warehouse Efficiency by Evaluating the Different Options Available By Lisa Kennedy and Samuel Nichols
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16 COULD YOUR SHIPPING MIX BE IMPROVED BY ADDING REGIONAL CARRIERS? By Jake Wertner
22 SHIPPING: THE ONLY CONSTANT IS CHANGE By Justin Cramer
24 7 INEFFICIENCIES THAT COULD BE SLOWING DOWN YOUR SUPPLY CHAIN By Jessica Wurst
SPONSORED CONTENT 15 LOCAL DELIVERY SERVICES: WHERE THE ENDLESS AISLE MEETS THE LAST MILE 18 GETTING TO KNOW THE REGIONAL CARRIERS 20 ARE YOU READY FOR A REGIONAL CARRIER PARTNERSHIP?
30 SPARK SUCCESS: 4 WAYS TO TIDY UP YOUR FULFILLMENT STRATEGY
27 THE DIMENSIONING DIFFERENCE IN SHIPPING APPLICATIONS
34 PARCEL COUNSEL
28 SHIPPING SOFTWARE: A ROADMAP TO SUCCESS
By Scott Guilmette
The New Paradigm for Capacity: Buying Drivers’ Hours By Brent Wm. Primus, JD
33 NATIONAL CARRIERS VS. REGIONAL CARRIERS: WHO GOES THE EXTRA MILE?
PARCEL PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ email@example.com ]
EDITORIAL DIRECTOR ALLISON LLOYD [ firstname.lastname@example.org ]
AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ email@example.com ]
CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (m) 608.235.2212 [ firstname.lastname@example.org ]
P.O. Box 259098 Madison WI 53725-9098 p: 608.241.8777 f: 608.241.8666 PARCELindustry.com
PARCEL (ISSN 1081-4035) is published 7 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2019 © 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.
MAY-JUNE 2019 PARCELindustry.com 5
DON’T OVERLOOK POTENTIAL PARTNERSHIPS By Amanda Armendariz
recently attended the National Postal Forum in Indianapolis, and many of the sessions that discussed parcel shipping focused on the benefits that the United States Postal Service could provide to small-package shippers. Now, I’m not here to endorse one carrier over another, but in the discussions I had with several industry professionals at the conference, the concept of diversification constantly came up. Several folks I spoke with were amazed at how many businesses were hesitant to consider the USPS or other shipping partners, even when presented with the benefits. In my years in this industry, I’ve often noticed this very thing. Many shippers stick solely to UPS and FedEx (and, often, they choose one over the other), and while these two industry giants are very good at what they do, a lot of businesses would be doing their operations a disservice if they didn’t explore the other options available to them. After all, it’s not an either/or scenario; many successful shipping operations boast a mix
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of carriers. Adopting some new partners doesn’t mean leaving the Big Two behind. Whether it’s the USPS or one of the many regional carriers populating this sphere, adding partners to your carrier portfolio will often only benefit you in the end. These carriers usually offer lower surcharges (or none at all) and improved transit times, providing you with several cost-saving opportunities you can then pass on to your customers (after all, if your customer isn’t happy with the final delivery process, your business isn’t achieving its ultimate goal!) I hope you’ll take the time to page through this issue and get to know several of the potential partners profiled in the regional carrier section, which starts on page 18. Obviously not every company is a match for every business, but the companies profiled within could give you an idea of the benefits available when you diversify your shipping mix. After all, partnership is the name of the game in any industry, and there are some fantastic options out there for parcel shippers. Speaker of partners, we’re proud that you consider us one of yours; it’s our goal to provide the latest, most relevant information in every issue as you seek to stay competitive in this ever-changing industry. So I mean it sincerely when I say, 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!
FedEx Surcharges and Fees You Need to Know About in 2019 By Rob Martinez
Want to Mitigate Risk in Your Supply Chain? The First Step Is to Identify It By Brent Wm. Primus, JD
Staying Relevant with Amazon’s Increased Influence By Dominic Lozano
IMO 2020: THE TRICKLE-DOWN IMPACT TO THE SUPPLY CHAIN? By John Haber
inety percent of world trade is transported by ocean vessels. However, according to industry estimates, just one container ship can produce the same amount of pollution as 50 million cars. The emissions from 15 megaships match those from all the cars in the world. And, if the ocean container shipping industry were a country, it would be ranked between Germany and Japan as the sixth-largest contributor to CO2 emissions.
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Ocean transportation is a dirty business — and it’s also a harmful one. In 2016, the United Nations shipping agency, the International Maritime Organization (IMO), agreed to limit sulfur oxide emissions from the current 3.5% m/m to 0.5% m/m effective January 1, 2020. Airborne sulfur oxide is a leading cause for acid rain, and studies have also shown that sulfur oxide is a cause of respiratory diseases, such as asthma. There are a few ways for ocean carriers to meet this requirement: } Low sulfur compliant fuel oil use } Low sulfur alternative fuel use, such as liquefied natural gas (LNG) } Exhaust gas cleaning system, aka “scrubbers,” installation But, as one can imagine, regardless of how the requirement is met, it will come at a price. MSC and Maersk Lines each estimate that the cost of the various changes that will need to be made to their fleet and fuel supply will be in excess of $2 billion dollars per year. Meanwhile, Hapag Lloyd noted that they are expecting their low sulfur fuel costs to be around $75 to $100 million during 2019 Q4 in order to be ready for the IMO 2020 implementation date of January 1. Overall estimates for ocean freight providers are over $15 billion annually.
The largest global ocean freight forwarder, Kuehne + Nagel, expects the increase in costs will have a significant impact on the overall prices of container transportation and on freight rates. “While the implementation date for IMO 2020 is January 1, 2020, we anticipate freight rates to increase as early as the
The positive result will be environmental improvements; however, costs incurred by ocean carriers will have a trickle-down effect across the entire supply chain. end of the third quarter of 2019,” it points out. In addition, Flexport estimates that carriers will be forced to reduce total capacity by seven to eight percent as they install scrubbers and additional preparations are made. Many providers, including both Maersk and MSC, have already imple-
mented a new bunker fuel surcharge to shippers in an effort to subsidize some of the increased costs. The positive result will be environmental improvements; however, costs incurred by ocean carriers will have a trickle-down effect across the entire supply chain. Ocean carriers will pass costs through to shippers in the form of surcharges and increased rates. Fuel refineries will raise prices as they switch to producing more low-sulfur fuels, and there is a strong likelihood that diesel and jet fuels will increase in price as well. This will likely translate into higher fuel surcharges from other modes of transportation carriers such as air, truck, rail, and small parcel providers. While neither leading US domestic small parcel providers, UPS and FedEx, have directly linked IMO 2020 to their recent fuel surcharge changes, it is likely one of the reasons. Ultimately, this will trickle down to consumers paying higher prices for such things as airfare, cab fares, and at the gas pump.
Some analysts expect the long chain of cause and effect will negatively impact the global economy by lowering global GDP by 1.5% in 2020. Shippers are encouraged to work with all of their supply chain partners to fully understand the effects of IMO 2020 and to communicate any changes to their customers well in advance. Collaboration is an important part of doing business. However, it is often overlooked, and the result could mean higher costs and often unplanned expenses.
Even worse, lack of collaboration can lead to a loss of customers. IMO 2020 will go into effect in just a matter of months. Don’t let it catch you by surprise when you start receiving invoices from your transportation partners, if you haven’t already.
John Haber is the Founder and CEO of Spend Management Experts. Contact John at email@example.com.
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BEING A LOCAVORE: REGIONAL CARRIER USE AND WHY IT MAKES SENSE FOR LTL SHIPPERS By Eric Grice
alking about regional carriers, we really think of two modes: parcel and LTL. On the parcel side, the two national giants (FedEx and UPS) still command a large segment of shippers’ business, although this is changing somewhat. However, regional LTL providers continue to be successful and maintain significant portions of shippers’ business. To compete with national carriers, you must provide a strategic advantage, and regional carriers have been able to do this in the categories of price, transit times, and service.
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PRICING When sourcing carriers, for all the talk about service levels and transit times, the reality is that price is always at the forefront of the decision-making process. Luckily, regional carriers have some distinct advantages in this area, which they can relay to shippers in their agreements. One of the major cost drivers for LTL carriers is pickup and delivery density. Regional carriers are often quite dense within their respective areas, which often allows them to transport linehauls directly from the origin terminal to the destination terminal. Meanwhile, a national carrier would often funnel everything through a breakbulk center before making its way to the destination/delivering terminal. This density of a regional carrier’s footprint reduces miles, improves time, and allows regional carriers to lower their costs. One thing we often notice when it comes to the regional carriers’ pricing advantage is lower minimum charges. Typically, the minimum charges offered are about $20 lower, on average, than a national carrier. Even if minimum charges are not that prominent in your overall LTL profile, they can still be significant in your shorter (intra-regional) moves (see Figure 1). TRANSIT TIMES In today’s just-in-time marketplace, having faster
transit times has transitioned from being somewhat of a marketable advantage to a necessity to compete. Regional carriers are most known for their next-day services, reaching most direct point destinations the next day. This is hard to find with your national carriers, and when it is provided, it often comes at a premium. Typically, national carriers will advertise next-day areas with an asterisk but are hesitant to commit unless the servicing destination terminal is the same as the pickup. Also, you will find that they have much earlier pickup time cutoffs for it to even be considered. A regional carrier will pick up as late as 6:00 PM and still deliver the next day. A national will pick up at 6:00 PM, not process it until the next day, deliver the following day, and then call it a one-day transit time. When looking at small parcel, FedEx & UPS have been improving, and slowly but surely have mitigated the overall transit benefits of the regional players. SERVICE The term “service” is somewhat all-encompassing, but it is the little things that make a working relationship into more of a partnership. Even if you have a smaller account, regional carriers are often more attentive to you as a customer. National carriers typically do not get this way until you eclipse a certain amount of spend. A regional
carrier will always have someone who will pick up the phone, while the nationalâ€™s goal sometimes appears to be to automate as much as possible, directing you to a website portal where you can self-assist. Another important aspect is that your freight often has fewer overall touches with a regional carrier, whereas a national might shuffle it through multiple locations. Having fewer touchpoints reduces overall damage rates. Overall, the biggest service benefit comes from the flexibility of regional carriers. If you have special business requests, need late pickups, or an extra dropped trailer that day, regional carriers are often able to come through for you.
Figure 1 Eric Grice is a Project Manager with the Transportation Solutions Consulting practice at enVista. For more information, he can be contacted at firstname.lastname@example.org, or please visit www.envistacorp.com.
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THE LEADERSHIP DILEMMA By Susan Rider
o you feel as though your workday is consumed by putting out fires? Some people thrive on this kind of environment (and more power to them), but most of us will eventually get tired of this constant reactivity and will start seeking some proactive solutions. Distribution center managers often feel as if their time is spent solving these little problems but not making much progress, but this isn’t how it has to be. As long as you build your team to be leaders, your job will become more strategic, which means you’ll have the time to spend on long-term strategic opportunities. When visiting a facility in Texas, the folks I was speaking with asked me where to find leaders in distribution. They had already tried several options, such as college graduates, leaders from other companies, retired
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military, etc., but yet nothing had worked. There are several reasons why this could be. First, leaders are usually not looking for a position because they are good at what they are already doing. Most managers realize when they have a good leader — and they don’t want to lose them. On the other hand, effective leaders are sometimes hard to find simply because there are not enough facilities focusing on how to train people to lead their team effectively. Leadership is not taught in college, and although leadership is taught in the military, most of that work pool does not end up in distribution. If you want a less hectic and stressful life, focus on building a team of leaders in each functional area. Then have that leader identify his or her heir apparent to start grooming as a future leader. For instance, you many have designations, such as: Beginning Associate, Associate, Lead Associate I, Lead Associate II, Supervisor, and Functional Area Lead. Whatever you decide to use as your designation doesn’t really matter; it’s the training that you develop and maintain that will reap rewards. The age-old problem in the distribution center is that someone is promoted to lead or supervisor and they have no experience in such a position. You may get lucky and the person you’ve promoted has an inherent talent for leadership, but most of the time the person fails when promoted because they
have no training on how to motivate, manage, and lead a team. What leadership skills are you creating? To develop a leadership program on a low-cost budget, pick a person in each function-
To develop a leadership program on a low-cost budget, pick a person in each functional area that you have identified as a potential leader. al area that you have identified as a potential leader. Establish the organizational goals you want to accomplish with this program. The transparency of the goals is very important for the team and for the individual. Write up and understand each person’s strengths and weaknesses via an individual development plan (IDP). Pull them into a 30-minute class at an opportune time in your facility (perhaps before their shift actually begins). Start by teaching the basics and then evaluate the results. As you see improvements, broaden the scope of the program to
include situational analysis, team building, motivation, and communication. Some personal goals for each individual may include soft goals like: Find something positive in every situation See opportunities where others do not Try harder than others and lead by example Do not give up easily The program should foster initiative in others as you build these new leaders. When people understand that you value their opinions and their views are listened to, they become motivated to act and use more creativity to solve problems. They also develop ownership of the situation and their respective departments. Trusting your staff to act effectively and make the right decision is part of your role and is another reason you want to continue to develop your leaders. Teach them the positive elements of a leader and demonstrate the traits they must display to get respect from their team, such as integrity, competence, inspiration, purpose, direction, and charisma. As you’re building this leadership team, you will notice
a sense of community among them. They will start to help each other and share ideas of success between themselves. This is when you know you have built something that will perpetuate the success of your facility. Motivating the team is probably one of the toughest non-tangible things to learn, but it is worth it. As you try to find your way in these ever-changing waters, keep your eye (and your team’s focus) on the goal. After all, goal-oriented leadership is probably the most common type of leadership used. It offers attention to detail and sets the expectations in a clear and firm manner. This
type of leadership is good for developing teamwork and collaboration. However, if you are seeing a decline in morale, a higher than usual increase in staff turnover, or an inability to see the big picture, you may have overdone this type of leadership and need to reboot. Developing your leaders and subleaders will pay off in a huge way; after all, what makes a facility efficient and effective is its people.
Susan Rider, President of Rider & Associates, Supply Chain Consultant, and Executive Life Coach can be reached at email@example.com.
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INCREASE YOUR WAREHOUSE EFFICIENCY BY EVALUATING THE DIFFERENT OPTIONS AVAILABLE By Lisa Kennedy and Samuel Nichols
he rise in parcel and direct-to-consumer shipping has disrupted warehouse operations, increasing labor costs and value-added services. The continued growth in e-commerce sales, which totaled $517 billion last year (a 15% increase from 2017), coupled with drastic labor shortages, is forcing warehouse operators to seek new solutions to cut costs and meet growing customer demands for rapid shipping and delivery. Robotics are becoming increasingly popular among warehouses looking to address manual labor limitations, reduce errors, and improve efficiencies. In addition to being cost-effective and quick to implement, these automated solutions also offer flexibility and scalability.
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Used in e-commerce fulfillment, goods-to-person picking robots allow the warehouse associate to remain at a packing station while the goods are brought to them for packing and shipping. These systems also enable warehouses to maximize storage space and increase efficiency. Collaborative picker aids are an option that travel the warehouse, stopping at a location where an item needs to be picked and moving to a packing area once an order is complete. Robots with green lights alert warehouse employees that an item needs to be manually picked from a storage bin and placed into a robot bin. Sortation robots are more prevalent within retail, wholesale, and e-commerce fulfillment operations for their ability to increase efficiency and reduce cost. These material handling systems can perform unit and parcel sortation simultaneously or separately, and they are scalable to accommodate growth as needed. Autonomous piece-picking solutions are another exciting development in this sphere. These systems can increase productivity and efficiency by working collaboratively with warehouse employees and existing or manual automated systems. Ideal for larger warehouse operations, an automated guided vehicle (AGV) is a portable robot that follows markers or wires on the floor, or uses vision, magnets, or lasers for navigation. AGVs have been
used for decades to transport case, pallet, bulk, or specialized containers across a wide range of industries and applications, and are now making their way into more e-commerce fulfillment operations as the need to move larger volumes continues to increase. As is the case in assessing any operational equipment, it is important to consider the system as a whole. For instance, while all of the solutions mentioned above will increase processing speed and throughput rates for their respective functions, the inputs and outputs of the solution must be considered to fully realize the benefits. As processing speeds in picking or sortation increase with the implementation of these technologies, the rest of the system must respond to handle the improved rates. This could result in additional investment in more traditional material handling technologies, such as conveyor in-feed and takeaway or increased staffing around peak operating times. Understanding these impacts is vital for a successful adoption of these advanced technologies, but the investment could be worth it.
Lisa Kennedy is Project Manager, Tompkins International, with 20 years of experience in growth and strategic planning across industries. Samuel Nichols is Consultant, Tompkins International and boasts a strong background in the field of Industrial and Systems Engineering.
Local Delivery Services: Where the Endless Aisle Meets the Last Mile
Retailers are meeting the demand for cheaper and faster delivery by shipping from inventory sources located closer to their customers. You might think that with all the recent news about retail store closings that the industry is in free fall. It isn’t. Retail sales hit a record of $5.35 trillion in 2018, according to Statista. The industry continues to show strong growth, supercharged by online shopping. It appears that there isn’t a retail problem, there’s a real estate problem. Too many stores have relied on people getting dressed, getting in the car, and going shopping. But retailers who have implemented omnichannel strategies and integrated their brick-and-mortar store operations with online stores are thriving. Omnichannel retail strategies aim to counter online marketplaces by shipping from inventory sources closest to customers, including local stores, distributors, and manufacturers. Nonasset eCommerce marketplaces are opening up hundreds of fulfillment centers across the US. As a result, the entire retail supply chain is getting in on the last-mile shipping act. This has resulted in unprecedented smaller and more frequent parcel shipping volumes and increased use of regional and local carriers.
Retailers who have implemented omnichannel delivery strategies have realized many benefits, including: Increased Sales. Stockouts are to retailers what a drought is to farmers. Endless aisle strategies extend ship-from-store and ship-from-supplier capabilities and offer consumers a wider range of product options without having to incur the cost of increased fulfillment center inventory. Reduced Inventory. Drop shipping from suppliers is a dream for chief financial officers. Why? They don’t have to carry inventory on the books, especially for slow moving SKUs, or fight with sales about availability of stock. With the right supplier partners, it’s a win-win situation: we sell, you ship. Reduced Shipping Costs. “Free” shipping has long been the standard in B2C eCommerce. Offer it or risk shopping cart abandonment. The trick is to manage the cost of free shipping. Shipping from a place closer to the consumer will help improve retail margins. Faster Delivery. Millennials are less inclined to wait for stuff. (Who knew?) Two-day delivery is becoming the standard but eCommerce marketplaces are increasingly offering same-day delivery in urban areas. To accommodate demand, networks of same-day delivery carriers are stepping up. Convenient Returns. Buy online, return to a local store. It’s a no brainer. And it’s all part of the integrated omnichannel logistics strategy that leverages the strengths of retailer assets: local customer service and drop-off facilities. Former US House Speaker Thomas P. “Tip” O’Neill, Jr. once said all politics is local. The same is true for brick-and-mortar retail if they choose to take advantage of it: local customer service, local delivery, and returns. But it’s complex. So many carriers and so many (potentially thousands) ship-from-store and supplier locations to manage. Retail brands hang in the balance against fulfillment of the delivery promise. Enterprise-class, multi-carrier shipping platforms are perfectly positioned to provide retailers with the technology they need to simplify outbound and returns shipping management. To learn more about how omnichannel shipping software can help you with the ins and outs of delivering from the endless aisle, download our eBook, “Omnichannel Retailers are Delivering from the Endless Aisle.”
www.pierbridge.com 508.630.1220 firstname.lastname@example.org
By Jake Wertner
COULD YOUR SHIPPING MIX BE IMPROVED BY ADDING REGIONAL CARRIERS? As with most things in this industry, you’ll want to analyze your data before making any decisions. But if regional carriers are the right choice for you, your operation could enjoy some significant benefits.
espite the pre-eminence of UPS, FedEx, and USPS, regional carriers can play a substantial role in maximizing the efficiency of a small-parcel supply chain. Sourcing relationships with these carriers can provide time-in-transit advantages as well as reduced costs; however, these benefits can be mitigated if one isn’t mindful of national carrier terms and individual package and distribution characteristics, among other factors. As with most decisions regarding the small-parcel supply chain, it is critically important to understand package and distribution characteristics. Without a thorough understanding, one risks
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ineffective transportation procurement at best — and disastrous financial consequences at worst. Once a decision-maker acquires a thorough understanding of characteristics, the next step is to craft a contract with the national carriers that allows for multi-sourcing. Poorly executed carrier negotiations can result in restrictive terms and conditions, which can inhibit the ability to effectively multi-source. “Regional carrier solutions always require a multi-sourcing strategy,” shares Glenn Gooding, President of iDrive Logistics. “The desired multi-sourced network must be planned first in order to design the national solution and associated contract structure to allow the
flexibility of utilizing regional carriers.” Another item to check off in a multi-source decision surrounds technology. Shippers must have the savvy to effectively divide shipments by carrier based on geography and environment. Regional carrier transit times are often highly advantageous within their geography, with exceptionally competitive pricing. Utilizing a shipping software can meet much of this need, assuming the software’s rules are properly aligned with speed, cost, and delivery experience objectives. A fourth consideration surrounds customer proximity and induction point. If the main distribution point is outside a regional carrier’s coverage area, the shipper must have a significant market within the coverage area to effectively utilize a multi-carrier strategy. One must be mindful of induction point; for example, a shipper using OnTrac will maximize timein-transit benefits by dropping packages at the Reno hub rather than hubs in Salt Lake City or Los Angeles. Once a shipper has walked through this methodology and confirms fitment of regional carriers with their overarching strategy, the myriad advantages of regional carriers come into focus. The Perks One of these advantages is improved transit time. Regional carriers often utilize fewer hubs within their geography, smoothing out kinks that exist in national parcel carrier networks. Let’s take a package traveling from San Francisco to Los Angeles as an example. While the national carriers offer two-day transit windows for ground, regional carriers offer overnight service. This arrangement provides enormous cost savings over national express services for time-sensitive items and, at a minimum, improved fulfillment speed over national ground services The pricing advantages of regionals are numerous and can be extremely impactful. As accessorial fees become increasingly complex and exorbitant among national carriers, shippers can find refuge in regional carriers. Residential and delivery area surcharges are typically reduced or nonexistent among regional carriers, resulting in massive cost savings for B2C operations. “Assum-
ing a proper national contract is in place, regional carriers can offer excellent shelter against accessorial surcharge application,” notes Shaun Rothwell, CEO of iDrive Logistics. “As surcharge revenues and application complexity continue to mount for customers of the national carriers, regional carriers can represent significant appeal.” As evidenced in the chart at top right, there lies an immense gulf in total package cost between UPS and a Midwest regional carrier. Looking forward, this difference is likely to grow because of the vast assortment of surcharges applied by national carriers and broadening application of fuel surcharge. In the latest UPS GRI, fuel surcharge was expanded to include Add’l Handling, Over Max, Signature Required, and Adult Signature Required surcharges. If history is any guide, this broadening trend is likely to continue until most, if not all, surcharges are assessed with fuel. Another advantage extended by certain regional carriers is found in a higher dimensional divisor. OnTrac, for example, offers a 166 dimensional divisor, compared to the 139 offered by the national carriers. The table in the middle of the righthand column illustrates the advantage of the 166 dimensional divisor. Rather than a bill weight of 17 pounds with FedEx, OnTrac’s higher dimensional divisor applies a bill weight of 14 pounds. This results in a five percent reduction in total cost. It is also helpful to consider the cost difference between an overnight national service and the regional ground service, as this is an overnight service for the regional (see the bottom chart for an illustration). The cost disparity in this scenario is enormous — even if the shipper enjoyed a 70% discount on FedEx Standard Overnight, costs could be reduced substantially by going with the regional. In an increasingly murky small-parcel landscape, regional carriers can represent a worthwhile bulwark against national carrier pricing and service pressures. Similar to most small-parcel supply chain decisions, knowledge is power — by putting that knowledge to use, adding a regional carrier to your roster can be an excellent choice.
Jake Wertner is Vice President of Client Services for iDrive Logistics, providing pricing and strategic advisory services in support of the world’s most efﬁcient small-parcel supply chains. He can be reached at email@example.com or 385.336.6405. MAY-JUNE 2019 PARCELindustry.com 17
REGIONAL CARRIER SERVICE MAP GETTING TO KNOW THE REGIONAL/ LAST-MILE CARRIERS By now, many shippers have heard of the benefits and advantages of adding a regional/ last-mile carrier to their parcel mix, and, not surprisingly, the use of these carriers continues to grow. If you have not yet incorporated the usage of a regional/last-mile carrier, you may be missing out on improved service times and reduced costs. On the following pages, youâ€™ll be able to get to know some of the leading players in this space, as well as the areas they service. Who knows; adding one (or several) of them as your partners could give your operation a leg up in the hypercompetitive quest to satisfy customers, improve delivery times, and reduce costs.
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GLS/GSO AZ, CA, ID, NM, NV, OR, UT, and WA
Hackbarth Delivery Service, Inc. AL, AR, FL, GA, LA, MS, MO, OK, TN, TX, and WV
CT, DE, FL, GA, IN, KY, MA, MD, MI (not including the upper peninsula), NC, NH, NJ, NY, OH, PA, RI, SC, VA, WV, and Washington DC
United Delivery Service
AZ, CA, CO, ID, NV, OR, UT, and WA
IA, IL, IN, and WI
LSO AL, AK, LA, MS, OK, TN, and TX
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ARE YOU READY FOR A REGIONAL CARRIER PARTNERSHIP? As you were reading Jake Wertner’s article on page 16, you might have been starting a mental tally of all the ways that regional carriers could benefit your shipping mix. After all, a concentrated delivery area, fewer (or no) surcharges, and more personalized service can go a long way in improving your smallparcel operation and, ultimately, your customers’ satisfaction. If you do decide to add or increase the number of regional carriers you utilize, the companies listed here are a great place to start. 20 PARCELindustry.com MAY-JUNE 2019
GLS/GSO In a hypercompetitive business world, every package you ship can make or break the customer experience. That’s why, now more than ever, it is time to change up your company’s shipping mix by working with a carrier that can deliver the reliability and quality that your shipments deserve. GLS/GSO is a western US regional carrier offering Priority, Ground, and LTL services for over 30 years. Because we focus on a specific geography, we’re able to provide faster delivery with greater flexibility and more personalized customer service. We’ve helped thousands of customers ensure faster delivery to their customers, while saving on shipping costs with competitive rates, lower fees, and a reasonable DIM weight policy. When you ship via our Ground Service, you’ll get next-day delivery over a vast geographical area at ground rates. LTL Freight shipping is just as simple and quick as our parcel delivery, with straightforward per-pallet pricing minus the complicated shipping routines of a traditional freight carrier. And for your time-sensitive pack-
ages, you can save up to 40% on priority overnight delivery when compared to the national carriers. Enjoy the simplicity of three delivery services under one roof. We know you’re busy, and the last thing you want to worry about is whether your shipments are being delivered properly. Partner with a carrier that you can rely on for faster delivery, lower fees, and improved customer service. Learn more at www.gls-us.com or call our team at 800.322.5555.
HACKBARTH DELIVERY SERVICE, INC. 43 locations in 43 years! Hackbarth Delivery Service is your single-source solutions provider, specializing in last-mile delivery. Founded in 1975, our footprint has grown to 43 locations, allowing us to provide customized logistics solutions and white glove services across 10 states. We are the southeastern connection for e-commerce shipments, delivering over 100,000 packages a day across the Southeast, Midwest, and Mid-Atlantic US regions. Twelve of these terminal locations
are in Texas alone, and our delivery and logistics solutions are tailored to meet each customer’s needs. We are a privately held, certified woman-owned corporation and SmartWay partner, and we are on a mission to provide the highest level of customer service — employing technology to drive efficiency, optimization, and complete visibility to all customers. Please visit our website to view all our locations, and let us deliver our trademarked KYSO® (Knock Your Socks Off) service for all your transportation, distribution, warehousing, and logistics needs, 24/7/365. 251.478.1401 / 800.277.3322 HackbarthDelivery.com
LASERSHIP LaserShip is the leading provider of sameday and next-day last-mile delivery services in the eastern and Midwest US for premier e-tailers, including some of the largest brands in the world. For 33 years, LaserShip’s last-mile solutions have helped shippers reduce transit times, eliminate excess costs, and increase flexibility within their supply chains. Today, LaserShip operates more than 55 facilities and four sort centers through a hub-and-spoke network that reaches over 140 million e-commerce consumers across 20 states. LaserShip partners with more than 5,000 professional independent contractors to make last-mile residential and business deliveries. LaserShip is committed to continuously driving value for retailers by adapting to consumer needs. This spring, LaserShip will expand its service area by 22% and launch service in new markets such as Harrisburg, PA; Norfolk, VA; Newburg, NY; and Southeast, NJ. LaserShip will also launch 7-day service throughout the mid-Atlantic and northeast this summer. LaserShip uses the latest technology to be there when and where retailers need a flexible delivery partner. Most recently, LaserShip rolled out its Visual Proof of Delivery (VPOD), a tool available on its mobile delivery application that allows LaserShip to confirm deliveries using GPS and image capturing. This year, LaserShip will also automate its largest sort center, more than doubling the facility’s throughput.
LaserShip is proud to be Carrier Certified by the International Supply Chain Protection Organization, a non-profit organization that promotes, educates, and advocates supply chain security and protection. To learn more about LaserShip’s e-commerce solutions, visit lasership.com or email firstname.lastname@example.org.
The OnTrac logistics network has three divisions based on service offerings; overnight, messenger, and international. For more information on overnight services, call 800.334.5000 or visit ontrac.com. For more information on messenger services, call 888.334.5001 or visit ontracmessenger.com. For more information on international services, call 800.628.4868 or visit ontracinternational.com.
LSO LSO/Lone Star Overnight is the leading regional parcel delivery provider in the southern US, including TX, OK, LA, AR, TN, MS, and AL. Services include Express next day 8:30a, 10:30a, and 3:00p and second day, as well as Ground 1-3 day. LSO also offers same-day on-demand and final mile service. LSO provides same/ better service than the global providers at rates that are up to 40% less expensive and is more user-friendly. Please reach us at 800.800.8984 or email@example.com. www.lso.com.
ONTRAC OnTrac specializes in logistics services throughout the eight western states, an area that is home to over 65 million consumers. OnTrac was founded in 1991 and has grown to become a top choice for e-commerce and companies looking to speed up parcel distribution without the additional costs associated with national carriers. In 2014, OnTrac launched DirectPost and became the first logistics company to offer a USPS Package Consolidation Service. OnTrac is a SmartWay Transport Partner, a USPS Workshare Partner, and integrates with over 30 different multi-carrier software providers. Significant milestones and awards for OnTrac include celebrating 25 years in business in 2016, being recognized in Chandler Chamber’s Top 100 Businesses from 2015 to 2018, and being the Phoenix Business Journal’s Arizona Corporate Excellence (ACE) Award Winner for three distinctions: Fastest Growing Company (2016, 2017, & 2018), Top Privately Held Company in Arizona (2016, 2017, & 2018), and winner of the Community Impact Award (2018).
UNITED DELIVERY SERVICE United Delivery Service, a regional parcel carrier with over 45 years of delivery experience, has been a leader in providing final-mile delivery solutions for some of the largest pharmaceutical, payroll, retail, and e-commerce companies throughout the Midwest. UDS offers a same-day, next-day, and routed distribution service that has provided its customers incredible cost savings, improved transit times, and a better customer experience by utilizing our innovative technology and software. UDS provides VPOD (Visual Proof of Delivery) on every shipment. This technology, along with providing GPS/ geocode on each order, allows us to be more successful when making a delivery to your customer’s home or business. For more information about our services and coverage area, feel free to visit us at www.uniteddeliveryservice.com
FEATURED REGIONAL/ LAST-MILE CARRIERS GLS/GSO www.gls-us.com HACKBARTH DELIVERY SERVICE, INC. HackbarthDelivery.com LASERSHIP lasership.com LSO www.lso.com ONTRAC ontrac.com UNITED DELIVERY SERVICE www.uniteddeliveryservice.com
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SHIPPING: THE ONLY CONSTANT IS CHANGE If DIM weight surcharges and the like are increasing your parcel costs, there are steps you can take to mitigate their effects.
hile shipping may seem simple to customers (or even company executives), shipping managers know that it’s anything but. Much more goes into shipping than simply getting the order from the warehouse to the customer’s home. Shippers must take into account when the customer wants to receive their order, the packaging, and, of course, the shipping costs. They must also keep up with the latest technologies and regulations in the constantly changing shipping industry. Case in point: dimensional (DIM) weight. It’s hard to believe, but DIM weight was first introduced to ground shipments only four years ago. Before then, shippers were simply charged for the
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BY JUSTIN CRAMER weight of their shipment, no matter the size of the parcel. All of that changed when two of the largest carriers, FedEx and UPS, introduced DIM weight pricing for all ground shipments. As many know, DIM weight is normally calculated for ground shipments by the length, width, and height of each parcel that is over three cubic feet, regardless of the shipment’s weight. This was a big change for shippers in 2015, especially since many of them experienced significantly higher shipping costs — some increasing by as much as 30%. Unfortunately, these DIM weight rates are only continuing to increase each year, forcing many shippers to continue to find new ways to combat these higher shipping charges in order to avoid impacting their bottom line.
For this reason, shippers are constantly reviewing their shipping procedures and turning to different solutions and shipping strategies. By leveraging the following strategies, companies can exponentially reduce shipping costs while still meeting customer demands. Renegotiate shipping contracts with multiple carriers. Before reaching out to your main shipping carriers to negotiate better rates and update contracts, obtain rates from all viable carriers. It may seem obvious, but knowing what company offers the lowest rate can help you negotiate with your current carriers, as well as update your contract. Your carrier is able to review the number of parcels your company shipped per day/ month/year and the average parcel size so they can create a unique contract designed just for your business. This will dramatically save on shipping costs and help boost business.
Consider a variety of carriers, including both regional and local. Many companies may not realize local couriers can transport shipments 80 to 100 miles within a specified zone. This is an excellent mode of transportation for last-mile delivery as it can provide a personalized, caring service for customers. Regional carriers also offer longer time schedules for pick-up and delivery, and they can even provide next-day delivery options to meet customer expectations. These carriers are especially beneficial for shippers as these services are oftentimes more cost-effective than large carriers, and not all utilize DIM weight surcharges. Design packaging with DIM weight in mind. It’s no surprise DIM weight charges impact large lightweight items the most. However, all oversized parcels are losing shippers money. This is why it’s critical shippers design packaging that better fits these items in order to create the smallest parcel possible. To do this, shippers can begin stocking many different types of parcel sizes in
order to create these custom-fit packages. However, some shippers have found this strategy is not always feasible due to warehouse space. In these cases, shippers incorporate automated packaging solutions into the order fulfillment process. These systems measure, construct, tape, weigh, and label each order while creating a fit-to-size package. These parcels can be created in as little as seven seconds using only one operator, which allows for better efficiencies. These systems can also autobox thousands of single- or multi-item orders per day, creating fit-to-size parcels with the lowest DIM weight.
contracts. Rate shopping also provides shippers with increased negotiating powers when the time comes to renegotiate with their current carrier contracts. While DIM weight surcharges are a constant pain point for shippers, there are many strategies and solutions that can be incorporated into the fulfillment process that alleviate increased shipping costs. In the end, when the only constant in the shipping industry is change, shippers need to incorporate the best strategies and solutions into the warehouse in order to keep up with regulations and boost business.
Rate shop carriers and services using multi-carrier shipping software. Many shippers turn to shipping software that automatically rate shops their carriers and services to identify the best shipping option for every order, no matter the DIM weight. These shippers have found they can save a minimum of six percent in shipping costs and have increased savings with many different regional carriers and services, even without established
Justin Cramer is Global Project Management Director and Co-Founder at ProShip, Inc, the global provider of today’s #1 multi-carrier shipping software. Throughout his time at ProShip, Cramer has worked with many small to global shippers on achieving certiﬁed carrier labels. For more information, please visit their new website at www.proshipinc.com.
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7 INEFFICIENCIES THAT COULD BE SLOWING DOWN YOUR SUPPLY CHAIN
n efficient supply chain is one that meets customer expectations in a cost-effective manner. With two-day delivery (or less) becoming the retail standard for customers, balancing cost and customer service is no small feat. According to the GMT 2018 Brand Shipping Policies and Execution Research Study, 58% of consumers seek same-day shipping. Meanwhile, 48 of the 54 retail respondents offered some form of free shipping. Unfortunately, reducing shipping costs and increasing delivery speed seem to be at odds with one another. And while it’s easy to blame the struggle on carriers who annually raise costs without
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BY JESSICA WURST improving commitment times, highly effective shippers are looking internally for cost reduction opportunities. How? Over 90% of Benchmark respondents’ parcel volume was shipped either via FedEx or UPS. As a result, an efficiency battle for a competitive edge is being fought through the fulfillment network. Little can be done to improve cost or efficiency once a shipper hands off an order to a carrier. Internal Diagnosis — Wait, We’re Inefficient? To identify inefficiencies, take a step back and evaluate the system as one entity. Lean Process Improvement identifies seven wastes: defects, over
processing, over production, movement, transportation, work in progress, and waiting. These can be roughly translated into symptoms of an inefficient parcel network. 1. Defects: Internal operational errors resulting in incorrectly shipped packages. Ask yourself: Are you getting slammed with address corrections? Are packages shipped at the correct service level? Recommendation: Blame the system. Well-established fulfillment processes are essential for an efficient shipping network. Unfortunately, the more steps involved in the process, the greater opportunity for error. Evaluate each step in the process where defects could occur. Include the transportation management system (TMS), packaging and labeling procedures, and the customer interface. Are these systems protected against human errors?
There is one constant across all systems involving people: mistakes will be made. Categorize defects as an error in the system, not an issue with its users. Fortify your fulfillment process by creating procedures that minimize opportunities for human errors. Rely less on human decision making and more on standardized processes. 2. Over Processing: Non-value-added work. Ask yourself: Do you have a high number of avoidable accessorial charges? Are your packages shipped in larger boxes than necessary? Recommendation: Know your contract and your volume. UPS and FedEx have a growing list of accessorial charges. While many of these charges are unavoidable, a few can be mitigated with proper planning. Handling charges are based on a shipment’s weight, dimensions, or packaging. Understanding the criteria for these charges is essential for planning shipping costs. Consider alternative packaging methods to avoid these charges. Evaluate freight shipping
options when those $850 Over Maximum Limits fees kick in. Another avoidable charge is UPS’s Shipping Charge Correction Audit fee, a penalty for incorrectly supplied package details. Ensure your TMS remains up to date with accurate dimensions and weights for all your boxes and SKUs. 3. Over Production: Exceeding requirements. Ask yourself: Do packages arrive faster than the customer expectation? Recommendation: Strive for just-in-time (JIT). In a manufacturing system, JIT refers to completing a product exactly when the customer needs it. Any early or late completions are inefficiencies. Similarly, shipments that arrive before customer expectations can be a sign of inefficiency. Early arrivals indicate an opportunity for downgrading service. Monitor your number of Express shipments for opportunities. Shipments in lower zones often have one- or two-day commitment times via Ground. If Express volume cannot be transferred to Ground,
downgrading an “early AM” Express Service to a standard Express service significantly reduces shipping costs and only increases delivery times by a few hours. 4. Movement: Shipping more shipments than necessary. Ask yourself: Do you have a high number of small shipments going to and from the same locations? Recommendation: Put that box inside another box. Besides shrinking box sizes or changing package contents, there are few options to change a shipment’s billed weight. However, package consolidation can reduce the average cost per pound for multiple shipments. On most rate cards, heavier packages are cheaper per pound than smaller packages. If dimensional or weight-related handling fees are avoided, consolidating shipments with the same origin and destination can produce significant savings. 5. Transportation: Shipping a package further than it needs to go. Ask yourself: Are shipments coming from the closest DC? Do packages have a high average
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zone? Recommendation: Work with what you have. When reducing transportation costs, take a holistic approach. Visibility into your network’s customer base and distribution capabilities is essential. Evaluate why you have a high average zone; if orders are not being shipped from the ideal location, determine whether this is an inventory or TMS issue. Shipping from store has become a common tool among retailers to reduce shipping zones. Eighty-four percent of GMT’s 2018 Benchmark Report retail respondents utilized or planned to utilize ship-from-store. Incorporating the entire retail network into the fulfilment process will be essential for competing in a next-day shipping market. 6. Work in Progress: Keeping too much inventory or works in progress in the system. Ask yourself: Is batching causing backups or delays in fulfillment? Are shipments ready to ship long before the cutoff time? Recommendation: Find a balance. Work in progress is a symptom of an unbalanced system. Longer queues
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result in longer fulfillment times. Map out your entire fulfillment process and identify where your backups are occurring. Alleviate stress in these areas. If orders are late due to spending a significant amount of time in a virtual or physical queue, consider upping fulfillment staffing or redistributing your workforce. If a large number of shipments are constantly staged for pick-up, consider increasing your carrier's pick-up frequency or changing the pick-up time. 7. Waiting: Delaying the next step in the process due to lack of resources. Ask yourself: Do I have the resources I need to fulfill an order? Recommendation: Share the wealth. Maintaining the minimum inventory levels to meet customer needs can be risky. However, an interconnected multi-DC system can minimize the impact of starvation. Understating customer volume by product type and region is essential for distributing volume and optimizing among DCs. In addition, treating all DCs and stores as a part of one interconnected inventory storage can mitigate the risk of low inventory.
Visibility in Your Supply Chain Any efficiency analysis or optimization initiative requires a comprehensive view of a shipper’s supply chain. As customer expectations rise, accurate and accessible parcel data is invaluable to shippers. Remaining in the dark about a network’s volume distributions or contract impacts is not an option for retailers wishing to gain a competitive edge. Ensuring your supply chain is interconnected and running smoothly requires taking a few steps back to evaluate the whole network and focus on opportunities.
Jessica Wurst is a Strategic Solutions Engineer at Green Mountain Technology (GMT), a Parcel Spend Management service provider for shippers with over 10 million parcels per year. Jessica has a Bachelor of Industrial and System Engineering from Auburn University and is a certiﬁed Lean Six Sigma Green Belt. Visit GreenMountainTechnology.com for more information.
The Dimensioning Difference in Shipping Applications The explosion of e-commerce over the last decade has challenged shippers to meet customers’ expectations quickly and efficiently. More and more consumers are buying products online, and this trend shows no signs of slowing down. In 2018, e-commerce sales increased 15%, according to Internet Retailer’s analysis. The convenience of online shopping is too great for many customers to ignore, so how do shipping operations adjust to an online market? Dimensional Weight: Old News? In 2015, most major carriers switched to a dimensional weight pricing model. This signaled a radical change in how shipping operations handled their outbound shipments. The responsibility for packaging efficiency shifted from carriers onto the shoulders of the shippers. The weight of a package was no longer the only relevant information; shippers now needed to know the length, width, and height of every box they shipped. As a result, many shipping operations were forced to hire more labor to hand measure outbound parcels in order to meet e-commerce demand and account for the dimensional weight pricing model. Shipping costs rose for parcels that had low density. For the majority of shipping operations, it made sense to turn to a dimensioner. Increasing Efficiency=Dimensioner Dimensioners are machines that simultaneously measure and weigh parcels, pallets, and irregular shapes. Placing an item on a dimensioner’s platform gives you the length, width, height, weight, and dimensional weight of that item in seconds. Depending on project requirements, the most precise dimensioning systems can get down to 1mm accuracy. Dimensioners also optimize outbound shipping applications by cutting down parcel measurement time to 1-2 seconds. There is no wasted time as employees measure length, width, and
height and calculate the dimensional weight. There are no entry errors in your data. The dimensioner gives you fast and accurate data in seconds. And with data you can trust, chargebacks and fees can also be avoided. Some dimensioners measure boxes, others are designed for pallets, some measure polybags and envelopes, and some can even measure irregular objects such as wrenches and apparel. Dimensioners increase efficiency and can save shippers thousands or millions of dollars each year. Dimensioning in Shipping There are many dimensioners that are designed to fit into end-of-line shipping applications. Dimensioners with open sides allow quick and easy pass-through for shipping stations, especially if a station includes conveyors. Look for proven dimensioning solutions from companies that know the industry and have years of experience. They will be able to help you decide on the best dimensioner for your application, whether you need speed, accuracy, or mobility (or all of the above). Conclusion The answer to dimensional weight and higher shipping costs is increasing your operation’s efficiency. A dimensioner saves time, improves accuracy, and calculates dimensional weight. Can you continue to afford overlooking dimensioners and their cost-saving benefits?
firstname.lastname@example.org 801.451.7000 cubiscan.com
SHIPPING SOFTWARE: A ROADMAP TO SUCCESS The term “shipping software” can encompass so many things, and some shippers (especially those new to the industry) may find themselves overwhelmed with the options as they attempt to evaluate which products would help them optimize their small-parcel operation. From multi-carrier systems to labeling and documentation software, the options are endless — and valuable. Many articles in this issue have demonstrated how the right shipping software can take your shipping operation to the next level, but choosing the wrong software for your business could create significant roadblocks. Take a look at some of these solution providers listed here and reach out; they can get you on the right path. 28 PARCELindustry.com MAY-JUNE 2019
Cubiscan is a high-tech company that produces advanced dimensioning (cubing) and weighing systems designed to increase efficiency and profitability in material handling, logistics, supply chain, and freight handling operations. At Cubiscan, we are in the business of producing data — the most accurate dimensioning data available on the market. Our dimensioning systems range in capability from being able to capture dimensions on bus-sized generators to paperclips. With 30 years of experience, we are the pioneer and leader in cubing and dimensioning. We are humbled by the trust our clients place in us and work every day to remain worthy of that confidence. The data our systems provide is highly accurate, but our ability to interpret, use, and leverage that data truly sets us apart. That ability is guided by our experience. From warehousing and space management to shipping and receiving to logistics and transportation, we understand the challenges you face. Let our technology, our data, and our experienced team guide your company to increased profits and improved efficiencies. At Cubiscan, experience is our guide. For more information, visit www.cubiscan.com or call us at 801.451.7000.
Shipping is often the final and arguably the most important touchpoint a consumer has with an online business. At Endicia, a Stamps.com company, our mission is to help e-commerce businesses of any size maximize the efficiency of their shipping and fulfillment processes, reduce shipping costs, and help provide a stellar customer experience. We are a technology company that offers solutions for businesses that ship parcels domestically or internationally, regardless of volume. Through our family of brands, we offer a wide range of options that solve virtually any e-commerce shipping need, including access to rate shopping across carriers, order management, inventory management, marketing tools, international address validation, bulk/batch printing, barcode scanner support, multi-user support, multi-warehouse support, actionable data for shipping and delivery performance, and much more. Users access our services via the web, APIs, or through integrations with over 450 e-commerce applications, platforms, and marketplaces. For high-volume shippers, we offer sophisticated automation tools, targeted delivery options, and expert technical support. And, for those businesses that want to grow internationally, we provide affordable, hassle-free global shipping and carrier services for lightweight packages to over 220 countries — with no minimum volume requirements. Stamps.com helps over 750,000 customers, from one person shops to
multi-warehouse operations, enhance their shipping and fulfillment capabilities. Contact us today to see how we can help you, too. Call 1.800.576.3279 x140, or check out our family of brands at: www.endicia.com, www.stamps.com, www.metapack.com, www.shipengine. com, www.shippingeasy.com, www. shipstation.com, and www.shipworks.com.
Pacejet is the award-winning shipping platform for midmarket brands. Integrating seamlessly with enterprise resource planning (ERP) systems such as Oracle NetSuite, Microsoft Dynamics 365, SAP, Infor, Acumatica, and more, Pacejet’s cloud-based solution also offers a RESTful API that enables quoting and shipping in any cloud or software application that powers your business. Reduce rates up to 30%: automatically rate shop across more carriers to find the best price for shipments. Reduce labor up to 80%: automate workflows and integrate carriers with your ERP to reduce manual steps. Grow sales with speed, accuracy, and service: choose faster transit times, validate items and quantities, and comply with customer rules. Pacejet pays for itself: generate enough savings to pay for a year’s subscription in as little as 1-2 months. Whether a business ships 50 parcels per day or a mix of 2,000 parcels and palletized freight shipments, Pacejet can create new competitive advantages and support faster business growth. Pacejet solutions can be deployed incrementally as agile improvements over time. Ready to put Pacejet to work for you? Choose Pacejet shipping software and get the right shipments to the right places more quickly, easily, and cost-effectively than ever before. That space between your shipping dock and your customer is the final frontier. It is the last link in the chain, the place where your success is determined. That’s why you need Pacejet. Call 877.722.3538, email info@ pacejet.com, or visit pacejet.com today and start making shipping a competitive advantage.
Why do thousands of shippers, developers, and logistics service providers trust Pierbridge technology to process millions of packages every year? Because we know shipping. Our customers and partners count on Pierbridge’s expertise, technology, and unwavering support to roll out powerful shipping solutions across their supply chains. What makes us different? Experience: Pierbridge’s executive team has led the parcel software industry for over 25 years, introducing innovation after innovation that have transformed the way businesses ship. Enterprise Class: Our enterprise shipping platform, Transtream, is built on a service-oriented architecture (SOA) that provides IT professionals with the controls and analytics they need to manage and monitor user permissions, security, and connections to hundreds of parcel and freight services worldwide. Scalability: Transtream can be deployed on premise, accessed from our cloud, or implemented in a hybrid environment. Our APIs enable developers to augment their solutions with cartonization, rating, shipping, tracking, returns, and other transportation execution capabilities with sub-second response times. Flexibility: Our Composer UI design studio tools enable administrators to modify and adapt Transtream apps to role-specific processes across the enterprise. Configure business rules to control processes by location, user, or user group, and then modify or create new apps as business requirements change. Connectivity: Transtream’s unique Internet of Things (IoT) tool, HubCapp, makes it easy to securely connect in real time to on-premise data sources and devices (such as scales, thermal label printers, conveyors, and cameras) from the cloud. www.pierbridge.com
Back in 2000, shipping software technology was full of kinks and obstacles, causing customer experience and satisfaction to be extremely low. Recognizing this, two US Navy veterans
put their heads together to create something better: something to improve satisfaction for both the customer and the shipper, in the end saving everyone time, money, and headaches. The resulting shipping software is now highly regarded in the shipping industry as the gold standard. As the most trusted global provider of automated multi-carrier shipping software, ProShip empowers its customers to ship at lightning speeds, stay carrier compliant 24/7/365, and build stronger-than-ever customer revenue streams. With almost two decades of enterprise experience in the shipping and supply chain industry, ProShip’s time-tested technology and advanced functionality continues to remain unmatched. Retailers, manufacturers, third-party logistics, and healthcare companies who choose ProShip choose the number one in speed, compliance, reliability, and experience. We’re not like those other guys. We understand that your business is more than boxes and labels — it’s about the customers you serve, the moments you help create, and the effort it takes to keep them coming back time and time again. Join more than 15 of the Top 100 Retailers, and go beyond the box with ProShip. For more information on how ProShip Multi-Carrier Shipping Software works, the clients we serve, and how you can start shipping with the #1 shipping software on the market, please visit our new website at www.proshipinc.com.
FEATURED PARCEL SHIPPING SOFTWARE PROVIDERS CUBISCAN www.cubiscan.com ENDICIA www.endicia.com PACEJET pacejet.com PIERBRIDGE www.pierbridge.com PROSHIP www.proshipinc.com MAY-JUNE 2019 PARCELindustry.com 29
By Scott Guilmette
SPARK SUCCESS: 4 WAYS TO TIDY UP YOUR FULFILLMENT STRATEGY
aise your hand if you’ve watched a recent episode of Netflix’s Tidying Up with Marie Kondo. Launched earlier this year, it chronicles the de-cluttering journey of several families who have decided to cull through their possessions, all spurred on by the famous cleaning expert’s advice to keep only what “sparks joy.” And according to many US charities, it’s been singlehandedly responsible for a huge uptick in donated items.
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Whether you love or hate the show (not to mention the best-selling book that inspired it), it’s tough to argue with Kondo’s central message, because we’re all guilty of hanging on to things for too long — and not just at home. In fact, it happens quite frequently in fulfillment operations when businesses remain resolutely committed to certain practices or locations even though they’ve long outlived their efficacy or they no longer spark impressive levels of success. To help offset that, we’d like to
channel our inner Marie Kondo and offer you four examples of when it might make the most sense to revisit — and quite possibly revamp — your company’s fulfillment program. Right After Peak Season When it comes to staying on top of your fulfillment game, there’s no substitute for a thorough peak season post-mortem, because that’s when dead weight is usually most evident. Use the period directly after your seasonal rush — when performance specifics are
still fresh in everyone’s mind — to take a no-holds-barred look at what worked and what didn’t. Among other things, you’ll want to: Look carefully at your fulfillment operations to see how they may have evolved during peak Meet with key vendors and carriers to find out how they think you performed (you might be surprised at how different their take can be) And ask other departments, like marketing, sales, and customer service, to weigh in on any problems or bottlenecks they might have seen
you happen to use voice picking). Even so, they’re still quite adept at calling for help if you know what to listen for. So pay attention when any sort of problems or issues pop up regarding the following key performance indicators (KPIs): Damage rates start to increase Inventory accuracy dips well below 100% On-time shipping rates or same-day shipping turnaround start to decline An increasing number of orders are incomplete or inaccurate Parcel shipping costs escalate And your hourly labor costs begin to increase
The things you learn will probably point to at least one practice or picking configuration that has outlived its useful life within your fulfillment program — and that needs to be changed before your next peak seasons rolls around.
Each suggests that some aspect of your fulfillment strategy may need to be tossed, tweaked, or replaced with a better version — and that you should probably do so sooner rather than later.
If Major KPIs Start to Go South Fulfillment supply chains may not be able to talk (except if
Before Automatically Renewing a DC Lease Agreement The expression, “If it’s not broken, don’t fix it” is often used as
a compelling reason for re-upping a DC agreement with no questions asked. However, given how quickly the landscape in this industry changes, it’s always wise to view the end of a leasing period as a natural watershed that gives you the opportunity to ask important questions such as: Is the facility’s location still the best place for your products? Or has your customer configuration shifted in some way? Would your company be better served by moving some of your inventory to one or two additional locations in order to get close to your customers and lower parcel delivery costs? If you’re handling fulfillment on your own, would it make sense to use a 3PL’s facility instead? And if you are using a 3PL’s facility, does it employ all of the systems, like a WMS, that your company truly needs? If the answers that you receive show that sticking with your existing DC
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network is still the best option, you haven’t lost a thing, except a bit of time. If not, you have an excellent chance to make a clean exit and start fresh at another fulfillment center (or combination of them) that will be a better match for your strategic needs going forward. If You’re Looking for More Scale There are some fulfillment programs that are the equivalent of your most stretchy, comfortable sweats. By contrast, there are others that have a lot more in common with the world’s smallest pair of skinny jeans. Both types can meet your needs during the early stages of your business when every aspect of your operation is relatively young and lean. But as you add more customers, stock keeping units (SKUs), markets, or sales channels, the latter could eventually become considerably more . . . confining. That’s why it pays to keep a close watch for signs like the following: Your facilities are having difficulty keeping inventory straight
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Product lingers too long on your warehouses’ loading docks Your personnel or partners get that deer-in-the-headlights look anytime you mention a special promotion that could create a significant sales spike Or you send some test shipments to yourself and they arrive looking like anything BUT the thoughtful presentation you expected to get Each of these situations could mean that you’re on the cusp of outgrowing your current operations and processes — and that it may be time to consider either changing your warehousing style or going up a size. After all, you want to make sure that your fulfillment operation is flexible enough to support rather than impede future sales growth. Happy Tidying These are by no means the only situations that can serve as fulfillment program catalysts. Instead, they are just a glimpse into some of the most obvious options your company has for
making its receiving, warehousing, picking, packing, and shipping more competitive — and a firm reminder that there’s no time like the present to get started. It is, after all, time for spring cleaning. And while we’re on that subject, here’s a word to the wise: If the members of your household haven’t heard of Marie and her show, you may want to keep this issue of PARCEL at your office instead of at home, because rumor has it this whole tidying up phenomenon is pretty addictive. We can’t promise it will keep your lucky poker shirt or ugly chair safe forever. But least they’ll be safe for now.
Scott Guilmette is Vice President of Business Development at Amware Fulﬁllment, a national 3PL that helps brands scale warehouse fulﬁllment operations to keep pace with business growth. With fulﬁllment centers in every region of the country, Amware enables one- to two-day delivery to 98% of the United States. Visit www.amwarelogistics.com for more information.
National Carriers vs. Regional Carriers: Who Goes the Extra Mile? Shippers fight a constant battle of finding the right carrier that will deliver packages to customers as efficiently and as cost-effectively as possible. This becomes even more difficult as there are hundreds of viable carrier options. This increases the time it takes to identify the right carrier for every order, forcing many shippers to overlook the vast network of regional carriers available for the simplicity that comes with opting for a national carrier. But what exactly classifies a carrier as regional? The main difference between a national and a regional carrier boils down to territories covered. Look at national carriers, such as FedEx, UPS, or USPS. Each has shipping routes that last up to a week long and can deliver anywhere within the continental United States. On the other hand, a regional carrier, like SpeeDee, OnTrac, and LaserShip, will deliver across a state or small region of states at a typically lower cost. While there are five major regional carriers in the US, this group of carriers only covers 85% of the country, making national carriers vital. Service levels are also a key differentiator between national and regional carriers. While national carriers offer many different shipping options, most regional carriers offer select service levels, such as “next day” delivery windows at lower costs and some economy services with longer delivery times. Ultimately, it’s about finding the right blend of shipping and delivery options that fit your customers’ needs. Shippers that utilize both regional and national carriers are better able to meet customer demands and lower shipping costs. But before shippers begin using regional carriers, they must understand the pros and cons. PROS Regional carriers provide competitive pricing Regional carriers generally have better rates than their national competitors for the areas they service. Speed of service Regional carriers work best for shippers with multiple distribution centers and a high concentration of customers
within a geographical market. They also typically have wider time schedules for pick-up and delivery and often provide next-day deliveries. Provide lane-level redundancy to national carriers During peak shipping season, national carriers may have particular lanes that are overloaded and unavailable. Shippers that already have contracts with regional carriers that service those lanes can have their shipping volume shifted and customers’ expectations can still be met. CONS Coverage There are many destinations in the West and the Midwest that are not covered by any regional carrier. Remember that even with a regional carrier strategy, you must be backed up by a national carrier. Variety of services Many regional carriers can have lower shipping costs by limiting the number of services they offer, often cutting down early AM services and postal last-mile solutions. More relationships for your logistics managers to maintain By adding more carriers, shippers are adding more relationships, more sets of rates to negotiate, and another set of contracts to finalize. Make sure you have the resources and the right software to help manage this. When it comes to shipping, meeting customer demands and saving on shipping costs are priorities. In order to do both, shippers must readjust their existing carrier networks accordingly. Adding both regional and national carriers to a shipper’s network can be the driving factor for success.
THE NEW PARADIGM FOR CAPACITY: BUYING DRIVERS’ HOURS By Brent Wm. Primus, J.D.
et’s explore how the enforcement of the Federal Motor Carrier Safety Administration’s (FMCSA) Hours of Service (HOS) regulations through the Electronic Logging Device (ELD) Mandate is also mandating how shippers and receivers need to change their approach to detention, that is, the time taken to load or unload a truck at origin and destination. At this year’s Transportation Intermediaries Association’s (TIA) Annual Conference, I attended a presentation by a panel of shippers. When the subject of how the ELD Mandate was affecting them came up, a logistics director of a very large shipper said, “We are now buying driver’s hours.” While a seemingly simple statement, it struck me as very profound. Up until now, when shippers purchased transportation services, they thought in terms of hiring a motor carrier or a broker. Now the true metric for measuring the capacity
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of the nation’s trucking fleet is not the number of trucks, but rather the quantity of “usable” driver hours. Based on this observation, this company, in its contracts with its providers, voluntarily reduced the amount of free (uncompensated) detention time from three hours to two hours. She explained this self-inflicted pain as necessary so that the inefficiencies of a particular location would be on its profit and loss statement… and thus get the attention of the facility’s manager. By way of background, the FMCSA’s HOS regulations have been in effect for many years. The current rule was enacted on December 27, 2011. While there are many permutations, the basic rule, as summarized by the FMCSA on its website, is that a property carrying driver may drive a maximum of 11 hours after 10 consecutive hours off duty. Up until December 17, 2017, drivers could document their driving time, rest stops, and so on by using manual paper logs. However, due to the FMCSA’s concern that the drivers were not accurately reporting their hours, a lengthy process was initiated leading to the required use of ELDs. This ushered in a new era whereby drivers would be strictly complying with the HOS regulations or else they — and the companies they drove for — would face fines and other penalties. Various organizations in the industry have conducted surveys and collected ELD data
that indicate that the current HOS driving utilization is 6.26 hours a day. Since the time a driver is in the cab waiting to be loaded or unloaded also counts towards the 11-hour maximum, this statistic indicates that, for drivers whose compensation is based on mileage, four hours are uncompensated. For shippers, this means that a truck cannot run as far as a driver could otherwise legally drive. It is also important to note that while some shippers may have realized the importance of minimizing detention time, other shippers will find it increasingly hard to meet their capacity needs. This is due, in part, to the fact that the drivers themselves are well aware of the financial consequences they suffer. There are now at least two websites and an application whereby a driver or owner-operator can see how various shipping and receiving locations are rated by their peers. Such information would include both favorable and unfavorable ratings, such as, does a location routinely make drivers wait for three hours without paying for detention time, does a location routinely “double book” appointment times, and similar factors. 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 May/June 2019