GET TO KNOW YOUR REGIONAL AND LAST-MILE CARRIERS PAGE 24

MAY-JUNE 2020

PARCELindustry.com

HOW TO BEST MAINTAIN SERVICE LEVELS WHILE MODERNIZING YOUR DC.

SELECTING THE RIGHT TECHNOLOGY FOR THE DYNAMIC SMALL PARCEL ENVIRONMENT.

FACING THE GIANTS: COMPETING FOR A PREMIUM E-COMMERCE EXPERIENCE.

EXPANDING YOUR CARRIER BASE? 5 KEY QUESTIONS TO ASK PAGE 18

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CONTENTS /// Volume 27 | Issue 3

16 18 28 30 38 06 EDITOR’S NOTE Flexibility Is Key to Remaining Relevant By Amanda Armendariz

08 SPEND PERSPECTIVES Pharmaceutical Supply Chain Weakness Exposed By John Haber

10 TECH SPACE Cloudy with a Chance of Data Analytics By Cathy Morrow Roberson

12 OPERATIONAL EFFICIENCIES Optimizing for Peak Season By Susan Rider

14 SUPPLY CHAIN SUCCESS Facing the Giants: How to Compete for a Premium E-commerce Experience By Andy Johnson

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16 PACKAGING Could Your Packaging Be Costing You More to Ship? By Rob Zaleski

18 THE INS AND OUTS OF EXPANDING YOUR CARRIER BASE 5 key questions to ask. By Cassidy Hardy

28 OMS, WMS, TMS How to select the right technology for the dynamic small parcel environment. By David Miller

30 MAINTAINING SERVICE LEVELS WHILE MODERNIZING YOUR DISTRIBUTION CENTER By Josh Duane

36 PARCEL COUNSEL Can They Do That? The Mandatory Isolation and Quarantine of Supply Chain Personnel By Brent Wm. Primus, JD

38 WRAP UP The New E-Commerce World By Michael J. Ryan

SPONSORED CONTENT 13 THE DIMENSIONING DIFFERENCE IN SHIPPING APPLICATIONS 22 [MAP] REGIONAL & LAST-MILE CARRIERS 24 GET TO KNOW YOUR REGIONAL AND LAST-MILE CARRIERS 32 7 COMPANIES WITH THE PARCEL LOGISTICS SOFTWARE & SYSTEMS YOU NEED TO KNOW ABOUT

PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL

PARCEL (ISSN 1081-4035) is published 7 times a year by MadMen3. All material in this magazine is copyrighted 2020 © by MadMen3. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, MadMen3 or its staff becomes the property of MadMen3. The articles in this magazine represent the views of the authors and not those of MadMen3 or PARCEL. MadMen3 and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine.

EDITOR AMANDA ARMENDARIZ [ amanda.c@rbpub.com ]

AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN

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.

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Send subscriptions or change of address to: PARCEL, P.O. Box 259098 Madison WI 53725-9098

ADVERTISING KEN WADDELL

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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

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EDITOR’SNOTE

FLEXIBILITY IS KEY TO REMAINING RELEVANT By Amanda Armendariz

s we enter the early days of summer, many states appear to be taking the first tentative steps to return to some sense of normalcy. Restaurants are opening at a reduced capacity, some retailers are open but will limit the number of customers allowed in at any one time, and some pools and waterparks will welcome visitors as the weather heats up. However, there is no denying this this summer will still look very different from those of years past. Most of the libraries in our metro area, for example, are not doing the usual summer reading programs and entertainments for children (luckily, our nearest branch is doing a virtual option), many parks and recreation department offerings are either canceled or have gone solely online, and camps and summer schools in some parts of the country will not be happening (as is the case in my city). So, for many of us, e-commerce will continue to play an even larger role in our everyday lives than it did pre-COVID. On a personal level, I know that if my three

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children don’t have access to the camps, museums, and library programs that normally enrich their summer, we’re going to have to provide a lot of that enrichment ourselves. The safest and most convenient way to procure the needed art supplies, books, and outdoor toys is going to be online, and I know I’m not alone in thinking ahead about this, so retailers who offer these types of products should gear up for a busy summer. I also wouldn’t be surprised if many stores continued to use their brick and mortar locations as mini-fulfillment centers offering curbside pickup, even when retail locations are allowed to completely re-open. Those who are more at-risk for the virus would likely welcome the opportunity to reduce their contact with others, and there is something to be said for the convenience of placing an order online, driving to a nearby store, and having the employee place your purchase in the trunk of your car without ever having to leave the driver’s seat (or wait one to two days for it to arrive in the mail)! While this pandemic has certainly been devastating to many, it has also served to highlight the ways that retailers can get creative in utilizing their stores and their websites to get their products to the customer in the most efficient way possible. No one knows what lies ahead with respect to this virus and its effects on the economy, but listening to customer expectations and adapting accordingly should be retailers’ top goals as they try to survive in this new environment. As always, thanks for reading PARCEL.

EDITOR’S PICK

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!

The Final Mile of Negotiating... Virtually By Brian Buck

The USPS: Surviving on Political Bread and Water? By Leo Raymond

Saving the USPS Is Critical to Small Businesses By Rafael Zimberoff

SPENDPERSPECTIVES

PHARMACEUTICAL SUPPLY CHAIN WEAKNESS EXPOSED By John Haber

he coronavirus pandemic has exposed a number of weak spots that have handcuffed pharmaceutical supply chains, especially outsourcing practices. Consider the following:  80% of the US supply of antibiotics are made in China.  China accounts for 95% of US imports of ibuprofen, 91% of US imports of hydrocortisone, 70% of US imports of acetaminophen, 40% to 45% of US imports of penicillin, and 40% of US imports of heparin, according to Commerce Department data.  Indian pharmaceutical companies supply approximately 40-50% of all US generic drugs. As logisticians, we have embraced outsourcing primarily for the benefits it usually brings. However, political pressures, changes in government regulatory requirements, shifts in logistics costs and sourcing, and the reliance on outside third parties can all negatively impact the benefits of outsourcing. For pharmaceutical supply chains, this double-edged sword can have a severe impact.

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In March 2020, India restricted the exports of 26 ingredients and medicines on fears of Coronavirus shortages. India also placed restrictions on the export of most diagnostic testing kits, ventilators, masks, and other protective gear needed by both patients and medical staff. However, through rumored political pressure, India has since lifted the restriction on some drug exports. In China, delays in some pharmaceutical and medical equipment exports have been reported as China says it wants to ensure the quality of exported medical products as well as make sure needed goods aren’t being shipped out of China. Here in the US, the government restricted the export of certain face masks and gloves for four months as the US demand for such products soared. The Federal Emergency Management Agency has been given the authority to grant approval for exports of the masks and gloves, with certain exceptions. As the pandemic spread, immediate demand for pharmaceuticals and medical equipment jumped. However, the International Air Transport Association (IATA) reported that global air capacity fell almost 23% in March. The “belly-capacity” for international air cargo declined 44%, but it was partially offset by a 6.2% increase in capacity through expanded use of freighter aircraft, including the use of passenger aircraft, idle from cancelled flights because of the coronavirus pandemic, for all-cargo operations. Furthermore, the search for pharmaceutical and medical

equipment suppliers beyond those suppliers considered tier 1 level has been exacerbated by poor or even lack of visibility within supply chains. As a result, social media platforms, emails, phone calls, word of mouth, and more have been used to track down much needed suppliers. However, the ability to vet such suppliers has proven difficult and upfront payments in many situations have either been difficult or even prohibitive as well, furthering the delay in much needed shipments. Not surprisingly, a single incident can result in a domino effect within supply chains. Much like the international concerns, domestically, pharmaceutical supply chains continue to face delays in not only obtaining enough supplies but also in testings for the virus. Strained labs have resulted in tests being sent to other labs. However, the lack of coordination and visibility has been disappointing in many situations, often resulting in delays. Delays and, thus, unplanned costs occur when supply chains are not optimized. Estimated at $80 billion, the typical global pharmaceutical supply chain is fragile with numerous touchpoints throughout the world. Optimizing it with visibility technology as well as with risk management tools will help mitigate pain points throughout its processes.

John Haber is the Founder and CEO of Spend Management Experts and can be reached at solutions@spendmgmt.com.

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TECHSPACE

CLOUDY WITH A CHANCE OF DATA ANALYTICS

By Cathy Morrow Roberson

he coronavirus outbreak paralyzed economies as it spread around the world. However, people who were bound to homes turned to a variety of technology tools that allowed them to continue interacting and working. This would have been difficult to do just 10 years ago, but thanks to cloud computing, such capabilities have greatly improved. The adoption of cloud computing has been on the rise for a number of years. According to Canalys, organizations spent a record $107 billion on cloud computing infrastructure as a service in 2019, up 37% from previous years. But what exactly is “cloud computing?” Various online glossaries define it as the “on-demand availability of computer system resources, especially data storage and computing power, without direct active management by the user.” The many benefits include its lower up-front IT infrastructure costs and the ability to upload and run applications more quickly.

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The majority of online retailers rely on the cloud to not only operate day to day but also to provide the flexibility needed when transactions surge, such as was the case when stay-at-home mandates were in place. Indeed, many consumers turned to Amazon, Instacart, and other online platforms, all of which are backed by cloud computing, to procure groceries, daily essentials, and medical supplies during this critical time. In 2019, US online retail sales, as a percentage of total retail sales, reached 16%. It is likely this percentage will jump to well over 20% this year as more consumers and businesses continue trends established during the coronavirus outbreak. As we emerge from this crisis, it is expected that many businesses across all industries will begin scaling up their digital transformation efforts and invest heavily in IT and cloud resources. Indeed, one of the lessons learned from the pandemic was that supply chains that are dependent on manual tasks or antiquated technology struggled to keep up with demands. Moving forward, these businesses will need to particularly fast track technology investments with a focus on cloud-based solutions or face the consequences. Clearly, agility will be more important than ever before as businesses are likely to face a much different landscape. Real-time supply chains backed by strong data analytics will be required in order to compete successfully. Cloud computing will serve as the backbone of these supply chains.

Managing costs should also become easier because of cloud computing. Automating audit processes, for example, results in not only uncovering cost savings but it also offers the ability to identify trends and perhaps aid in the development of new products and services. As more businesses invest in transformation and dependency on shipping goods increases, shipping costs will be scrutinized. A number of technology firms are now offering cloudbased solutions to analyze such costs. Such services are often more accurate and quicker than traditional means. In addition to uncovering cost savings, shipping data is able to be further analyzed for network optimization, measuring carrier performance and forecasting. According to Gartner, by 2022, up to 60% of organizations will use an external service provider’s cloud managed service offering, which is double the percentage of organizations from 2018. Organizations will also increase their reliance on a number of cloud technologies. The result will mean real-time (or almost real-time) access to data from across an organization and the ability to analyze all this data to assist in strategic decisions that companies will need to make quickly to an environment that is quickly changing.

Cathy Morrow Roberson is President of Logistics Trends & Insights LLC, a logistics market research firm. Cathy can be reached at croberson@LogisticsTI.com.

OPERATIONALEFFICIENCIES

OPTIMIZING FOR PEAK SEASON By Susan Rider

here’s nothing more important right now than preparation, as evidenced by how COVID-19 took the world by surprise. However, the upcoming peak season is a known occurrence (even though it could look slightly different than in years past), and now is the perfect time to plan for it. Where to start? Seems simple, but start at the beginning (receiving) because if you get it wrong from the start, problems will pop up later. For instance, if your pack size when the product is received is not correct, the order pickers will be picking the wrong count, so shipping will ship the wrong count, and customers will get a pack of three items instead of 12. Often, you’ll never hear of this mistake until your inventory counts are way off. Optimizing receiving starts with advanced shipping notices (ASNs). ASNs let you know what is coming in

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and when, giving you time to prepare. Second, the license plate number can be scanned, and all the details of the order are displayed. No cumbersome look up, no searching, etc. Write down the steps you currently have in receiving. Then review and see if any steps can be combined or eliminated. If you are a company that gets a lot of product in pack size from overseas, add checking the pack size to the list of criteria, since overseas companies often change the pack size without notification. Putaway is another area that is often overlooked. If your system does not have directed putaway and you are doing it manually, create some rules. Identify product as A-movers, B-movers, etc. A-movers will receive most activity, so they need to be in the most optimal slots. The slower movers are the ones you put furthest away and in the highest positions. All too often, companies are keeping their fast movers in the farthest away locations in the highest positions, creating more travel time and replenishment time. Picking is an area where a lot of activity is taking place, so it’s crucial to review your data before implementing improvements. Looking at the weekly orders, could one more division increase productivity and decrease bottlenecks? There are several things to review in this area to optimize for the peak time. Slotting is

one and can usually increase productivity by 10-20%. Layout is another area that increases speed and throughput; automation may help, or new technology may be appropriate. Most important, make sure you have the basics right first, like signage and labeling. If you are still picking with paper, make sure your pick list has increased font size on the important things (location, SKU, and count). If a need for automation is determined, do your homework. Don’t decide on the first design you look at. Shipping is an area that some believe should be located next to or across from receiving. That may be true if you are doing a lot of cross docking. If not, shipping benefits more by a location close to picking, especially for those fast movers. Now is a good time to review shipping processes and identify any new items that need to be added or deleted. Don’t assume you have the best deal on contracts; review them for additional savings opportunities and better service. Flow in shipping can really increase productivity, so take some time to review the flow for better optimization. Preparation is key, and now is the perfect time to get ready to optimize.

Susan Rider, President of Rider & Associates, Supply Chain Consultant, and Executive Life Coach can be reached at susanrider@msn.com.

APPLICATION ARTICLE

The Dimensioning Difference in Shipping Applications

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.

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 2019, 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

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?

www.cubiscan.com info@cubiscan.com 801.451.7000

SUPPLYCHAINSUCCESS

FACING THE GIANTS: HOW TO COMPETE FOR A PREMIUM E-COMMERCE EXPERIENCE By Andy Johnson

f the last few months have shown the retail world anything, it’s the driving need for a functional, dynamic e-commerce platform. At the beginning of the year, Amazon and Walmart dominated the e-commerce landscape, and the present crisis has only added to that dominance. While we live in an uncertain time, what is certain is that moving forward, online retailers will have to compete in an increasingly sophisticated space. And to compete, you must understand the competition. Amazon, in particular, has defined what the online retail experience should be, but the crown comes with a price. The New York Times recently cited Amazon’s average order for one-day shipping as being $8.32, yet it costs Amazon $10.59 to fulfill. Clearly, this is unsustainable. To stop the bleeding, Amazon is employing a multi-faceted approach. With over 110 fulfillment centers already nationwide, it is continuing to expand its distribution footprint.

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To achieve the rapid growth needed, Amazon has begun repurposing vacant shopping malls around the country. These malls are located in high-density, metropolitan areas, usually in close proximity to highways. The average size of these facilities is over 100,000 square feet, and they are easily retrofitted to allow stocking large selections of Amazon’s fastest moving SKUs for reduced transit time and delivery costs. With over 20% of the country’s shopping malls projected to close by 2022, Amazon is likely to have its pick of locations. To further drive speed to market and mitigate costs, Amazon plans to own the delivery process — literally. As gray “Prime” vans continue to proliferate, Amazon handles more of its own last-mile deliveries and is anticipated to begin chipping away at both FedEx and UPS’s market share in the future. While it’s unlikely to see Amazon as a viable contender in the domestic parcel market anytime soon, it’s clear it wants to achieve self-sufficiency — and ultimately savings. Speed to Market Not to be outdone, Amazon’s chief rival Walmart is making strides of its own. Walmart is America’s largest retailer, and since 2016, its online sales have grown over 75%. While that’s a big number, perhaps even more relevant is that those same online sales are currently growing twice as fast as Amazon’s. And as Amazon’s distribution network struggles to keep pace with its sales, Walmart already has a very mature supply chain to leverage. In the age of online shopping,

a brick and mortar store has traditionally been viewed as more of a liability than an asset. Walmart is changing that. With over 150 distribution centers and almost 5,000 stores, 90% of Americans live within 10 miles of a Walmart. That means Walmart has a physical footprint without parallel in the retail world. It also means that because these stores are already profitable, Walmart can reach more people faster than Amazon can, and at a much lower cost. How to Compete? At first glance, many small and midsize shippers may see the bar raised to an insurmountable height. Sure, it would be convenient to start your own national delivery fleet or ship from one of your own 5,000 stores, but shockingly, not everyone has that option. So how do you ensure a good customer experience? Saving Money As the world of shipping and customer service rapidly evolves, over 90% of midsize shippers are relying on the same shipping software they have used for over four years. However, retailers are increasingly viewing fulfillment as a strategy and opting to make investments in updated shipping technologies. Transportation Management Systems (TMS) provide automation to a dynamic process, allowing retailers to rate shop between carriers and services instead of being totally reliant on one provider’s proprietary system. This multicarrier approach allows retailers to take advantage of national providers such as UPS and FedEx, while

potentially utilizing regional carriers, which can realize cost savings and more timely service. A good TMS will also provide reporting functionality, facilitating a holistic view of the shipping program and driving informed decisions. Equally important as updated technology is understanding the world of accessorial shipping charges, which can have a huge impact on the bottom line. It may seem as though the list of accessorial charges is unending (and the list gets longer every year), but these charges can often cost more per package than the actual freight. Dimensional Weight, Delivery Area, Additional Handling, and Peak holiday surcharges are just a few in the litany of extra fees parcel carriers can bill for. Understanding when and why these charges are assessed and how to mitigate them is a key step to saving money on shipping costs. Saving Time The desire for instant gratification is strong. Who doesnâ€™t want their stuff sooner rather than later? One of the easiest ways to expedite transit time is to begin the shipping process closer to the customer. Not every retailer has 5,000 stores at its disposal, but more and more, companies are le-

veraging their existing physical footprint as mini-warehouses or forward stocking locations for their fastest moving items. Utilizing your current supply chain to its fullest not only drives down costs, but also saves valuable time. Another possibility for improving transit time is utilizing a different carrier. Each carrier has its respective network, with varying cutoff times and limitations. Reliance on one carrier is the path of least resistance, but staying informed of all your options will ensure you arenâ€™t sacrificing speed for convenience. If knowledge is power, then knowing where the competition is going provides the power for

small- and mid-size retailers to adapt their current shipping patterns to meet upcoming challenges. At the end of the day, whether you are Amazon or the newest start-up on the block, the customer experience will continue to drive innovations in parcel shipping for the foreseeable future.

Andy Johnson is Project Manager, enVista. With 15 years of experience, Andy has worked extensively in supply chain and managed transportation. He has worked with Fortune 50 companies to build networks, optimize savings, and most recently with contract negotiation.

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PACKAGING

By Rob Zaleski

How UPS and FedEx Calculate DIM Weight DIM weight applies to every size package for FedEx and UPS. To find this, you need to use the (Length x Width x Height) / 139 formula. For example, let’s say you have a 16” x 12” x 10” package that weighs eight pounds. Multiply those dimensions together, and you get 1,920 cubic inches. Use the 139 divisor, and your new “weight” is 14 pounds. Those extra inches nearly double your weight, and since the carriers use the greater of the two weights to determine the costs, the price just went up. This is especially problematic when you’re shipping hundreds or even thousands of packages.

How USPS Calculates DIM Weight USPS only charges dimensional weight on packages that exceed one cubic foot (1,728 inches). It also uses a more merchant-friendly divisor of 166, which turns the dimensional weight of our above example to 12 rather than 14 pounds. That being said, the additional costs can still add up quickly. The above examples show the importance of not only optimizing your packaging to fit the product as closely as possible, but also the importance of a multicarrier approach. Simply defaulting to a single carrier can cost you significantly, particularly with dimensional weight.

COULD YOUR PACKAGING BE COSTING YOU MORE TO SHIP?

hen it comes to shipping costs, much of the conversation revolves around package weight and destination. The heavier it is, or the further it travels, the more it will cost a business to ship — or so they think. However, large, lightweight packages can actually cost more to ship than some smaller, dense packages, thanks to dimensional weight (DIM weight). DIM weight is used by USPS, FedEx, and UPS. It bases the cost to ship a package on the amount of space it would take up on a truck or plane, as opposed to the actual physical weight of the package. Dimensional weight is calculated differently by USPS than it is for FedEx and UPS, and that difference can have major impacts on your shipping costs.

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There are times when USPS will be substantially cheaper than UPS and FedEx, and instances, like the above, when it is not. Carrier Packaging vs. Your Own Packaging Each carrier has packaging that can be used for specific services it offers. You can order these supplies from their websites or web portals, and in the case of USPS and FedEx, they’re free and will be delivered to your home or office. Some of these products, such as Priority Mail Flat Rate, can be ideal for heavier items as they ship for one cost up to a certain weight (20 pounds in the case Priority Mail Flat Rate). Flat Rate Shipping All three major carriers now offer flat-rate shipping options, which offer a single rate that doesn’t change based on weight (up to certain maximums) and, in some cases, distance traveled. A benefit of flat-rate shipping is the time savings of not having to weigh or measure packages, so long as you know they fall somewhere in the necessary ranges. It can also help you budget your shipping costs better and, in the case of FedEx and UPS, you don’t have to worry about surcharges (USPS does not apply surcharges to any services). UPS released Simple Rate back in November 2019. It differs from the other

carriers’ options in that it doesn’t require carrier-provided packaging. You can use your own, which can be convenient if you ship products that don’t fit neatly in the provided boxes. FedEx offers One Rate as its flat-rate shipping option. FedEx is the only carrier that offers a range of flat-rate box products with guaranteed overnight delivery, so it is certainly worth looking into if you have time-sensitive products. USPS has the above-mentioned Priority Mail Flat and Regional Rate (online only), which takes distance into account, but is the same up to a maximum weight (depending on one of two box sizes). The latter is ideal for heavier packages that aren’t traveling far. Flat-rate shipping provides time and cost savings without the headache of measuring individual packages. It still can’t be a default, though. Similar to weight-

based shipping, you should compare and contrast. In certain instances, flat-rate shipping may cost more than weight-based versions. Between carrier and service, package type, size, and materials, there are numerous ways your packaging could cost you more to ship. With some attention to detail and a multicarrier approach, you could put more money back into your bottom line and turn shipping into less of a sunk cost for your e-commerce business.

Rob Zaleski is Head of Brand for ShippingEasy, the easiest online shipping, inventory, and email marketing platform for growing businesses. With ShippingEasy, merchants can access discounted USPS and UPS shipping rates, automate shipping, and get time back to focus on their business. ShippingEasy recently released a free in-depth guide (https://shippingeasy.com/flat-rate-shipping-guide/) that compares and contrasts the various carriers’ options, as well as compares flat-rate shipping options to appropriately-sized weight-based counterparts.

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By Cassidy Hardy

THE INS AND OUTS OF EXPANDING YOUR CARRIER BASE:

5 KEY QUESTIONS TO ASK

t is no secret that regional carriers are gathering steam as the push for faster and cheaper delivery continues. Regional carriers have capitalized on the weak points of major carriers (such as peak season surcharges and operational limitations), which has caused increased interest in regional service offerings. Some of the regional carriers’ desirable attributes include their flexible networks, speed, and decreased accessorial charges. Regional carriers can certainly be beneficial partners in many cases. However, like with any decision parcel shippers make concerning their operations, certain characteristics of the supply chain should be evaluated. Here, we’ll highlight five specific

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characteristics or network components that should be taken into account when you are considering expanding your carrier network, including: the goal of the supply chain, carrier sourcing, artificial intelligence capabilities, the geographic characteristics of the supply chain, and system flexibility. Before making any requests or negotiations, it’s important that the cause and effect of incorporating a regional carrier in your system be evaluated in relation to each of these five components. Supply Chain Goal First and foremost, the goals of the supply chain must be clear and well-defined objectives. As the push for same-day or next-day delivery continues,

it is imperative to align your network’s internal benchmarks to the area in which value add is needed. Regional carriers have created a reputation for offering shortened ship-to-delivery times, flexible networks, and even decreased expenses. However, those offerings need to be tied to an internal goal. Offering speedy delivery service may not be the value add needed for your supply chain, brand, or customers. Alternatively, decreased per package expenses from a regional carrier may be overshadowed by increased operational expenses. When exploring the opportunity to incorporate additional carriers, the possible effects to the network need to be thoroughly explored in conjunction with the supply chain’s underlying

objectives. Consider:  What are the ultimate goals of your parcel network? (i.e. Is same-day or next-day delivery important, or is support for specific geographic locations more important?)  How does a prospective regional carrier support these goals? Carrier Sourcing After the goals of the supply chain have been well-defined, the peripheral components of the network need to be taken into consideration. When the question of including another carrier arises, first consider the supply chain’s existing sourcing model. The introduction of an additional carrier needs to be evaluated in conjunction with current carrier relationships, contractual stipulations, and spend. Introducing a dual or multi-sourced network may affect the working relationship of existing partners. Furthermore, regional carriers could positively or

negatively affect future negotiations for contract renewals or proposals. Evaluating and understanding these contractual obligations will provide necessary insight to the available flexibility within the network. Some of this flexibility will be determined by existing spend or volume commitments. If current contracted rates include earned discounts or tier discounts, allowing regional carriers to compete for volume may reallocate spend. In turn, this could cause an increase in per package fees for existing carriers. Modeling the cost benefit scenarios of onboarding additional carriers will provide the data and insight needed for efficient decision making. Artificial Intelligence Data drives many of the supply chains in the shipping sphere today. Artificial intelligence (AI) tools help guide and monitor these day-to-day operations. Some benefits of an AI-based transportation management system (TMS) include reduced spend,

network visibility, and improved efficiency. However, to reap the benefits of these technological advancements, the integrity of the TMS must be upheld. As the question of regional carrier sourcing arises, the relationship between the supply chain’s AI and the regional carrier of interest needs to be gauged. With carrier implementation, the accuracy of the system’s decision-making when choosing between multiple carriers must be considered. If the constraints placed within the TMS are not consistent, then the forecasted savings may never be experienced. Another valuable point to consider is the capability to monitor carrier performance. With the implementation of any new carrier, it will be valuable to monitor the actual performance and spend following the start of the partnership. Finally, the transfer of data or other information will need to be done in a mutually acceptable form. When considering a regional carrier, consider the capabilities of your current TMS,

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(201) 933-7840 | DMWandH.com | info@DMWandH.com MAY-JUNE 2020  PARCELindustry.com 19

and the cost of AI implementation and maintenance in relation to the value add from their services. Regional carriers are aware of this possible technological barrier. Conducting research into the regional carrier’s existing solutions may prove more cost-effective than internal implementation. Regardless, the supply chain’s technological components should be a main point of consideration when debating a regional carrier play. Consider:  Will the accuracy of the system’s decision-making remain intact when choosing between multiple carriers?  Can the performance of the carrier be easily monitored to quantify wins or losses?  Does the value add brought by prospective regional carriers outweigh the costs of implementing the regional carriers into your TMS? Geographical Characteristics In the evaluation of a supply chain, many of the elements are most notably reflected on in a fiscal manner. However, there are some physical and geographical components that come into play as well. Regional carriers are just that: regional. Although strides are made to increase the service areas of these smaller carriers, there are significant limitations to take into consideration. If regional carriers seem like an attractive option, quickly develop a short list of potential partnerships. Do so by noting the geographical location of their hubs or origin points in relation to the network’s own distribution centers (DC). It should also be noted that some transfer of goods to a regional carrier hub may be required. If regional carriers are a cost play for the supply chain, then the transference of shipments and/or the payment of line haul expenses should be forecasted for a more accurate potential savings calculation. A large distance between the DC and the regional carrier hub may negatively affect cost and transit goals. Another important point to discuss is the geography of the supply chain’s parcel recipients. The service area of the regional carrier should align with

20 PARCELindustry.com  MAY-JUNE 2020

high-density recipient locations of the supply chain. To receive the full potential of a regional service offering, align the dense recipient destinations with the service area of potential carriers. When ensuring the actions of the supply chain directly correlates to its goal, also ensure that the regional carrier delivers to a highly serviced sector of the supply chain. System Flexibility The remaining component of the supply chain to review, system flexibility, differs slightly from the evaluation of these other elements. When determining the level of flexibility within the supply chain, assess the harmony of the components working together simultaneously. Previously, as each topic was discussed in further detail, certain attributes and reactions of the supply chain component were called into question. For example, when discussing regional carrier eligibility, the current carrier sourcing model was called into question. What contractual constraints is the supply chain under obligation to uphold? This process can present constraints specific to each element and, consequently, the effects ripple to the rest of the network due to their limitations. As an example of far-reaching effects, consider the geographical characteristics of the network. A supply chain with distribution centers located in rural areas will limit the carrier sourcing options to those in the surrounding regional area. Although the network may have available volume and spend for reallocation, no viable regionals exist in the area of interest. Another example is the network’s main goal. Although a regional carrier may provide excellent pricing initially, pricing lower than the current rates, if the cost of implementing and maintaining a new carrier within the TMS is too high, the underlying cost initiative will be mitigated. As this internal evaluation of each element progresses, more and more information is collected regarding the constraints that are “naturally” occurring within the network. The outcome of this evaluation may not be indicative of the flexibility

needed to pursue a new sourcing option; however, that does not necessarily have to be negative for the supply chain. If the findings from the evaluation of the supply chain elements and derived level of flexibility makes regional carriers seem less attractive, consider the flexibility of the network in another light. It is easy to assume that regional carriers solve many challenges of a national carrier that is limited within their own network; however, forcing a carrier relationship within a network unequipped for the new partnership will not bring the desired outcome. Instead, review alternative options that will more positively benefit the supply chain. If geographical constraints or current carrier obligations are limiting flexibility, a possible re-evaluation of terms may provide some benefit. Further, refocusing efforts into strengthening current working partnerships may bring similar opportunities to the supply chain (e.g. national carrier pilot programs or special service offerings). On the other hand, if the evaluation of the supply chain shows promise for a successful regional partnership, pursue additional information from the regional carriers of interest. Negotiating terms at the start of the agreement may provide the solutions to any withstanding obstacles in the network. In our battle with the “Amazon effect,” it is crucial to identify new and effective ways to better our parcel networks. By understanding how a prospective regional carrier fits into the five crucial decision areas discussed, any retailer will also be in possession of a more complete understanding of their parcel network as a whole.

Cassidy Hardy 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. In this role, Cassidy partners with customers to provide GMT’s strategic Parcel Spend Management solutions – Network Optimization, Spend Analytics, and Contract Management. Cassidy has a Bachelor of Science from Mississippi State University.

CARRIER SERVICE MAP

GET TO KNOW YOUR REGIONAL AND LAST-MILE CARRIERS As the e-commerce explosion continues to shape the way shippers reach their customers, regional carriers and lastmile carriers are becoming a bigger and bigger part of many organizations’ carrier mixes — and for good reason. Fewer (or no) surcharges, a concentrated delivery area, personalized service… what’s not to like? On the following pages, get to know some of the leading players in this industry and the areas they service. Together with the three major carriers (UPS, FedEx, and USPS), these carriers can complement your operation and take customer satisfaction to new levels. And in today’s hyper-competitive environment, that’s exactly what you want and need.

22 PARCELindustry.com  MAY-JUNE 2020

FirstMile

OnTrac

TForce Logistics

CA, CO, FL, IL, NJ, NV, NY, TX, and UT

AZ, CA, CO, ID, NV, OR, UT, and WA

AZ, CA, CO, CT, FL, GA, IA, IN, IL, KY, MA, MD, MN, NC, NJ, NM, NV, NY, OH, OR, PA, RI, SC, TX, UT, VA, WA, and WV

Optima Overnight

General Logistics Systems US (GLS)

CT, MA, southern ME, southern NH, and RI

United Delivery Service

AZ, CA, ID, NM, NV, OR, UT, and WA

PCF

LaserShip

CT, MA, NJ, and NY

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

Sonic

IA, IL, IN, and WI

IOWA

Turn the page for details on each of The carriers.

MAY-JUNE 2020 ï€´ PARCELindustry.com 23

GET TO KNOW YOUR REGIONAL AND FirstMile is an e-commerce parcel carrier. Our unique approach allows e-commerce retail shippers to get the best combination of price and service across a wide network of United States Post Office workshare shipping solutions, including our own. We include regional last-mile partners like OnTrac, OSM, and more. We do this all with one API connection, one pickup via our FirstMile owned and operated vehicles, and one invoice. We run sort operations and linehaul which allows us to access regional carriers many customers simply can’t access on their own. Our algorithm drives the right label to you for each and every package, every day, across multiple USPS workshare options, including first class, priority mail, expedited, ground, hybrid and regional last-mile options. The FirstMile algorithm works by

first shopping each package for price and service. It then returns the right label for each unique package, which ensures the best combination of price and service for that package within the prescribed service limits you set. Need 5 day or less service? No Problem. Need 2-4 day service? No Problem. Just want the lowest priced regional ground service possible for every package? No Problem. If you are tired of the headaches from trying to navigate the e-commerce shipping labyrinth, let FirstMile help. Our API integrates seamlessly into common shipping platforms like ShipStation, Order Cup, and many more.

geofencing, and visual proof of delivery, drivers have an aid in delivering to the right location on time. Notification availability provides the consignee delivery flexibility, allowing them to choose a delivery date and time of their choice. This year GLS continues to increase our geographical footprint, enabling service expansion into new markets both domestic and international. Today, GLS operates 50 facilities in the US through a hub and spoke network incorporating low impact automation sortation equipment to ensure speed and care of every brand which runs through the network. To learn more about how GLS-US can create a custom solution for your brand, visit us at www.gls-us.com.

Since 1986, LaserShip has continuously innovated to stay ahead of the evolving e-commerce marketplace to provide shorter transit times, more flexibility, and lower costs than competitors. Today LaserShip is the largest regional last-mile carrier, with over 50 distribution centers and 4 sort centers reaching over 100 million consumers. As a result, LaserShip is trusted by the largest retailers to provide same-day and next-day delivery services in the Eastern and Midwest US. LaserShip’s mantra, Personalize the Box, means LaserShip doesn’t just deliver packages. Behind every delivery made is a story waiting to be fulfilled by the contents of a package. And this year, in the face of the COVID-19 pandemic, it’s more important than ever. This year, LaserShip will add inbound lanes and automation to its 300,000+ sq. ft. sort center in South Brunswick, NJ, including an automated smalls/poly bag sort system, increasing throughput by 20% up to an estimated 30,000 packages per hour. LaserShip is also excited to announce that version 2 of its proprietary mobile application, elli, is rolling out this spring with updates to make it an all-in-one delivery application that will help LaserShip deliver faster than ever. Whether it's delivering meal kits to allow families to stay home during the pandemic or delivering essential items, LaserShip’s goal is to be there when consumers need a trusted delivery provider. Visit lasership.com or email sales@lasership.com.

www.gls-us.com mtarallo@gls-us.com 800.322.5555 ext. 5397

lasership.com sales@lasership.com 703.761.9030

www.firstmile.com sales@firstmile.com 888.993.8594

General Logistics Systems US is a leader in transportation and logistics services. Backed by extensive global experience, GLS brings solutions to every market segment of shipper. Smaller shippers appreciate the simplicity in fee structure; enterprise, national, and global shippers gain incremental benefits from custom solutions focused on their brand. All shippers and consignees enjoy faster time in transit through our larger nextday footprint. Many of the largest brands in the world trust GLS with their transportation and logistics needs because our priority is delivering their brand. Today’s consignees demand more than just on-time deliveries, they want transparency and reliability. Surveys reflect a carrier’s influence on the consignee’s future purchases from the shipper company, putting performance pressures on the carrier. Combining data and technology, GLS creates the highest levels of reliability, bringing best in class service level commitments. Through geocoding,

24 PARCELindustry.com  MAY-JUNE 2020

Company

LAST-MILE CARRIERS OnTrac provides an affordable logistics network that speeds up ground delivery so companies can delight shoppers with world-class service and save money on shipping. They connect hundreds of independent delivery businesses with thousands of drivers through proprietary technologies, centralized customer service, and hub-and-spoke sort and linehaul operations. The OnTrac service area can reach 65 million consumers and includes all of California and the major cities of the Western United States. E-commerce companies choose OnTrac for their economy pricing, lower fees and surcharges, and faster residential Ground delivery service.

They offer the features and tracking tools you expect from big companies while still focusing on small-company customer service. OnTrac is a SmartWay Transport Partner, a USPS Workshare Partner, is SOC 2-certified, and integrates with over 30 leading multi-carrier software providers. For more information, please visit ontrac.com.

Optima Overnight delivers last-mile solutions within the New England region for items ranging from small packages to pallets. We provide specialized delivery services to e-commerce, payroll companies, banks, hospitals, pharmacies, laboratories, medical equipment, and many more… We believe in honest pricing, with far fewer accessorial charges than the national carriers! No surprises! At Optima we do more than transport items from one place to another; we take responsibility for every aspect of the process — including scheduling, pickup, tracking, delivery, special handling and reporting — so that your staff doesn’t have to. Optima’s exceptional professionalism and accountability result from up-front planning, consistent performance, intensive service, and depth of resources. Our uniformed company drivers are courteous, careful, and reliable. Last-Mile Delivery – Optima offers regional Next-Day Last-Mile deliv-

ery service to over 1200 ZIP Codes throughout CT, MA, NH, ME, and RI at a very economical cost to your business enabling you to save over the national carriers. We boast a greater than 99% on-time delivery average ensuring your packages are delivered on-time most every time! Scheduled Routes – Many Optima customers have recurring delivery needs to the same locations. By outsourcing your routes to us, we can streamline workflow, reduce administrative time and hassle, eliminate fleet issues, and significantly lower your operating costs. To learn more, contact Optima today!

ontrac.com salesweb@ontrac.com 800.334.5000

800.872.4004 sales@shipoptima.com shipoptima.com

PARCEL May June 2020

Published on May 29, 2020

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