PARCEL September/October 2022

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SEPTEMBER-OCTOBER 2022 PARCELindustry.com STOP & SEE AT PARCEL FORUM ’22! PAGE 29 CARRIER MIXOLOGY: DETERMINING THE RIGHT STRATEGIES FOR DIVERSIFYING YOUR PROGRAM. PAGE 40 BEST PRACTICES IN 3PL FULFILLMENT PROCUREMENT. PAGE 26 THE CASE FOR AI ROBOTICS IN THE LOGISTICS INDUSTRY. PAGE 22 WHAT GOES INTO YOUR SUPPLY CHAIN MIX? REGISTER TODAY!

///CONTENTS

06 EDITOR’S NOTE

Cheers to 20 Years

08 SPEND PERSPECTIVES

Redefining Free Shipping

By John Haber

10 REVERSE LOGISTICS

Consumers Turn to Brands for Secondhand Goods

By Tony Sciarrotta

12 OPERATIONAL EFFICIENCIES

The New Buzzword

By Susan Rider

14 PARCEL COUNSEL

United States Postal Service’s Prohibitions and Restrictions

By Brent Wm. Primus, JD

16 PACKAGING

Mailing Solutions: Small Changes Compound to Benefit Your Bottom Line

By Damon Lucenta

18 3 WAYS SHIPPING DATA CAN SUPERCHARGE YOUR SUSTAINABILITY EFFORTS

By Caleb Nelson

20 ADDRESSING THE RETURN-KEEP DICHOTOMY

By Michael Foy

22 BUILDING A CLEAR BUSINESS CASE FOR AI-POWERED ROBOTICS IN PACKAGE FULFILLMENT, LOGISTICS, AND DELIVERY

By Marin Tchakarov

24 CHALLENGES LOW- AND MID-VOLUME SHIPPERS HAVE IN MANAGING CARRIERS AND CARRIER AGREEMENTS

By Stephanie Martin

26 BEST PRACTICES IN 3PL FULFILLMENT PROCUREMENT

By Steve Givens

32 ON-TIME PAYMENTS BUILD BETTER CARRIER RELATIONSHIPS

By Steve Beda

36 DON’T PUT ALL YOUR EGGS IN ONE BASKET: DIVERSIFICATION IS KEY

By Josh Dinneen

38 PARCEL DECISION MANAGEMENT: DON’T LET YOUR DATA TAKE YOU OFF COURSE

40 CARRIER MIXOLOGY: DETERMINING THE RIGHT MIXING STRATEGIES FOR YOUR PROGRAM

By Mark Taylor

44 SURVEY: HOW OUR READERS RATE THE CARRIERS

By Amanda Armendariz

SPONSORED CONTENT

29 STOP AND SEE AT PARCEL FORUM!

18 24 32 38 40
Volume 29 | Issue 5
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EDITOR

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SEPTEMBER-OCTOBER 2022  PARCELindustry.com 5

EDITOR’S NOTE

CHEERS TO 20 YEARS

I’m writing this editor’s note in anticipation of our upcoming 2022 PARCEL Forum, at which we will be celebrating our 20th year of this show. During the past two decades, the shipping industry has seen tremendous growth and change, particularly with respect to the large influx of packages accompanying the e-commerce boom. COVID-19 only exacerbated this growth, and organizations struggled to keep up with the increased demand for online ordering in the wake of COVID lockdowns and stay-at-home orders. Through it all, the folks at PARCEL Forum (and we at PARCEL, as their publication partner) stayed ahead of the curve, remaining

firm in the commitment to bring you the most relevant and up-to-date information necessary to help you succeed in today’s environment. It is an honor to be celebrating 20 years; we couldn’t have done it without you.

I sincerely hope that many of you who are reading this editor’s note are planning on joining us in Chicago this year; meeting up with our readers and hearing what issues are important to them is one of the highlights of my position. And there is certainly no shortage of things to discuss in our industry. From delays at the ports, to carrier capacity issues, to keeping up with (sometimes impossible) customer demands, our industry is an exciting and ever-changing one. The best way to stay at the top of one’s game is to learn and network with other industry professionals, and there’s no better place to do so than the PARCEL Forum.

And if you can’t make it to this year’s show, that’s all right. We’ll be doing plenty of post-show coverage in our November/December issue. And, as always, if there is something you’d like to see covered, please drop me a line at amanda.c@rbpub.com. I’d love to hear from you.

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!

Planning and Optimizing for a Happy Holiday Season

4 Reasons You Need Reverse Logistics in Your Supply Chain Network

Supply Chains Move Beyond the Pandemic

6 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

REDEFINING FREE SHIPPING

Free shipping is still alive and well, but it is evolving as retailers battle higher last-mile costs. According to a report from last-mile technology firm X Delivery and the Retail Management Institute of Santa Clara Univer sity, free shipping is now ubiquitous, with 96% of retailers offering zero-cost shipping options. For good reason, 80% of consumers expect free shipping when ordering a spe cific dollar amount of products, and 66% of consumers expect free shipping for all online orders. And if it’s not offered? According to Amazon seller software & product research provider, Jungle Scout, they will walk away.

However, high supply chain costs have many retailers looking for solutions to continue to offer free shipping. One of the most obvious solutions is buy online, pick up in store (BOPIS), with an added benefit of the customer potentially buying more items when going into a store to pick up an order.

Other options include lockers and other third-party drop-off locations, and curbside pickups.

All these options, including BOPIS, come as additional costs to the retailers in the form of labor, locker rental fees, and potential fees associated with third-party drop-off locations.

Factoring the cost, or at least some of the cost of shipping, in the price of the item is undoubtedly an option, but with inflation running high, this could deter shoppers from pur chasing anything.

Increasing the minimum order of purchase to receive free shipping is another option for retailers. According to a survey from multi-carrier shipping software provider Shippo, most shoppers will take action to qualify for it. Consider the following when doing this:

The shipping origin

The shipping destination

Service levels

Your profit margins

Also, be mindful of shipping large, heavy items. Minimum order thresholds may not work, and these products may have other shipping fees to consider.

Online subscription services such as Amazon and Walmart+ offer free shipping as a perk for joining. In addition, online subscription boxes such as Stitchfix, Birchbox, and FabFitFun also offer free shipping as part of a member ship signup. It is estimated that there are over 7,000 subscription box companies, most of which are based out of the US.

In 2021, it was estimated that the subscription box market revenue reached

$22.7 billion and is expected to increase to $65 billion by 2027.

Many customers continue to expect free shipping in one form or another, so it’s important to come up with creative ways to offer it without breaking the bank.

When offering free shipping, reducing the cost of each shipment is an intel ligent way to make it more sustainable for your business. Delivery costs, including surcharges, continue to rise. Do your research on last-mile carrier options, service levels, free shipping thresholds, and options.

Also, this is not a one-time strategy review. Remember to revisit your shipping policies at crucial selling periods and growth milestones.

Regularly monitor your shipping invoices, the lastmile marketplace, and what your competitors are doing. The market is changing fast!

With over 25 years of supply chain experience, John Haber has helped some of the world’s leading brands drive greater efficiencies through their supply chain operations while reducing transportation, distribution, and fulfillment costs. After a successful UPS career, John founded Spend Management Experts, now part of Transportation Insight.

8 PARCELindustry.com  SEPTEMBER-OCTOBER 2022
SPEND PERSPECTIVES

CONSUMERS TURN TO BRANDS FOR SECONDHAND GOODS

What’s old is new nowadays, as retail ers resell returned items online and in stores. According to data analytics and consulting firm, GlobalData, the market for secondhand goods is esti mated at $43 billion in 2022 and is forecasted to grow to $82 billion by 2026.

There are several reasons why reselling goods, also known as recommerce, is popular these days. For brands, recommerce expands the lifecycle of existing products and supply chains and helps retailers reduce waste and recover the cost, especially as returns increase in step with e-commerce growth.

For example, Best Buy has opened 19 outlet locations, with plans to open more and sell clearance and end-of-life inventories. As noted on a recent earnings call, the retailer has a team that quality checks and repairs products for resale. According to the CEO, Corie Barry, “We see twice the recovery rate of our cost-of-goods-sold when we sell open box, clearance, and end-of-life inventory at our outlets versus alternative channels.” Best Buy also sells clearance and returns online as well.

Many consumers are turning to recommerce as a means of prioritizing sustainability. During the company’s Q2 earnings call, Barry told analysts, “We continue to operate the most comprehensive consumer electronics & appli ances take-back program in the US, collecting more than 2.5 billion pounds since 2009.”

The nonprofit agency, Good will, diverts about three billion pounds of goods from landfills into retail and recycling annu ally. That’s about three percent of the furniture, apparel, and other durables that Americans tossed out in 2018, according to its annual report.

Indeed, reverse logistics technology provider Optoro estimates that about six bil lion pounds of returns end up in landfills each year. Meanwhile, other consum ers are searching for deals when it comes to recom merce. Inflation and economic uncertainty have consumers looking for a bargain and, therefore, are frequenting retailers such as Dollar Tree, Big Lots, and Tuesday Morning and online retailers such as eBay and Amazon’s Amazon Warehouse. However, Goodwill is perhaps one of the most recognized recommerce sellers, with 3,200 stores in the US and Canada.

Unsurprisingly, many tech nologies have popped up in recent years to assist retailers in reselling goods. ThredUp, for example, bills itself as an online thrift store. However, it also offers what it calls resale-as-a-business. This is a technology service that allows such brands as Tommy Hilfiger, Madewell, and Oak + Fort to open their own resale website and includes such features as order fulfillment, storage, pricing and payouts, and more.

Trove is a similar solution with REI, Eileen Fisher, Levi’s, and Nordstrom utiliz ing Trove’s resell technology. According to Trove’s CEO, 65% of consumers want to experience resale directly with the brands.

Another example is FloorFound, a developer of an e-commerce software plat form that facilitates retailers’ returns and resales of over sized products. FloorFound offers a technology platform for retailers to sell through — FloorFound.store, and its software also links to the retailer’s own branded web site to provide two avenues for retailers to reach custom ers. For example, furniture brand Joybird’s website has a “New To You” page with listings uploaded and main tained by FloorFound, which also handles the pricing through algorithms.

Recommerce benefits the brand, the consumer, and the environment. As more embrace this growing trend, the spotlight will highlight the need to improve reverse logistics processes for many businesses.

Tony Sciarrotta is Executive Director of the Reverse Logistics Association. The RLA offers various tools, white-papers, and monthly webinars that provide best prac tices in managing reverse logistics.

10 PARCELindustry.com  SEPTEMBER-OCTOBER 2022
REVERSE LOGISTICS

THE NEW BUZZWORD

Automation is defined as “the use of largely automatic equipment in a system of manu facturing or other production process.” What does that mean in your distribution center?

Automation can refer to anything that you do that is not a truly manual process. So, with that defini tion in mind, let’s talk about automating your processes. Automation is perceived to cost a lot of money, but that’s not always true.

Let’s face it: The real renewed interest in automation is not to replace existing associates but to reduce the number of people you need in your facility, given that facilities all across the country are finding it difficult to find qualified workers and, most importantly, to retain them at a logical wage. When a McDonald’s franchise location announced a wage of $25 per hour with two weeks of vacation time, the younger generation went there instead of nearby warehouses. Competition is fierce with a shrinking labor pool, so anything you can do to reduce the number of people needed in your facility will not only pay big dividends but also lessen the tremen dous effort of searching for and finding new people.

Below are a few ideas by functional area to reduce manual handling and increase throughput while also increasing productivity:

Receiving If your product comes in on pallets and you have a receiving staging area, make it smart! Put a

barcode on the floor desig nating the aisles closer to the area that the product goes in, therefore reducing travel times. If you are unloading a container, use a portable automatic flex conveyor so several people can palletize at the same time on the staging area in order to avoid congestion and heat ex haustion in container. Some people are still manually loading to pallets inside the container!

Put away If you are not using directed put away, put this automatic software on your wish list. This will increase replenishment, picking, and overall space utilization. If you have a WMS and you don’t have directed put away, research new releases to find out if that functionality has been included. Directed put away just makes sense!

Order management Do an analysis of your order profile! Do you have like orders for the same SKUs every day? This opens you up to batch picking and sortation.

Picking If you are picking full cases to a pallet manually and walking through the facility on every order, look at implementing a full case pick module with an automatic palletizer. This will quadruple your through put with fewer people and less errors.

If you are piece picking, there are so many automation solutions available. Choosing the right one for your facility is the trick! If you are still picking with paper, stop. An RF gun will increase your productivity and accuracy, but don’t buy the guns with tiny screens that the order filler has to scroll and scroll through to get the data. Make sure your process is easy and streamlined. If you have RF, you can increase productivity and throughput with pick-tolight, or maybe batch pick with a sort. You may be a candidate for smart pick carts with smart pads at every location telling you what goes in each slot. There are lots of options in automation for picking where

Don’t ignore used equipment, but, of course, you don’t want to buy something that is a maintenance nightmare, so choose wisely.
12 PARCELindustry.com  SEPTEMBER-OCTOBER 2022
OPERATIONALEFFICIENCIES

the most cost in your DC resides. You may be a candidate for a robotic picking module. Search out ideas to improve this area based on SKU and order profile.

Shipping This is a simple one: Look at your shrink wrap machine. Are your full pallet forklift operators having to get off to start the shrink wrap, or is it automatic? If you have an old one where the operator has to get off, put a new one on your wish list. This will save so much time, and this area has a lot more competitive pricing. There are also a lot more alternatives today than there used to be.

General Anytime you can improve accountability of your team, the more accurate and productive they become. Hold your team to a high standard and make your expectations known, and they will hopefully rise to your expectations.

Remember, if you can’t buy new equipment, there are always companies shrinking or going out of business that may have “like new” equipment for a very good price. Don’t ignore used equipment, but, of course, you don’t want to buy something that is a maintenance nightmare, so choose wisely. The only downside of automation is choosing a solution that leaves no flexibility. Many moons ago, while working on an Amazon

facility, the golden word was “agility”. This is still true today; distribution centers need to be agile so they can respond accordingly to changing market trends and order demands.

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

SEPTEMBER-OCTOBER 2022  PARCELindustry.com 13

UNITED STATES

POSTAL SERVICE’S PROHIBITIONS AND RESTRICTIONS

It is very important for a parcel shipper to know and follow the rules of the transportation service providers used by the shipper however named, e.g., tariffs, service guides, or terms and condi tions. This knowledge should be acquired before shipping, not after a penalty has been incurred or other negative consequences occur.

In this installment of PARCEL Counsel, we will focus on the rules of the USPS and, in particular, what the USPS calls “Prohibitions and Restrictions.” There are two sets of these. One relates to shipping packages domestically within the United States (https://www.usps.com/ship/ shipping-restrictions.htm) and the other relates to inter national shipments (https://www.usps.com/international/ shipping-restrictions.htm).

Within both of these sets of rules, certain items are designated as “prohibited” and others as “restricted.” Prohibited items may not be sent in domestic United States mail. These are airbags, ammunition, explosives, gasoline, and marijuana.

Internationally prohibited items may not be sent from the United States to any country. These items include the prohibited items for domestic mailing plus aerosols, alco holic beverages, cigarettes, dry ice, hemp-based products, nail polish, perfumes, and poisons.

Just as there are items prohibited for domestic or international shipments, there are also items that are restricted. These items may be sent, but only if the ship per follows all of the rules relating to a particular item. A complete list may be found at the USPS website at the links listed above.

The rules relating to prohibited items are pretty easy to follow — if an item is on the list, you cannot ship it. The

rules relating to restricted items are not as simple. They include items that are commonly found in the home and office. For instance, hand sanitizers may be mailed domestically subject to restrictions, but would be prohibited to mail internation ally. Furthermore, they might be considered to be hazard ous materials (Hazmat) and subject to further rules: USPS Publication 52, Hazardous, Restricted, & Perishable Mail.

It is important to note that the restrictions for mailing items are not the same for dif ferent items. They vary from item to item. Restrictions on the same item can also vary depending on whether it is being mailed domestically or internationally. As an exam ple, here are the restrictions for lithium batteries as they appear on the USPS website for domestic shipments:

“Lithium Batteries

For domestic mailings only, small consumer-type primary lithium cells or batteries (lithium metal or lithium alloy) like those used to power cameras and flashlights are mailable domestically under certain conditions.

Lithium Batteries in Electronic Devices

If you’re mailing pre-owned, damaged, or defective electronic devices containing or packaged with lithium batteries, you must send them via ground transporta tion; they are prohibited in air transportation.

These devices must be marked on the outer packag ing with the text, “Restricted Electronic Device” and “Sur face Transportation Only.”

The international restric tions for mailing lithium batteries are as follows:

“Lithium Batteries

Only lithium cells and batter ies that are properly installed in the equipment they are intended to operate may be mailed internationally or to APO/FPO/DPO locations if the destination country and APO/ FPO/DPO permit their receipt.

Prohibited Lithium Battery Shipments

 Lithium batteries packed with, but not installed in, equipment

 Lithium batteries sent sep arately from equipment

 Damaged or recalled bat teries

 All pre-owned, damaged, or defective electronic devices containing or packaged with lithium batteries”

To conclude, the first very critical step is to thor oughly research the USPS website to determine if the items shipped via USPS are restricted, prohibited, or hazardous… and then go from there. 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 brent@primuslawoffice.com.

14 PARCELindustry.com  SEPTEMBER-OCTOBER 2022
PARCEL COUNSEL

MAILING SOLUTIONS: SMALL CHANGES COMPOUND TO BENEFIT YOUR BOTTOM LINE

Ports remain clogged, labor is still short, and various raw materials continue to be endangered — which makes a company’s inventory invaluable. That means businesses are seeking every possible avenue to get their available products packed up and through the shipping network quickly, efficiently, and with cost in mind. To do that, flexible mailers are being increasingly used. Why?

Reducing Your Dimensional Weight (DIM)

Freight costs are at an all-time high thanks to the cost of oil, shipping rate increases, and new surcharges. Reducing your DIM weight can help you chip away at those expenses. It imperative to determine the best way to reduce the size of your parcel — without compromising protection.

Going Green – Less Is More

Disposing of excessive volumes of packaging imposes a burden on consumers. Using fewer materials to achieve the same result will provide a better user experience and generate less total waste in our landfills. Flexible mailers allow companies to reduce the amount of material used to ship a product when compared to a box solution. On top of that, mailers can be manufactured with varying degrees of recycled content and can be conveniently recycled.

Building a Brand Identity

Look for mailers produced with substrates that are not only environmentally friendly but provide ideal on-pack printing capabilities. Whether it’s a company logo or an advertising tagline, studies suggest 55% of consumers admitted to providing repeat business to brands with custom packaging, and the unexpected increase in demand for sustainable printed packaging is fueling

innovation in this area. Beyond the obvious benefits above, testing is the key to identifying what solution (shipping box or mailer?) is the right fit, while determining which packaging offers the biggest ROI. Work closely with your packaging partner to audit your existing packaging strategy to zero in on the areas that require the most improvement. Consider all of the variables where a new package can impact your business — product damage, cost savings in freight, impact on sustainability, and any oth er business goals important to your team. Studies show nearly 30% of businesses that improved their packaging saw increases in revenue.

Finding a Good Fit

If you have determined that migrating your packaging materials from boxes to flexible mailers is a realistic business decision, start your journey toward selection by considering the pros and cons of your current process.

1. Consider the product you are packaging. Choosing flexible mailers may be a great solution if your product is not fragile and not very large or heavy.

2. If the item does not require boxed protection, the cost of box, interior packag ing, tape, and the associated freight of the box item may come at a higher total cost than a flexible mailer.

3. Switching to a flexible mailer can help streamline operations and increase

throughput; in some cases, as much as a 50% reduction in packing time vs. a laborer manually erecting a shipping box and packing up its contents.

4. If you are fulfilling orders with speed in mind, especially during peak, flexible mailer options with automated bagging equipment may be the solution. You would be able to pack faster without hiring additional personnel. If you are already struggling to hire, this can take the pressure off filling new positions and re-position staff to areas where they can offer greater value.

5. Like many companies managing inventory to coin cide with market changes, if you are experiencing SKU proliferation, you may now use a select few box sizes for a large product mix to reduce cost per box. The box sizes may be tougher to optimize, increasing ship ping costs due to increased dimensional weight. This is where a flexible mailer can simplify the process.

Ideally, you are running all available tests to get enough data to make sound decisions. Always ask your supplier to provide a life cycle assess ment (LCA), which measures the impact of the packaging on the environment from raw material to disposal.

Damon Lucenta is Senior Manag er, Pregis Innovation Headquarters Packaging Services.

16 PARCELindustry.com  SEPTEMBER-OCTOBER 2022
PACKAGING

3 WAYS SHIPPING DATA CAN

surcharges, and fully optimize supply chains for long-term sustainability and profit. Through analyzing data and imple menting new technologies, parcel shippers hold success in the palm of their hands.

Start Eliminating Supply Chain Waste

Waste can creep into all touchpoints of a supply chain. But many shippers fear that the steps necessary to limit waste would be detrimental to their bottom line. That couldn’t be further from the truth. Aiming for greener supply chains reduces not only a shipper’s carbon footprint but also their

Consider market expectations. Consumers have spoken, and they’re not happy with excessive packaging; in fact, they’d be willing to wait longer for delivery if it’s being shipped in a more sustainable way (think slower ground service vs. faster air service). Additionally, 57% would be willing to pay more for an eco-friendly package, rather than be stuck with overfilled or oversized boxes.

Shippers should pack like a pro. There’s a growing market for sustainable packaging made from eco-friendly materials. Modeling optimal package sizes can reduce both material waste and costs. Incentives can be given to choose green packaging at customer checkout. Additionally, inventory man agement technology can help create systems that eliminate waste and drive efficiency throughout shipping operations.

This is a two-fold win: You’ll be reducing waste and material costs and improving the customer’s experience. Packaging company Shorr found in a study that nearly a fifth of consumers say excessive packaging negatively impacts brand experience, and according to Sifted’s research, 81% of consumers feel that most companies are using excessive packaging.

Reduce Shipping Fuel Surcharges

SUSTAINABILITY EFFORTS

The pandemic prepared shippers and brands globally for the unexpected. However, the wave of new challenges hasn’t ended. Carrier fuel hikes are eating up bottom lines, and many of these cost increases can’t be solved by simply adjusting a carrier mix.

Parcel shippers are looking to find both profit and sustainability within their supply chains, but most don’t know where to start. With change brought on by the pandemic and rising consumer demand for green business practices, many shippers are feeling the pressure to future-proof their shipping operations while advancing sustainability efforts.

With shipping data, it’s possible to achieve both. Shipping data holds the power to eliminate waste, reduce fuel

FedEx and UPS upped their ground fuel surcharges nine times in the first 90 days of 2022, and these charges will only continue to increase. Plus, you can expect nearly every delivery area surcharge to have a fuel surcharge attached to it.

Luckily, there are several steps that can be taken to avoid surcharge pain. Historical data and shipping ZIP Codes can uncover how far packages travel and help calculate the fuel surcharges assessed to an average package. Additionally, this can help supply chain managers determine the carbon footprint of their shipping operations and, more importantly, progress that’s been made to reduce it.

Shippers should reach out to their carrier or 3PL provider to better understand their fuel surcharges and how they can mitigate their impact on shipping operations while still meeting consumer expectations.

18 PARCELindustry.com  SEPTEMBER-OCTOBER 2022
SUPERCHARGE YOUR

Fully Optimize Supply Chain Operations

The shipping industry is starting to look like a scene from Alice in Wonderland. But shippers can ‘keep their heads’ by learning to ship smarter and finding those key touchpoints in their supply chain that need enhancement.

Using shipping data, shippers can filter through their costs by zone and service level to achieve shipping goals faster and find service levels that minimize costs (and in some cases, emissions) without sacrificing delivery speed. By analyzing their data, shippers can determine key cities or regions where larger portions of their customer base is located, and position their distribution/fulfillment centers in locations close to these areas. With shorter distances to travel, they can achieve the same shipping speeds with a cheaper, more sustainable ground service, rather than an air service. This will reduce delivery times, emissions, and shipping costs.

Additionally, shippers should consider their product data when selecting their network’s locations. If certain products sell more in certain regions (for example, a yard care equipment business might sell more shovels in the northern US and more pool chemicals in the southern US) they should obviously be primarily stocked at warehouses and distribution centers in that region. Again, this will lead to shorter delivery times, lower emissions, and lower costs on average.

Analyze with Ease

Shippers that optimize all functions of their supply chains — from the point of manufacture to delivery and reverse logistics — can slash waste and maximize revenue. And there are no spreadsheets required. They can do it with smart analytic and modeling software specifically built for shipping data.

Shipping data can be the key to sustainable supply chains. Still, it’s inherently complex. Analyzing and modeling shipping data to identify and address inefficiencies is, itself, inefficient. Because of this, logistics intelligence software has become a rising force in the market, helping supply chain managers easily analyze and act on their data.

It’s clear that sustainability is top-of-mind among consumers, especially with supply chains and last-mile delivery. By harnessing their data, parcel shippers can take the steps to make their operations — and wallets — much greener.

At the end of the day, what’s good for the planet is good for business.

Caleb Nelson is Chief Growth Officer at Sifted.
SEPTEMBER-OCTOBER 2022  PARCELindustry.com 19

ADDRESSING THE RETURN-KEEP DICHOTOMY

Recently, I’ve been inundated with inquires pertaining to return-less refunds — a term first coined by Amazon in 2017. Return-less refunds occur when a buyer initiates a return and a request for a refund, and the seller issues a refund without requiring the buyer to actually return the item. The seller notifies the buyer that a refund has been issued but tells the buyer to keep the item anyway, or they may be asked to donate the item instead.

The question I keep getting is: How do I [seller] determine what’s best — to return and refund or just refund?

While this may be a simple, straightforward question, the answer is extremely complex due to a large number of variables — some steeped in logic and others driven by emotion, such as experiences and loyalty.

When e-commerce accounted for one to two percent of a retailer’s total sales, returns were not given much thought. Then e-commerce exploded and the number of returns grew exponentially. Now merchants fall into one of two camps: Those leveraging returns as a competitive advantage and those aspiring to do so. Merchants taking no action will not survive. Returns will consume

their profits and their market share will dwindle until they are no longer relevant.

Before I go any further, the real answer for addressing the return-keep dichotomy is, “It depends.” For example, it depends on how far the organization is along the digital transformation continuum. Does a merchant truly understand the hard and soft cost of a return? A recent Inmar survey revealed that approximately 50% of the retailers indicated they did understand these costs. However, this number may be overstated due to adage, “You don’t know what you don’t know.”

Similarly, I have to wonder if merchants truly understand how different value recovery methods, such as return-to-stock, liquidation, refurbishment, etc., can offset the potential margin-loss from a return.

Omnichannel Retailers: Returning In-Store

Let’s tackle the easiest one first. Omnichannel retailers should ask for items to be returned in-store and maybe even incentivize shoppers to do so. Conveniently, 60% of shoppers prefer to make in-store returns. Plus, this economically generates a store visit in which the shopper will receive a refund or store credit on the spot. The shopper, armed with fresh funds, is likely to make new purchases while in-store.

This also connects the online customer experience to the physical store. When executed properly, this can differentiate your banner, boost shopper loyalty, and increase customer lifetime value. This approach is also more sustainable as returns are aggregated at the store, which is already integrated into the company’s supply chain and logistics.

Pure-Play E-commerce Retailers and Omnichannel Retailers with Out-of-Store Returns

For pure-play e-commerce retailers and out-of-store returns for omnichannel retailers, the decision tree has many more branches. The intangibles, like loyalty and customer experience, are similar but the economics of returns are vastly different.

In early days of e-commerce, the decision to return or keep was based on a static formula: Return the item provided its resale value exceeded the transportation costs. However, it is important to note that during this period, most returned goods were sent directly to landfills; therefore, other cost considerations were moot.

Today, there are many more options with companies turning to landfills as a last resort. Brands and merchants,

20 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

understanding that shoppers with the highest number of returns are often their best customers, know they have to find a better approach to returns management.

It’s About to Get Personal: The Future of Returns

Product returns are becoming more sophisticated thanks to AI and ML. Advanced returns management systems will answer the return or keep question based on configurable rules engines. Cost analyses will be expanded to include:

 All-in return transportation costs, including accessorial charges

Labor costs, including receiving, inspection, and put-away

Inventory holding costs

Projected demand and price dilution

Optimal value recovery method

Customer lifetime value, shopper returns history, seasonal nuances, and SKU history are just a few of the factors that will feed the decision. Sustainability measures, optimal value recovery, speed-to-resale, and, of course, costs

will further augment the decision to return or keep.

This will provide a platform for multidimensional decision support. For example, a customer wants to return a $17 decorative desk lamp. The system quickly determines that this product should be slated for liquidation because returning to stock would be cost-prohibitive. Or the system recognizes this is the first order ever received from this shopper; therefore, the best solution is to let the newbie collect a refund without returning the lamp in order to establish goodwill and trust. In this case, letting the shopper keep the item is more of an investment.

Other processes and technologies will be implemented to mitigate returns. Enhanced quality control measures will reduce the number of returns caused by merchants, such as shipping the wrong product, inaccurate site content, or damages occurring in transit. Similarly, brands and merchants will use augmented reality to let shoppers “virtually try before they buy.”

A Word of Caution: Seller Beware Issuing a refund without requiring the shopper to return the item may seem like the right choice, economically and environmentally. But this practice may be inviting bad actors into your shopper base. A shopper that was just told to keep the $17 desk lamp may try to return a higher-priced item. Or they may encourage friends to order similar products from the same retailer, then initiate a return to see if they get the same offer.

According to the National Retail Federation, organized retail crime (ORC) cost retailers seven percent of their total annual sales, and the percentage of fraudulent returns exceeds 10% and is growing. So, seller beware. And remember, when asked, “When do you let a shopper keep a return?” The answer is, “It depends.”

Michael Foy is Director of Business Development, Inmar Intelligence.

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BUILDING A CLEAR BUSINESS CASE FOR AI-POWERED ROBOTICS IN PACKAGE FULFILLMENT, LOGISTICS, AND DELIVERY

model, and pave the way to adoption and installation.

The case has already been made by leading retailers using AI-enabled robotics systems at other points of the supply chain and seeing rapid returns. Emerging business models like Robots-as-a-Service (RaaS) are making testing AI easier, as well as justifying the business case.

CEOs and organizations are open and, indeed, eager to explore technological innovations to address their challenges and increase their future resiliency. According to a Supply Chain AI survey from Gartner, supply chain leaders predict that AI will have the greatest impact on their industry during the next three years, with 64% of respondents citing AI in customer fulfillment as the most important emerging technology area.

The good news is AI is entirely achievable. For decades, warehouses, distribution, and fulfillment centers have employed robots to automate functions and support workers. Much newer to the scene is the integration of artificial intelligence capabilities. AI-enabled robots represent the next generation in automation and augmentation in PFLD.

AI Advantages in Picking, Sorting, and Induction

In general terms, AI refers to a computer’s ability to carry out functions usually performed by human associates. On the warehouse and distribution floor, those functions often include picking, sorting, and induction. With human-like intelligence, AI-powered robots employ vision, grasping, and manipulation algorithms to read barcodes and see, maneuver, and sort products. With each repeated task, AI-powered robots learn — becoming smarter, faster, more accurate, and more efficient. As they improve, so do the operations that employ them.

McKinsey & Co. reports that, over time, retailers may see as much as 87% incremental value from using AI in their ware houses. Over the past four years, leading retailers, including Gap Inc., J. Crew Group, and Under Armour, have proven that AI-powered robots are effective for pick-and-place applications. In total, these e-tailers, and others, have used AI-powered robotic systems to pick hundreds of millions of items.

There’s no denying the data: consumer demand for e-commerce shopping is rising. According to Statista, by 2026, the volume of small parcels processed each year is expected to reach 266 billion — more than double the volume of 2020. To meet this demand, the package, fulfillment, logistics, and delivery (PFLD) industry will invest in new technologies in the next three to five years that deliver demonstrable business outcomes.

An MHI 2022 Industry Report predicts a near 55% increase in the adoption of artificial intelligence (AI) over the next five years. Yet, supply chain leaders identified the lack of a clear business case as the most significant barrier to adopt ing all new technologies. The action now is to prepare the business case for these technologies, identify the financial

With advancements in AI-enabled induction robots, operations can see the same improvements in speed, throughput, and productivity applied to their parcel induction processes. Highly intelligent robotic systems can also address the challenges of parcel induction, such as variations in size, weight, fragility, and materials. This increased efficiency also comes with enhanced speed. AI-enabled induction robots can process up to 2,000 units per hour (UPH) while maintaining a 99.5% uptime with the support of remote robot pilots. In addition to the speedy throughput, operators can use multiple robotic systems along the line so distribution centers, e-com merce fulfillment operations, and shippers can keep up with the breakneck pace of customer demands.

Smarter, Faster Data-Driven Decisions

The need for speed is critical in e-commerce. So is the need for data. AI-powered induction robots also deliver on that front, serving up robust business analytics that operators can leverage to make faster, smarter business decisions. As robots

22 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

go about their tasks, they capture and evaluate millions of data points across a range of metrics, including:

 Throughput: How the robots are processing units and orders.

 Associate Impact: Where associates’ performance is affected.

 Utilization: How much time a robot is being fully used.

Speed: How fast the robot processes items.

Blocktime: The measure of the time the robot is unable to work.

 Accuracy: The error rate when sorting items and orders.

Order Attributes: Real time order information, including order size, item composition, item velocity info, etc.

The supply chain team can then leverage this information to drive continuous improvements throughout operations.

From Business Case to Business Reality

Increasingly aware of the advantages of AI, businesses around the world are integrating AI-enabled technologies into their logistics operations. Research and Markets’ 2022 Logistics Robots Market Report estimates that the global logistics robots market will surpass $5.4 billion in 2020, with an expected 15% compound annual growth rate over the next six years. New business models like RaaS make the benefits of AI even more accessible.

The RaaS model operates much like a utility. Just as customers pay only for what they use, RaaS allows operators to pay only for the work the robots execute. Supply chain teams can better align costs with fluctuations in volume and demand. With no large, upfront capital investments, operators can quickly pilot robotic solutions to gauge the effectiveness and realize benefits immediately.

AI-powered induction robots are already producing tangible business outcomes for logistics, e-commerce, distribution, and fulfillment operations — even as they face soaring demand, supply chain challenges, and labor shortages. For companies seeking to drive improvements while building resiliency, the business case for AI-enabled robotics is clear. With cost-effective, rapidly deployable RaaS, that business case can quickly become a reality.

Marin Tchakarov is the CEO of Kindred. A technology executive for over 28 years, Marin is passionate about connecting supply chain and fulfillment organizations to the advantages of artificial intelligence, machine learning, and next-gen robotics. Under his leadership as CEO, Kindred launched the INDUCT robotic system built on the proprietary CORE/AutoGrasp AI platform, and developed Kindred SORT to pick half a billion pieces of merchandise in real-world production environments. Learn more at www.Kindred.ai.

SEPTEMBER-OCTOBER 2022  PARCELindustry.com 23

CHALLENGES LOW- AND MID-VOLUME SHIPPERS HAVE IN MANAGING CARRIERS AND CARRIER AGREEMENTS

Typically, with a smaller organization, the responsibility of managing the carriers falls on the shipping manager or operations manager. This responsibility is in addition to the many other jobs required of this person from warehousing, including running TMS, shipping, operations, and managing incoming returns and invoice resolution.

As part of managing the carriers, most of the responsibility of renegotiating carrier agreements also becomes part of the job. And, when it comes to taking on a carrier contract negotiation,

it can become complicated if you lack the dedicated resources or guidance to put together a strong RFP. Most importantly, it’s critical to be proactive and the one who initiates the agreement renewals and amendments… not the carrier.

In addition to so many other responsibilities, the shipping manager deals directly with their carrier rep. This rep is normally the sole source of the information the manager receives from the carrier. For low- and mid-volume shippers, it can often feel like there is a lack of attention from the rep. Whether you have a good, proactive rep, or one that doesn’t provide much help, is a key factor in whether or not the manager is at a disadvantage. It is crucial to create and maintain a good working relationship and have your rep work as an advocate for your company. And, most importantly, it is critical for managers to also develop these close relationships with the non-incumbent carrier.

Plan to have regular meetings and discuss a quarterly business review with your rep. Work closely with them to review your usage, time in transit, and major areas of spend, including the impact of new surcharges. This will identify areas for improvement and potential savings. During these reviews, update your rep with plans for your organization, such as growth, peak season planning, new product box sizes, and other changes to make sure your carrier agreements are adjusted to reflect your unique profile.

One shipper recently spoke with their carrier representative about a large increase in surcharges and was told, “Unfortunately, the AHS and oversize peak surcharges were not implemented when your agreement was executed. Those were new peak surcharges.” Obviously, that is not something a shipper wants to hear (see Figure 1).

Recently, FedEx announced its peak surcharges for Additional Handling and Oversize Charge will effective September 5 (which means these charges will be in effect by the time you read this article), almost a month earlier than last year. This rate increase is 10% YOY for peak surcharges.

In addition to the reviews with your carrier, become familiar with your invoicing shipping data. Analyze your data and learn where all your money is going. By knowing what your major spend areas are and the true shipment cost, you will have specific and targeted talking points to take to the carriers for contract adjustments. Many carriers will push back on providing lower rates, so using your data to show increases in cost and YOY change will give you an advantage.

Figure 1
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Change Is Good (Except When It Isn’t)

Another challenge managers face is dealing with unexpected changes from the carriers. We used to be able to rely on changes once a year with the annual general rate increase (GRI). However, the last couple years have shown that changes are being implemented all year long and often at times with little warning. Prioritize staying connected with the reps so they will keep you updated with upcoming announcements and carrier tariff changes such as new peak surcharges, new services, surcharge rule changes, and fuel rate index adjustments.

Getting an alert will help you have a head start in planning for these changes, especially since midyear changes can drastically affect your organization’s budget for the year.

Not only do you need to have a strong relationship with your carrier, but oftentimes, the manager typically does not have a good relationship with the non-incumbent carriers. It is important to have ongoing conversations with all the major carriers, as well as regional carriers. Unless you have consistently engaged the non-incumbent carrier, you will not receive a robust proposal from them.

Additionally, don’t overlook regional carriers, as they can often provide not only faster service but do so at a lower cost. Diversifying your carrier footprint will allow you more flexibility and shipping options. Using more than one carrier can also help leverage the multiple source strategy. Having a relationship with only one carrier leaves potential risk if your incumbent carrier decides to implement capacity restraints like we have seen a great deal of in the past few years. If your

capacity is maxed out, you will have additional routes to ship your packages already set up to easily shift your volume.

However, if you decide to bring in additional carriers, be aware of how much volume/revenue you are pulling from your main incumbent carrier, as there are a lot of ways the carriers take advantage of this situation. Many carrier agreements are structured around your shipment spend and your rate incentives are tied to it as well. If significant volume is pulled, this will negatively affect your current incentives. Review where your organization falls in the incentive tiers and shift volume accordingly. If volume and spend drop too low, many organizations convert their LTL spend to their incumbent carrier. This additional revenue can help meet the requirements to keep current incentives.

There are many challenges to managing and controlling your carrier agreements, and it continues to become more complicated. Remember, you should be able to bring in your CFO or CEO to support your efforts, and now you can provide them with the information needed to achieve bottom line savings.

Stephanie Martin, Managing Director at Navigo Consulting Group, has been in the logistics and distribution industry since 2009. She is presenting How to Predict & Analyze 2023 Accessorials at the upcoming PARCEL Forum in October. Navigo specializes in contract benchmarking, distribution analysis, and transportation spend management. Since 1995, Navigo has reduced its clients’ shipping costs by more than 20%. Stephanie can be reached at Stephanie@navigoinc.com or 562.621.0830.

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2022  PARCELindustry.com

BEST PRACTICES IN 3PL FULFILLMENT PROCUREMENT

With the proliferation of online shopping, the e-commerce industry is growing exponentially. As a direct result, thirdparty logistics (3PL) fulfillment support services are a rapidly growing and critical part of the customer experience.

The 3PL fulfillment market has changed significantly over the last 50 years, and the scope of the support services has also changed throughout the decades. Overall direction of the industry changed forever on July 5, 1994, when Amazon was founded and began operations. In the late 20th century, online commerce launched a modern-day gold rush, and with newfound fortunes to be made, the 3PL fulfillment services market was flooded with new companies from various industries that all wanted to stake their claims.

Fast forward to 2022, and the 3PL market is now a complex and different landscape. Overall, the 3PL fulfillment services market is saturated, with over 1,000 3PLs in North America alone. Today, understanding 3PL fulfillment market options, pricing methodologies, and service level agreements (SLAs) is critically important to selecting the best 3PL partner to support your current fulfillment needs and help you scale your business.

One of the most difficult tasks in developing an outstanding 3PL partnership is selecting the best 3PL to support not only your current needs, but your future needs as you scale your business. Selecting the wrong 3PL can have a negative finan cial impact on your business and adversely affect the customer engagement experience and increase customer attrition rates.

Finding the ideal 3PL partner sounds easy, but with so many options, how do you best understand the market and your options? Clearly, you can use the conventional sourcing strategies of market research, leveraging your professional network, and reviewing available data from trade associations. Unfortunately, for the 3PL fulfillment services market, those methods will only yield limited benefit. Online market research will lead you straight to a relatively small number of 3PLs that do a great job with search engine optimization and brand promotion, only to provide you with mostly biased marketing rhetoric. Leveraging your network of contacts is a good way to get referral recommendations. However, unless your contacts are experts in the 3PL fulfillment market and your specific support needs (which most aren’t), that will likely fall short of the desired goal. Trade associations can be an excellent source of unbiased market knowledge, but in the 3PL fulfillment market, they are almost non-existent. The trade associations that are well-positioned to focus on the issues important to the 3PL fulfillment industry primarily focus on the 3PL logistics and transportation segment of the market. If you search on Google for 3PL fulfillment trade associations, the results mostly yield the same 3PLs that you find when performing online market research for 3PL fulfillment services.

To effectively understand the 3PL fulfillment market and your options, the best source of unbiased, comprehensive market intelligence is the small number of consultants and subject matter experts (SME) who specialize in the space. Consultants and SMEs can be an invaluable resource in helping you shorten the timeline and improve the results of your 3PL fulfillment market assessment and partner selection process.

3PL Fulfillment Procurement Process & Evaluation Considerations

Once you have identified a select number of qualified 3PLs seemingly well-suited to support your needs, it is important to have a formal vendor/partner selection process. This process normally starts with a formal request for proposal (RFP). The RFP should document, and clearly communicate, your support requirements, service objectives, and relationship goals. Once you communicate your requirements, request a formal services proposal from each 3PL to better understand the experience, capabilities, value proposition, and level of professionalism of each prospective partner.

There are several key considerations when evaluating prospective 3PL partners:

Fulfillment transaction pricing and overall cost

Geographic locations

Technology

Culture and level of professionalism

Experience with similar programs and distribution channel expertise

Willingness to invest in the relationship

Size, scalability, and infrastructure

Available capacity and expansion plans

Current and former client satisfaction

Let’s take a closer look at the top three considerations above.

26 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

Overall Cost

The overall value that you receive from your 3PL has a direct correlation to the overall fulfillment cost and detailed transaction pricing for each of their services. Within the 3PL fulfillment services market, there are numerous pricing strategies, so it’s important to understand the differences at a high level.

The various 3PL transaction pricing strategies aren’t difficult to understand, but what is significantly more challenging is estimating and comparing the total cost per order and annual support costs between the various pricing methodologies. As stated above, the 3PL market expanded rapidly when a host of companies, from vastly different industries and market segments, entered the fulfillment services space. These new market players brought with them their own set of pricing models and industry-specific best practices. Unfortunately, there are no formal industry standards regarding 3PL fulfillment pricing guidelines and, as a result, there are numerous pricing strategies and hybrid models that have emerged over the years.

It’s very beneficial to estimate your all-in cost per order for warehousing, pick & pack, account management, and transportation costs to compare options. Most 3PLs include their account management costs in their per-order fees, but some 3PLs charge separate fees for those services. Estimated transportation costs can be a little more challenging but can be simplified by getting rate tables by carrier, weight, zone, and service. Once you understand the estimated cost per order, it is relatively easy to compute your overall estimated annual fulfillment support

costs based on anticipated order volumes, inventory storage requirements, and other support requirements.

Geographic Locations

Having your fulfillment centers in the appropriate locations is critically important to an effective and efficient solution that delivers maximum customer value. When developing your location strategy, key considerations include manufacturing locations, customer concentration, time-in-transit goals, and order volume. Manufacturing locations will drive the supply chain process and impact fulfillment center location options but are only part of the decision-making criteria. Customer concentration and desired delivery time-in-transit goals are also important considerations. Order volume will also impact your optimal fulfillment center location strategy.

Your optimal fulfillment location strategy may lead to leveraging multiple distribution locations. One common US strategy is to leverage east coast and west coast fulfillment operations to reduce freight costs and deliver time-in-transit efficiencies. It’s very important to determine your desired fulfillment center locations prior to selecting 3PLs for consideration.

Technology

3PL technology is also an important consideration. Many 3PLs leverage inhouse systems and proprietary technology to support their business and clients. Some proprietary fulfillment order management systems (OMS) and warehouse

SEPTEMBER-OCTOBER 2022  PARCELindustry.com 27

management systems (WMS) are very robust but some have challenges. There are also many third-party OMS/WMS systems available. Third-party OMS/WMS systems tend to be comprehensive but can be more difficult to modify for client specific customization requirements.

From optimal warehouse networks, micro-warehousing, and the most successful fulfillment strategies of 2022, learn how to create a modern fulfillment strategy at PARCEL Forum ‘22 in the Smarter Fulfillment Learning Pod.

It’s also critical to select a 3PL partner that has experience and existing integrations with your current e-commerce shopping cart platform. If integration with your ERP system is required, it’s a good practice to validate that they have preexisting integrations or can efficiently and effectively manage that process in a timely fashion. Although many 3PLs work with most major shopping carts, many have limited expertise and integrations with some common ERP systems. If system integrations work well, that will help your fulfillment process run smoothly and efficiently. If not, it can be a major challenge and negatively impact support costs and the customer experience.

During this process, it’s important to rate and rank each 3PL based on the above key considerations and any other unique support requirements in order to narrow the process to a few finalists for further evaluation.

After you select a 3PL, it’s time to negotiate and execute the master services agreement (MSA) and statement of work (SOW). For the most part, standard 3PL MSAs are one-sided agreements, developed specifically to protect the 3PL’s best interests. Standard 3PL SOWs are typically much more bilateral and document the agreed upon client fulfillment support requirements and specific operational workflows to achieve the desired results. In practice, many merchants do a decent job of incorporating their required terms and conditions into the MSAs; however, overall, most agreements do an inadequate job of protecting both parties’ best interests and clearly defining support requirements. It is vital to structure your 3PL contracts to clearly define the support requirements, memorialize the agreed upon terms and conditions, document SLAs, and provide the foundation for future optimization opportunities.

Remember, an effective 3PL fulfillment partnership will deliver significant value for your company and your customers by increasing customer engagement, enhancing brand value, and driving shareholder equity.

Steve Givens is Managing Director, 3PL Fulfillment Optimization, Shipware, LLC. Visit www.shipware.com for more information.
28 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

STOP & SEE AT PARCEL FORUM!

WE care about YOUR shipping costs as much as you do. It just makes cents (and dollars) to stop by and get to know the folks at Advanced Carrier Technologies (ACT). We are passionate about helping you reach and surpass your savings goals, using your data to find innovative approaches to reduce shipping costs. Teamwork, commitment, knowledge, experience. Work with ACT and find the savings you need. www.Go-ACT.com

For 30 years, AFMS has helped over 3,000 companies reduce their shipping costs by 15-25%. Specializing in transportation benchmarking, carrier contract negotiations, full RFP and RFQ support for carrier optimization & invoice auditing; All modes of transportation. Our expert team of former carrier pricing executives and strategists from UPS, FedEx, DHL, USPS, Hyundai, US lines, Panalpina, Topocean and the major LTL carriers have over 500 years of combined industry experience. AFMS will provide a FREE full shipping analysis and shipping profile of where you stand in the market today. www.afms.com

Capital Express, LLC & ADL Delivery have been in business for 35 years. Recently, they have become one company now servicing 16 states with over 45 hubs! They have large regional footprints in the Midwest and Southeast United States. Capital Express specializes in pharmaceutical, distribution, critical parts, and e-commerce final-mile while ADL Delivery has one of the largest overnight delivery networks, providing parcel delivery and fleet replacement for the automotive distributor industry. www.adldelivery.com | www.capitalexpress.biz

Founded in 1923, CT Logistics is a global solutions provider helping clients to more effectively source, execute, pay and analyze parcel and non-parcel transportation expense. CT offers a number of unique delivery models and options for large volume shippers to outsource freight audit and payment, or a dynamic software platform that can be utilized to perform this function in-house. Comprehensive global spend visibility is driven by a powerful, customized Business Intelligence platform coupled with a deep suite of advisory services to more effectively negotiate large-scale shipping agreements. www.ctlogistics.com

Designed Conveyor Systems (DCS) has 40 years of experience serving major clients in multiple industries by providing material handling, full-scale warehouse operations, and conveyor design solutions that are custom crafted for their needs. DCS utilizes consulting, engineering design, project management, installation services, and client support to ensure our customers can keep their promises to deliver on time. We would love for you to meet our team at PARCEL Forum to discuss how we can assist in improving warehouse operations through our supply chain solutions. www.DesignedConveyor.com

DMW&H is a premier Automated Material Handling Systems Integrator headquartered in NJ. Our employees have recognized us as one of the best places to work in New Jersey for nine continuous years. As a leading automation company, DMW&H specializes in the design, integration, installation, and support of innovative material handling systems. Our talented team of consultants, engineers, controls and software experts, and project managers will work with you from conception through final commissioning. They’ll design and deliver a material handling solution that will transcend your strategic, operational, and financial goals. www.dmwandh.com

Curious about starting parcel automation or need to fill in the gaps? Join Engineering Innovation in hitting the start button with our new arcade theme at PARCEL Forum 2022. Like our solutions, our booth is aimed at helping you level-up your parcel game — with retro video games involving our LightSort Technology and Chameleon Parcel Processing Solution. Stop by to set the high score and explore the next step in powering up your parcel processing. www.eii-online.com

The dynamic parcel shipping landscape is leading organizations to implement new technologies to overcome shipping challenges. However, implementing multiple point technologies is creating unintended consequences and compounding shipping program challenges. Visit Enveyo in booth #710 to learn how our suite of shipping optimization software centralizes your shipping tech stack, eliminates data-related headaches, and saves your company BIG in parcel spend. Enveyo is the only technology partner at PARCEL Forum with a single platform that offers: parcel analytic & BI, predictive modeling, intelligent TMS, real-time delivery alerts, and carrier auditing. www.enveyo.com

ePost Global is a technology enabled global shipping solutions provider. Our international parcel and shipping solutions allow businesses to streamline global distribution while increasing customer satisfaction. Our worldwide network, technology-backed support model and extensive knowledge of international shipping requirements provide a seamless experience with delivery reliability, accuracy and consistency. With more options, better service, and tailored solutions that help you reach more customers with confidence. Visit BOOTH 301 to see how ePost Global’s cost effective solutions give you the TOTAL PACKAGE for international e-commerce shipping. epostglobalshipping.com

JANUARY-FEBRUARY 2022  PARCELindustry.com 29 SPONSORED CONTENT
BOOTH # 106 BOOTH # 801 BOOTH # 210 BOOTH # 904 BOOTH # 716 BOOTH # 717 BOOTH # 804 BOOTH # 710 BOOTH # 301

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Come see EuroSort’s Single Split Tray and Dual Split Tray Sorters in person and chat with the team about some of our success stories working with the largest USPS consolidators in the industry. Our suite of sortation equipment excels in sorting irregular, light, polybagged, and small parcel items at speeds of up to 34,000 items/hour, perfect for today’s e-commerce spike. No longer do you need to fear the polybag! www.EuroSort.com

Flat World Global Solutions utilizes a concept of “Parcel Optimization” which allows shippers to find the best option for each parcel shipment, quickly and easily through a single shipping platform called Parcel Pipeline. This is done without contracts and volume commitments. Please stop by booth 104 and try our Shipping Options game …everyone is a winner with options! We hope to visit with you…have a great PARCEL Forum conference! www.flatworldgs.com

GlobalPost offers a range of domestic and international shipping solutions that simplifies parcel shipping while saving you money. By combining our world-class customer service, easy-to-use technology and seamless integrations with the world’s top shipping platforms, we help e-commerce and warehouse sellers succeed domestically and around the world. Whether you ship one or hundreds of packages a day, GlobalPost has a solution to simplify your shipping operations while you take advantage of our competitive, low rates. www.goglobalpost.com

GLS understands your needs when it comes to shipping time-critical, important documents and packages. That’s why thousands of organizations rely on us to not only deliver their packages on time but to also handle them with care. With a focus on providing exceptional service levels, we offer a strong alternative to other regional and national carriers alongside reduced transit times throughout the Western United States at comparable rates. GLS also offers LTL, FTL, Dedicated, and Brokerage solutions. www.gls-us.com

Having the right data matters. Access to normalized and cleansed data across all modes enables shippers to analyze carriers, services, routes, package dimensions, and more, all in real-time. Intelligent Audit (IA) provides shippers with actionable, datadriven insights that take the guesswork out of decision-making through our digitized shipment invoice auditing and business intelligence solution. IA is your secret weapon against complexity, chaos, and costly mistakes — helping you to Ship Smarter! Visit booth #500 for an in-depth demo of what it’s like to have all the right data in front of you. www.intelligentaudit.com

LaserShip and OnTrac have launched a new transcontinental delivery service connecting the two companies’ complementary East and West Coast operating footprints to help shippers reach their customers across the country with faster, more reliable home delivery at a lower cost. With our expansion into Texas in 2023, shippers can now reach 80% of the U.S. population in 31 states. As the duopoly prioritizes profits over partnerships, we’re offering to lock in 2022 rates for 1 year and no GRI until 2024. Stop by our booth or learn more at lasership.com

NPI’s leading parcel sortation design is the Gen-3 Xstream, a dual shoe-sorter with modular, compact, and ergonomic-design for sorting plastic polybags, boxes, irregularly shaped packages, and flats, sorting up to 24,000 parcels and flats per hour. Using a patented semi-automated induct system with optional in-motion weighing, dimensioning, and labeling, configurable destination bins such as carts, sacks, and gaylords, and the most advanced, user-friendly software available, the Xstream can also be integrated into existing conveyor system(s). NPI is the clear choice for your sortation needs. NPIsorters.com

of our customers, Optima continues to grow as the first choice in Final Mile Delivery for e-commerce,

medical and more! Our customized solutions can get you to your customers faster, with more consistent

than the competition. To learn more please visit our website below or give us a call.

www.shipoptima.com

Optima Overnight’s expedited ground delivery network offers unmatched service throughout New England. With over 40 years experience
30 PARCELindustry.com  JANUARY-FEBRUARY 2022
meeting the delivery needs
retail, meal kits,
service and more cost-effectively
We deliver, on-time, every time!
BOOTH # 719 BOOTH # 104 BOOTH # 305 BOOTH # 316 BOOTH # 500 BOOTH # 604 BOOTH # 813 BOOTH # 208

FORUM!

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OSM Worldwide is a global logistics management services company providing domestic and international parcel delivery, with 98% of packages delivered in 1 to 5 days. OSM utilizes a proprietary software system providing detailed shipment tracking 24/7. The OSM Premium Network®, comprised of special pickup, processing facilities, and routing, boosts USPS delivery times and reliability while lowering shipping rates. OSM ranks on the 2022 Inc. 5000 list of “Fastest Growing Private Companies,” its twelfth consecutive year on the list. Stop by booth #213 to learn more about OSM shipping services. osmworldwide.com

For 25 years, Pace has been your go-to final-mile provider for the Southeast. Our 18 facilities effectively serve customers in endeavors including e-commerce, retail, automotive, healthcare, business and industrial supply, and hospitality. Our services for these customers feature final mile, pool distribution, scheduled courier routes, and linehaul. Pace’s transportation solutions range from small vehicles, cargo vans, straight trucks, to tractor trailers. Pace is excited to fulfill our mission with you of Solving Logistics Together! www.pace-usa.com

Ready for something different? Tired of paying consultants year after year? Reveel will showcase the Reveel Shipping Intelligence App, a business intelligence and decision support app specifically designed for parcel shippers. The Reveel app enables shippers to optimize shipping operations and level the playing field with the carriers during agreement negotiations. Industry benchmarks, carrier agreement comparison, pricing impact analysis, and rate modeling and simulation tools let you do it yourself if you want to, or let our experts guide you through it step by step… your choice. www.reveelgroup.com

Are you ready to elevate your shipping processes to the next level? Discover ShipERP, a multi-carrier parcel management solution, designed to reduce labor, save costs, and achieve supply chain efficiency. Meet with our team to get a true understanding of what makes our solution so uniquely impactful and why we’re trusted by Movado, Boeing, Porsche, and many more. We invite you to grab some freebies and explore new solutions for your enterprise. https://learn.shiperp.com/ shiperp-shipping-software-demo

For competitively priced same-day and next-day delivery services TForce Logistics delivers over 100 million shipments a year. Visit our VP of Sales Dean Mills and his team to solve your final-mile challenges. Experienced in B2B, financial, big and bulky as well as e-commerce shipping, we’ve got coverage across all major metropolitan communities reaching 90% of U.S. and 95% of Canada’s population. In the 50 United States of America, we cover 16,000 ZIP Codes (yes Hawaii and Alaska, we’ve got you covered). Every mile counts, but the final mile matters most. www.tforcelogistics.com

The increasingly complex nature of small parcel shipments makes it difficult to get a timely, accurate picture of true cost and service fulfillment. High volumes, multiple surcharges, contracted delivery guarantees, limited access to information — all add up to a complicated invoicing process prone to inaccuracies and unnecessary costs. U.S. Bank Freight Payment can help you address these challenges with robust solutions providing: Parcel Spend Management, Parcel Analytics, Contract Optimization, and Parcel Intelligence. Stop by Booth #201 so we can help you navigate what’s ahead — and find efficiencies at every mile. usbank.com/transportation-solutions/small-parcel

United Delivery Service, a regional parcel carrier with 50 years’ experience, is the leader in providing final-mile delivery solutions to many different industries in the Midwest. UDS offers same-day, next-day, and routed distribution services providing incredible cost savings, improved transit times, and a better customer delivery experience. On top of providing real-time signature capture, we also can provide visual proof of delivery and SMS text notifications upon arrival as well as tremendous value adds. www.uniteddeliveryservice.com

WCA Courier Network is the world’s only network of independent courier companies and provides a single platform to grow members’ domestic courier network, expand international reach, and generate new business opportunities with qualified partners from around the globe. By joining the WCA Courier Network you can benefit from exclusive Financial Protection allowing for member-to-member payment guarantee up to $100,000 and with access to PartnerPay you can avoid paying wire fees. To learn about these great benefits and many more, visit our booth #917 and become a member. www.wcacouriernetwork.com

JANUARY-FEBRUARY 2022  PARCELindustry.com 31
CONTENT
BOOTH # 213 BOOTH # 223 BOOTH # 526 BOOTH # 626 BOOTH # 222 BOOTH # 201 BOOTH # 216 BOOTH # 917

ON-TIME PAYMENTS BUILD BETTER CARRIER RELATIONSHIPS

The tables have turned on shippers. Throughout the world, shippers are up against demand, sky rocketing rates, capacity, and unpredictability.

Some of this is augmented by a new dynamic: the market is favoring the carrier.

Carriers have more choices, and they are willing to make changes at a moment’s notice. Retaining carriers, an issue that has always mattered, is now tenuous. So, what are shippers going to do to keep carriers happy?

One area of opportunity has shippers shoring up operational practices to achieve just that: on-time payments. Paying car riers on time is the single best way to earn loyalty. It is made possible by doing something shippers should already do: using tech-based tools to manage invoicing and payment processes, and embracing new technology to unlock automation.

Automated Payments Are Now a Carrier Retention Strategy Shippers have been plagued by manual processes, inefficien

cies, and a huge margin of error in invoicing and payment. It’s the bane of many companies’ existences, and a reality that’s simply been ignored or placed at a lower priority. But now, as the need to cultivate good carrier relationships reaches a critical mass, course correction is imperative.

To start, a solid freight audit and payment system leverages technology to gain visibility into the right data, tracing money to the source and identifying problems that would otherwise lead to gaps or delays. Broken systems contribute to carrier churn, and knowing what’s wrong is the first step to fixing it.

Once there is visibility, companies are poised for automa tion. Automating carrier payments has four positive outcomes:

1. Decreased pressure on internal teams

2. Fast payment to carriers

3. Better payment reconciliation and fraud protection

4. Better relationships with carriers

32 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

off balance at the slightest disruption, and disruption is all too common. Sometimes a practical approach to this works best. Don’t hold up a $10K invoice for $1.00; look for ways to establish reasonableness in the audit/approval process to reduce exceptions. It may be practical to reduce the number of exceptions AP teams are managing. Get clarity into the process and exercise control over operations. Then, automate what you can, knowing that purposeful exceptions can be reviewed and approved while maintaining a sustainable flow of transactions.

Automated carrier payment requires clean, reliable data. The best way to achieve this is utilizing electronic billing: EDI and EDI alternatives like flat files, XML, and Excel formats. These create better data consistency, quality, and faster cycle times for payment, and EDI alternatives permit flexibility for carriers not capable of formal EDI. Once set up, automation does all of the heavy lifting, making it possible to process and send payments on any scale.

Fast Payment to Carriers

Reducing errors and exceptions improves payment cycle time and increases the likelihood of meeting payment terms with your carriers. Freight audit and payment systems meet audit and business rule requirements that promote systemic cost

SEPTEMBER-OCTOBER 2022  PARCELindustry.com 33

allocations and integration into AP platforms. This automation and integration promote less manual intervention, improve data quality, and generally solve most of the “slow payment” problems.

When the financial team has clarity and can rely on the quality and accuracy of costs posting to the AP platform, they can pay out or automate payments with confidence.

Payment acceleration programs can be a win-win for shipper and carrier, guaranteeing on-time or even early payment while also giving the shipper options for supply chain financing. On-time or early payments can also help the shipper reach “shipper of choice” status in the eyes of the carrier.

Better Payment Reconciliation and Fraud Protection

The security of faster payments is a point of concern. Technology is essential for maintaining the right checks and balances while getting carrier payments out faster. Speed can’t compromise quality.

Third-party providers can automate many of the processes that perform the checks and balances necessary to ensure invoices are valid, thus paving the way for quick payment reconciliation, verification, and posting.

Better Relationship with Carriers

Ultimately, managing carrier relationships is supported by having relevant information in the form of KPIs and scorecards. Understanding the current statement of account, along with measurements for data quality, payment cycle time, and billing accuracy are all important data points that can create healthy conversation relative to payment automation and on-time payment. Adopting or refining technology to gain visibility and streamline operations and capturing good KPIs along the way will enforce a partnership approach to achieving continuous process improvement.

Bonus: Growing in a tech-first direction inspires trust that a shipper intends to be a major player for the long-haul. Honest feedback, using a carrier scorecard approach, is helpful for identifying areas for improvement and creates alignment between a shipper and carrier and a third-party provider.

Adopting or refining technology to gain visibility and streamline operations and capturing good KPIs along the way will enforce a partnership approach to achieving continuous process improvement.
34 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

Benefits of Better Carrier Relationships

Aside from the fact that shippers need carriers to function, there are plenty of benefits to strategically investing in carrier relationships. These include:

Longevity, loyalty, and retention — Churn is expensive. Carriers have a higher degree of loyalty to a shipper that won’t jump ship at the next best offer. The longer they stay around, the more mutual benefits all around.

Competitive advantage — The working relationships that shippers maintain with carriers provide a competitive advantage. Shippers can offer more reliability to the end customer and build predictability into service offerings.

Better service — Regardless of scale, people still do business with people. And if those people (on both sides) can be trusted, that positive experience will translate into improved service.

Better negotiating power — When shippers have a bench of high-performing carriers, they come from a place of strength in negotiation. They have more to bargain with and may represent more value in the market.

Becoming a Shipper of Choice

The ability to offer faster payment terms makes an organization a shipper of choice to a whole network of carriers. This network has inherent value for the business today and for future growth.

In a world of stiff competition for carrier loyalty, on-time payment is a differentiator that can make or break an organization. While there are complexities to implementing new technology or processes that enable this, it’s a worthwhile investment that will pay dividends.

Without reliable carriers, shippers face the major risks of days payable outstanding, disrupted working capital objectives, and fi nancial challenges. Much of this is alleviated when carriers show up, hit their targets, and stick around.

The incentive of on-time payments is one shippers must offer. New technologies that make it possible are the key to achieving growth with a reliable network of carriers.

Steve Beda is executive vice president of customer success for Trax Technologies, a global leader in Transportation Spend Management solutions. Trax elevates traditional Freight Audit and Payment with a combination of industry leading cloud-based technology solutions and expert services to help enterprises with the world’s most complex supply chains better manage and control their global transportation costs and drive enterprise-wide efficiency and value. For more information, visit www.traxtech.com.

SEPTEMBER-OCTOBER 2022  PARCELindustry.com 35

DON’T PUT ALL YOUR EGGS IN ONE BASKET: DIVERSIFICATION IS KEY

The e-commerce landscape has changed dramatically over the last two years.

Retailers have had to balance the accelera tion towards e-commerce and meeting consumers’ expectations of fast and free home delivery with rising rates, surcharges, and crippling volume con straints from national carriers that erode profitability and compromise customer satisfaction.

As retailers seek strategies to over come these obstacles, what was already trending has now become crystal clear: Putting all your eggs in the single-carrier basket doesn’t work anymore.

Carrier diversity is a proven solution that can help retailers lower their costs, increase their flexibility and capacity,

and meet consumer demands. Here’s why retailers should act now to diversify their carrier mixes to create a supply chain that sets them up for success.

Shipping Is Getting Even More Expensive

National carriers have generated billions of dollars during the e-commerce shift by prioritizing profits over partnerships. By their own admission, national carriers are focusing on revenue quality and selec tively choosing volume that can maximize yield through GRIs, surcharges, and repricing customer accounts.

The Cowen/AFS Parcel Freight Index, which tracks parcel transportation pricing versus a January 2018 base line, reached a record-breaking high of 27% in the second quarter of 2022,

as fuel surcharges more than doubled from last year. Meanwhile, UPS saw a 5.7% revenue increase in Q2, despite a four percent decrease in average daily volume. The remainder of the year will continue to be expensive for FedEx shippers, based on the company’s recently-announced peak residential delivery surcharges for the holiday sea son, which can range from $1.25 to $6 for FedEx Ground and $2.25 to $7 for FedEx Express. UPS is expected to fol low suit with a similar pricing structure.

Consumers Are Expecting Faster Home Delivery

As more consumers shift to e-com merce, fast and free home delivery has become a competitive differentiator for retailers. Seventy-four percent of

36 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

consumers are choosing one retailer over another based on the availability of next-day delivery. Avid shoppers, or those who make six or more online purchases a month, are increasingly likely to shop with a new retailer that provides faster delivery options. In fact, 85% of avid shoppers indicated they would try a new retailer that offers next-day delivery (see Figure 1).

Slow delivery also causes retailers to lose customers. Seventy-one percent of consumers consider slow delivery to be three or more days, and they will shop elsewhere to get their items delivered faster (see Figure 2).

In addition to delivery speed, free shipping and home delivery continue to have a major impact on consumer shopping decisions. Seventy-five percent of consumers say that free shipping has a major influence on where they choose to shop in 2022, up nearly 20% from 2021. While many retailers invested in buy online, pick up in-store (BOPIS) and other forms of click-and-collect during the pandemic, an overwhelming 87% of consumers still prefer to receive their items at home (see Figure 3). Sixty-four percent of consumers that use BOPIS are driven to do so to avoid paying for shipping.

Single-carrier shipping strategies have proven unable to provide the service that retailers need to satisfy consumer expectations. Retailers need to pursue an alternative that can provide fast and free home delivery while helping them protecting their margins. The days of relying solely on one carrier are long gone. If retailers want their businesses to thrive, the shift to diversification needs to begin right now.

Source: LaserShip survey with Hanover Research

Figure 1

Josh Dinneen is the Chief Commercial Officer at LaserShip/OnTrac, the leader in last-mile, e-commerce parcel delivery. A 20+ year veteran, Josh has spearheaded the company’s transcontinental delivery service launch, which connects the company’s two operating footprints to provide faster, cost-effective, coast-to-coast delivery and creates a proven alternative to the duopoly.

Source: LaserShip survey with Hanover Research

Figure 2

Figure 3

Source: LaserShip survey with Hanover Research

SEPTEMBER-OCTOBER 2022  PARCELindustry.com 37

PARCEL DECISION MANAGEMENT: DON’T LET YOUR DATA TAKE YOU OFF COURSE

In today’s challenging supply chain environment, shippers face the problem of information overload while attempting to make informed business decisions. Data coming from multiple systems at multiple times creates a constant struggle to make sense of it all. This is especially true for parcel shippers, who sometimes receive package-level data that reaches thousands — or even millions — of data points in a month creating an information glut.

The wealth of information produces a great deal of consternation too for the time-strapped logistics professionals who are tasked with deciphering the data, extracting that which matters, and sharing such information in ways that are both meaningful to, and actionable for, company management. Most of the shippers I’ve encountered just don’t have an army of business intelligence experts to properly analyze the volume of data received each month.

This is not to suggest that the data is so voluminous that it’s generic or lacks applicability. The data presents several pieces of useful information, such as understanding the impact of origin-to-destination distance, package

weight, and the ever-growing list of parcel carrier accessorial charges. There are many data elements logistics professionals must consider as they aim to balance meeting customer expectations, which have increased in intensity in the last two years, and managing important carrier relationships.

Which Way Is Up?

Interpreting parcel data is not only difficult and a drain on company resources, but it also comes with considerable risk. Because of the limited amount of available time and the overwhelming amount and frequency of data, the potential to make a costly business decision based on an analysis of data that is neither thorough nor accurate is significant. These otherwise unavoidable errors can cause significant disruption and delay in making business decisions to mitigate cost, maximize efficiency, and enhance customer service.

The challenge of parcel data analysis often creates unactionable reports and false key performance indicators (KPIs), which do not support business needs. I’ve seen instances of companies needing to hire additional analysts to produce

“emergency” reports, without fully understanding the problems these reports were expected to address, and still others that spent a lot of staffhours generating reports that were never used. The result of these: increasing company costs without decreasing the company’s confusion.

Put simply, the parcel industry is a complex logistics model to explain to stakeholders as-is, without using manual and time-delayed internal reporting tools. And it’s not just the volume of data coming in or ineffectual reporting that can present problems. There’s also the need to store and secure the data, which can dramatically increase a company’s costs in hardware or software and the needed IT resources to support these new technologies.

A Compass — or a Map — Might Help

While there may be any number of solutions or stopgap measures a company could deploy to manage information overload, my experience has shown that when companies try to navigate to success alone, they often find themselves off-course, or worse, at an entirely different destination.

38 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

Parcel shippers may want to consider additional solutions support from trusted partners who possess the deep industry expertise to move goals and objectives forward. There is no shame in asking for help. A knowledgeable partner can be critical in helping you uncover areas of opportunity, such as managing through a complex RFP process, selecting regional carrier participation, and developing robust incentive programs that offer long-term value. Building a collaborative project management-focused relationship with a partner, beyond parcel invoice audit and payment, reduces complexity and increases efficiency to achieve goals sooner.

Given that parcel supplier contracts can be quite complex, another consideration might include outsourcing contract management for your small parcel processes. It’s important to consider the effectiveness and customizability of the contract retention process with a goal of allowing the shipper to have real-time access to active rates and terms on-file for each parcel supplier. Not only does

this process offer convenience via a means of retaining rates, but also acts as a security redundancy to complement the shipper’s internal systems.

Best results are realized when a partner is actively involved, not only in specific parcel projects, but alongside the organization on a regular basis to identify additional areas of opportunity. An effective partnership will be one in which shippers are encouraged to question company assumptions, where they fully understand the problems they’re trying to solve through the effective use of data, and where there is organizational alignment on KPIs to incrementally chart their course over time.

You’ve Reached Your Destination

Success — a shipper’s ability to manage through the complexity of today’s supply chain tumult — depends on the company’s ability to manage through a wealth of data quickly and accurately, proactively identify opportunities, and monitor compliance and future trends. Creating actionable KPIs in an iterative

manner to support decision making is critical in servicing customers and managing parcel expense. Having the support of a collaborative partner, who brings the appropriate knowledge and experience of the parcel industry, helps to ensure that you remain on course and reach your destination.

Jeff Pape is General Manager, U.S. Bank Freight Payment.

Hear how companies like Ford and Rockwell Automation managed the risks of higher cost and commitment with capacity and consistency while maintaining positive carrier relationships at PARCEL Forum ’22 on Wednesday, October 12.
SEPTEMBER-OCTOBER 2022  PARCELindustry.com 39

CARRIER MIXOLOGY: DETERMINING THE RIGHT MIXING STRATEGIES FOR YOUR PROGRAM

Since 2020, shippers have diversified their pro grams at a rapid pace. But what are the best strategies to determine which parts of your program should be given to each carrier? The common tool of the revenue attainment or earned discount tier has been in use for decades. However, now that most shippers have mixed carrier scenarios, how can you balance the attain ment to maximize discounts?

Why should you add carriers?

There are several reasons to mix a program, but two reasons are most common.

#1 Capacity/Business Continuity

Surge capacity at peak requires a second carrier

 At other times, if one carrier is unable to pick up, the other can be used as a supplement

#2 Transit Times

To meet the changing expectations of consumers, shippers need to supplement to get a transit time that will match their customer commitments

The first step for most small shippers is building an afford able alternative to their primary carrier with a national reach. Adding UPS SurePost or FedEx Ground Economy could suf fice in this space (depending on who you are primarily using now), but DHL eCommerce and the USPS itself are also alternatives. There are a host of new carriers that have begun to offer services with a national reach. However, the majority of these new carriers utilize the USPS for the last mile. The choice between them comes down to the differences in what they do with your packages before induction to the USPS for delivery. Increasingly, FedEx is pricing itself out of a slower, cheaper service (FedEx SmartPost has morphed into FedEx Ground Economy).

Another consideration for additional capacity may be that you need national coverage. In today’s era, if you are a shipper that ships more than approximately $20 million per year, it is advisable to include both FedEx and UPS in your program, even if you use one of them in a limited way. This affects your pricing and will have implementation costs, but ensuring that both carriers are implemented gives you the ability to switch, if necessary, in future negotiations.

This could include regionals or specialized carriers that have better ground transit than the nationals in a particular region, or a second national that has a different service standard for a particular geography

Capacity

What is the best way to supplement capacity? That is best determined by what capacity is needed. Do you need additional pick-up capacity with the ability to reach the entire country? Do you need the ability to deliver to increased demands in a par ticular region? Do you have specialty demands like cold chain or large packages? Incorporating the right carrier will typically depend on these types of guiding discovery questions.

In a recent Pitney Bowes box poll (“Multicarrier appears to be a privilege”), shippers identified technology integrations as the biggest obstacle in implementing a multicarrier solution. It is worth the investment to implement and thoroughly test both national carriers prior to them being needed. This could also be expanded to include a direct link to the USPS or one of its consolidators.

Transit Time

Amazon is, of course, the standard bearer of online transit. With two-day transit being standard for the contiguous US, overnight shipping available on many items, and even free same-day delivery in some ZIP Codes, Amazon is the indus try’s culture and expectation driver.

40 PARCELindustry.com  SEPTEMBER-OCTOBER 2022 BY MARK TAYLOR

Regionals may help to improve the transit time in a given region by taking advantage of their larger overnight footprints. Although UPS and FedEx are at parity in most of the US ZIPs, there are some geographies where they differ greatly.

When Do I Mix My Program?

The answer to this question has changed in the past two years. Before 2020, most shippers branched to two carriers when they were spending above $20 million per year on their parcel program. The reason is that UPS and FedEx bound their incentives to those with higher spend. At one point, network saturation was needed, and the more volume, the better. These carriers cycle with the economy. When goods are in high demand, margin and profit are the focus… when demand for shipped goods falls, volume and revenue are more desirable.

Consumer demands also play a key role in determining focus. As e-commerce has grown, consumer expectations have changed. Two days is practically a universal expectation of delivery, with overnight and same-day options growing in popularity.

Your shipping costs are too high. We’ll get you back on track.

The Basic Mixed Program

Most shippers start with a single carrier solution with national reach. Namely, UPS or FedEx typically serves to start the parcel program. They are still the all-purpose, go-to carriers that are scalable and meet modern expectations for service time, national reach, and tracking.

Often, the first experiment in a mixed program is adding a postal consolidator, regionals, or the USPS to the mix. Typically, this is going to happen above $10 million in annual parcel spend, but capacity or other constraints could call for consideration sooner. At this level of annual spend, there is enough shipping volume to use a mix of carriers while being able to maintain revenue tiers with national carriers. It is best to use well-established carriers during this stage and spend to ensure your first split carrier scenarios are successful. These would include DHL eCommerce, LaserShip/ OnTrac, or the USPS itself.

Above $20 million of annual spend, many options become available and may make strategic sense. These would include a second national carrier and additional regionals. As a note, any carrier that has been established in the last fi ve years should be piloted before promising them any signifi cant portion of your parcel program. Although a host of new alternatives have arisen, they are so new that they do not have a tremendous amount of customer or performance history.

Our dedicated team of logistics experts with over 30 years of experience, know where to look for incentives and optimization opportunities the carriers don’t want you to see.

Auditing

Reporting and analytics

Freight payment processing

Expert advice

Contract optimization www.Go-ACT.com 248-630-1326 | Connect@Go-ACT.com

Our goal is to reduce your shipping costs, it’s all we do.

Don’t miss Mark’s session, “Advanced Strategies for Parcel Rate Shopping in an Evolving Supply Chain Era” at PARCEL Forum ‘22 on Tuesday, October 11.
SEPTEMBER-OCTOBER 2022  PARCELindustry.com 41
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As a general rule, your pool of carriers and technology should grow to meet the demands of your spend.

Practical Application: “What Should I Do About This?”

Several steps in the management of your operations and contracts will empower you to stay current or ahead of the curve.

#1 Data, data, and more data

To be poised for change going forward, vigilance in the collection and interpretation of your operational and invoicing data is going to be paramount; specifically, develop independence from your carrier by collecting the following:

Invoicing data: collect and store package-level detail for every invoice, for every package by tracking ID. The carriers do not retain accessible invoicing data indefinitely. Typically, it is only available for six months to two years.

Dimensional data: collect data on every box size used for every package, tied to tracking ID. UPS and FedEx do not share dimensions for every package; they only share the dimensions of packages for which they have assessed a dim weight. When changes in dimensional policies occur, if you rely on the carrier, you will not have complete information to assess the costs of new policies or charges.

Transit data: capture data on ship date and time as well as delivery date and time. Transit time from the carriers typically excludes service failures for weather and other causes at the discretion of the carrier.

#2 Negotiate

Do not accept any limiting clauses like Early Termination, Minimum Commitments, or Rebate paybacks in your carrier agreements. The rate of change in the industry will make it crucial to have the ability to renegotiate at any time.

Arm yourself with the data to assess impacts before negotiating.

#3 Develop a community with other shippers

Reach out to other shippers via conferences, social media, and industry events.

#4 Build out your operational and organizational capabilities

Your flexibility to use other carriers begins on your dock. If you are only using one carrier currently, develop a relationship with other carriers, establish an agreement with them, and periodically test shipping.

Keep in mind using a new carrier not only involves change management of your dock operations, but all their supporting processes of accounting, marketing, and other internal groups.

#5 Develop a partnership with subject matter experts

Even the most seasoned transportation and procurement professionals in your organization can use an additional set (or a dozen sets) of eyes. Ask your SMEs about the ROI on their services, and partner with those you can trust.

Mark Taylor is Director of Parcel Consulting at enVista.
42 PARCELindustry.com  SEPTEMBER-OCTOBER 2022

SURVEY: HOW OUR READERS RATE THE CARRIERS

2022 is the third year since the COVID-19 pandemic upended our lives, and it seems like things are finally on the upswing, or so our 2022 survey results would suggest. Scores for every category increased, sometimes significantly, for all three major carriers. From customer service to on-time service performance to claims processing, our readers are much happier with the carriers than they reported being in last year’s survey.

Additionally, for the past few years, carrier diversification has been a hot topic for those in our industry, so it’s no surprise that for those who reported modifying their primary carrier in 2022, diversification was a much more popular reason than it was in 2021’s survey.

As always, we’d like to thank everyone who took the time to complete this survey. We truly appreciate your input!

In our July/August issue, we published a survey that went more in-depth in terms of what our readers are doing with respect to carrier diversification, contract negotiation, and more. To view those results, please visit PARCELindustry. com/AlternativesRising

Did you use FedEx in the last 12 months for domestic parcel shipping?

Carrier Performance

On a scale of 1-5, with 5 being the highest rating.

Customer Service

FedEx | 3.13

UPS | 3.55 USPS | 3.08

On-time Service Performance

FedEx | 2.87

UPS | 3.93 USPS | 2.87

Delivery Performance (driver courtesy, package handling)

FedEx | 3.31

UPS | 3.91 USPS | 3.16

Claims Processing

FedEx | 2.74

UPS | 3.17 USPS | 2.49

Refunds for Late Delivery

FedEx | 2.28

Did you use UPS in the last 12 months for domestic parcel shipping?

Did you use USPS in the last 12 months for domestic parcel shipping?

UPS | 3.05 USPS | 2.26

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

FedEx | 2.83

UPS | 3.33 USPS | 2.94

44 PARCELindustry.com  SEPTEMBER-OCTOBER 2022
22.54% 77.46% No Yes
14.71% 85.29% No Yes
28.87% 73.13% No Yes

On a scale of 1-5, with 5 being the highest rating.Other Insights into Our Industry

In last year’s survey, 83% of our respondents reported reaching out to their carrier(s) to discuss COVIDrelated supply chain concerns, so this year’s 64% is quite a decrease. Perhaps we really have entered the “new normal,” where organizations have adjusted to the increase in online ordering spurred on by the pandemic, and thus no longer feel it is as imperative to discuss related concerns with their carriers.

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

The number of our readers who said the carriers handled their concerns regarding COVID-19 “very well” grew slightly compared to last year, but the number of those who said their concerns were handled “not at all well” grew by about 10 percentage points.

Very well; they addressed all concerns and handled them to the best of their abilities

SEPTEMBER-OCTOBER 2022  PARCELindustry.com 45 Somewhat well

Not at all; we experienced significant disruptions that we feel could have been handled by the carriers to at least some extent

36% NO 64% YES 53% NO 47% YES
29.27% 39.02% 31.71%
46 PARCELindustry.com  SEPTEMBER-OCTOBER 2022 If you have modified your PRIMARY carrier in 2022, what was your main reason for doing so? Needed to achieve better pricing Dissatisfied with service Changed our level of service (i.e., air to ground) Diversified to use more carriers Reduced the number of carriers used Previous carrier was unable to help us effectively during the COVID-19 pandemic 28.57% 14.29% 9.52% 38.10% 7.14% 2.38% What is your biggest complaint about your primary domestic parcel carrier? 0 10 20 30 40 50 60 70 80 90 100 Accessorial Charges | 19.67% Claims Processing | 0% Customer Service Response | 9.84% Driver Behavior | 6.56% Fuel Surcharges | 3.28% Invoices | 0% Negotiating Contracts | 1.64% On-time Performance | 24.59% Pricing | 13.11% Refunds for Non-performance | 1.64% Relationships with Carrier Reps | 4.92% Residential Deliveries | 0% Service Failures | 13.11% Tracking | 0% Fuel Surcharge Reversals | 1.64%