A Christmas Shipping Poem

By Mark Taylor

“Tis a week before Christmas and all through the house,

not a creature was stirring, not even a mouse.

The procrastinators know that there is plenty of time,

to get their gifts shipped and everything will be fine.

If they wait until Wednesday, two days before,

they can ship via USPS Express Mail and their gift will arrive at the door.

And for those who are willing to pay $12.50 more,

The USPS will take packages for Christmas, the day before.

But procrastinators be warned that not all destinations will be served,

and you need to drop off your package before noon or you might be nerved.”

In order to be certain, make sure you call, 1 800-ASK-USPS.

For UPS and FedEx the last day for shipping is Wednesday, December 23. Make sure that you use a service that provides delivery for the next day to the zip code you are shipping to. The last day for delivery is Thursday, December 24.

Many people have asked, what is the best carrier or the best value for shipping their presents. My answer is that it depends. It is variable based on how far away the recipient is, the weight of the item, and whether or not the delivery is to a home or a business (among other factors). If you don’t have a discount with a carrier, are shipping to a residence, and your gift if less than 10 pounds, the USPS is probably your best choice. Make sure that you check out their flat rate boxes. And if you ship online using Click-N-Ship or a PC Postage provider like www.stamps.com or www.endicia.com, you can get a discount on some services like Express mail and free Delivery Confirmation with USPS Priority Mail.

To give you a sense of the difference in price, let’s say that you have a 10 pound gift that you are sending to a residence from New York NY to Beverly Hills CA.

UPS Next Day Air by 10:30 will cost $97.32

UPS Next Day AirSaver by the end of the day will cost $87.78 (source www.ups.com retail rates)

USPS Express Mail $58.40 at the Post Office or $55.48 online.

USPS Priority Mail Large Flat-Rate Box is $13.95 at the Post Office or $13.50 online (source www.usps.com)

Attention UPS Shippers: the rates will be increasing on January 4, 2010. Most of you probably know this by now, but what you may not realize is how the rates will impact your budgets for 2010. My friend and colleague, Doug Kahl, wrote a useful analysis for PARCEL magazine which I would encourage you to read, called, UPS 2010 Rates: An In-depth Look.

In a nutshell, UPS Ground UPS Ground service will increase 4.9%. Doug provides an in-depth initial analysis of the 2010 Ground Rates UPS List Rate Increase that you can download. You will see that the lower weights and zones, less than five pounds, go up a little over 6%.

UPS Air and International Services will increase 6.9% in the base rate and will reduce the Air and International Services fuel surcharge by 2%. Doug also provides an analysis of the express services that you can download.

If you would like to see how UPS will compute the fuel surcharge next year, you can download the PDF, Fuel Surcharge Calculation Changes. You can download Doug’s analysis of fuel surcharges here.

Some of the highest increases occur with the 2010 Surcharges. You can download an excel spreadsheet.

The 2010 UPS Rate and Service Guide for Daily Rates is available here for download. You can also see the Retail Rates here.

The difference between retail and daily rates is significant. Retail is $7.05 for a zone 2 one-pound package compared to $4.84 for Daily Rates. You pay 31% more for retail! Nobody that ships regularly should pay for retail. Retail rates are for what is known in the industry as “gift shippers” or consumers. (see my blog on Consumer Parcel Shippers Pay More for Shipping). These are people that only ship once or twice a year and don’t have an account with a carrier.

Here is how to get up to a 31% Discount on UPS:

Discounts are available for shippers; in fact, eBay shippers can get an account with UPS and qualify for the lower daily rates and save 31%. You can find out more about the eBay discount here. So even if you ship a few packages a month, you could save a lot of money on shipping!

The new rates for 2010 go into effect January 4, 2010. The largest increases come from surcharges and accessorials (a fancy word for add-on charges).

The single largest increase is for address correction charges. The charge for ground packages increases from $8.00 to $10.00, a 25% increase! Air goes from $10.00 to $11.00. You could pay $5 to ship the package and get charged $15 because of an incorrect address! Here are a few suggestions:

1. Before you ship your package, validate your addresses. UPS provides a service, called “Detailed Address Validation” which is available if you are using www.ups.com or UPS CampusShip and shipping to a US address. This feature allows you to validate the street number range and the apartment number or suite number of your address. If it does not match, you will be offered some suggestions to choose from. It is not a 100% guarantee but it is a step in the right direction. This option is on the “create a shipment” page and requires the user to check the checkbox. You can also set a preference on the “shipping preferences” page so that it always performs the address validation. By the way, FedEx offers a similar tool.
2. UPS also offers an online tool for Address Validation for free. This is an XML tool that will require some help from your IT department to help you but can be used on your website for customers when they place their orders.
3. If you are not using the www.ups.com or CampusShip, you can use third-party software for validating addresses. I Googled “address validation” and received 131,000 English pages. I would suggest software with CASS certification, which stands for “Coding Accuracy Support System”. This is a US Post Office certification that the address conforms to USPS standards. In fact, here is the list of CASS certified software vendors.
4. Some shipping software providers also have options for address validation available, so you can also check with your supplier.
5. Finally, check every invoice you get from UPS for address correction charges. Research the address and do one of two things, correct the address if it is wrong in your database or call UPS and fight the charges. Either way, you should prevent this charge from occurring again.

It is hard to believe but true, the US Post Office has announced that effective January 4, 2010 that it will reduce the price of a domestic Priority Mail Flat Rate Envelope from $4.95 to $4.90! Now a nickel is not a lot of money but it is better than an increase. Sure, some prices are going up—an average of 3.3% for Priority Mail; however, let me highlight some areas that you can save on shipping that are unique bargains in this upcoming change.

The USPS has three pricing levels: retail, commercial, and commercial plus. The first thing that everyone should know about the shipping industry is this: never pay retail. Retail pricing is for people that don’t know how to qualify for a discount. My objective of this blog is to educate so that you can save. With the USPS, you can get the first level of discount by simply using your computer to ship a package. You can do this for free at www.usps.com by simply signing up for Click-N-Ship. The savings are significant. Instead of $4.95, you pay only $4.75 for a Flat-Rate Envelope AND you get Delivery Confirmation for FREE, saving you $.70 compared to buying it at the Post Office. That is a savings of 16%. Online prices, on average, are 5 percent less than retail for Express Mail and 5.7 percent less for Priority Mail. Online savings for international shipping is 10 percent less than retail for Global Express Guaranteed, 8 percent less for Express Mail International and 5 percent less for Priority Mail International.

If you ship higher volumes, you can qualify as a commercial shipper by using PC Postage with through any other qualified PC Postage provider such as stamps.com or endicia.com for a monthly fee. Many other third-party providers embed PC Postage in their solutions.

If you are a high volume shipper, shipping over 100,000 pieces a year or 420 a day, the rates are even better and there are a couple of new bargains: a Priority Mail half-pound price, starting at $4.22 for a Zone 2 delivery and a new Priority Mail Flat Rate padded envelope for $4.95, measuring 9.5 x 12.5 inches will be available exclusively for Commercial Plus shippers.

Knowledge is power!

In this video you will see a real life example of a package that I received where the cost of shipping was at least 10 times more! As a customer that was charged $7.95 for shipping something that could have been shipped with via USPS First Class Mail for $.61, I was unhappy. Not only did it cost more, it took twice as long to get to me from California–4 days instead of 2. And, on top of that, it was more costly to the environment. It cost more to ship, cost more packaging, and contained plastic filler.

I don’t work for the Post Office or get a commission. I just hate it when I see waste.

When it comes to getting a discount from UPS or FedEx for shipping parcels, there is a dirty secret that most companies don’t know. I learned this secret almost by accident. 

I founded TAYLOR Systems Engineering Corporation (TSE) from the living room of my home in 1989 after 13 years of working at Pitney Bowes. I was one of the launch managers for their first computerized shipping system and at TSE we became one of the fastest growing companies in the State of Michigan through integrating hundreds of shipping systems with our clients order entry and accounting systems. When we were in the process of implementing a system, we would program the client’s UPS or FedEx rates and discounts so that the client could reconcile their bills. It was then that I noticed a great disparity in the rates that our customers paid. We put systems in for companies as big as GM and in small to medium size distributors/manufacturers. While the carriers would have you believe that rates are based on a scientific formula that is not based on shipping volume, the difference in the discounts between significantly varying volumes amazed me. 

Here is the dirty secret stated perfectly by Chester Karrass,

“You don’t get what you deserve, you get what you negotiate.”

A few weeks ago, a colleague of mine and I met with a New York based company that had negotiated their UPS agreement three months earlier. The controller said, “I guarantee you won’t be able to save a penny on this contract.” We said that we may not but would be happy to look and see if he was getting the rates that he deserved. After a detailed examination and an in-depth analysis of his services, accessorial charges, and volume, we discovered some anomalies. We benchmarked his data and used that information to renegotiate his contract with UPS. The result was that we saved him $243,000 or 15% of his annual spend.

Are you getting the rates that you deserve? How do you know? We know. If you’re not sure, let me know and we will help you to find out.

I just got back from the PARCEL forum in Chicago. I had the opportunity to facilitate the PARCEL Key Executive Forum where a group of peers in the parcel industry met for the sole purpose of helping one another tackle the most challenging issues they face in running and growing their operations. One of the key issues was reducing transportation costs; the collective wisdom of this group of experienced parcel and logistics managers came up with 25 actionable ideas. Here are 8 of the suggestions:

1. Evaluate parcel consolidators, like FedEx SmartPost, which offer a low cost way to ship high volumes of low-weight packages to residential customers. FedEx will pick up, sort, line haul, track and deliver packages by leveraging the delivery network and capabilities of the USPS for the last mile.
2. Ship express packages with a hold for pickup option instead of First Overnight to substantially reduce express costs. The recipient can pick up the package at a nearby location.
3. Charge customers for freight and shipping. Even if the cost is distributed internally it will increase awareness about the cost of shipping and choosing express options.
4. Compare ground delivery guaranteed times to second day and third day air; many times ground will get it there faster for 25% of the cost. Use day definite instead of time definite services.
5. Re-negotiate parcel contracts; hire a third party negotiator that works on a gain share basis.
6. Use the US Postal service for brochures sent to sales people working out of their homes rather than UPS or FedEx. Check out the pricing for Priority Mail and First-Class Packages. It could be significantly less than the discounted rates with the residential surcharges.
7. Create a global routing guide; compare Less-than-Truckload (LTL) to parcel and specify which mode shipments should utilize.
8. Rather than importing shipments into the distribution center, investigate consolidated clearance for shipments coming to the United States. Manifest and label the packages overseas and have them sent directly to the carrier’s hub to reduce the cost of bringing them to the distribution center and re-shipping to customers.

We have formed a group on LinkedIn for PARCEL and I invite you to join and get feedback for your shipping challenges.

http://www.linkedin.com/groups?home=&gid=2076153&trk=anet_ug_hm&goback=%2Eanh_2076153

Many businesses today have decided to focus on their core competencies. According to Jim Collins, in his book, Good to Great: Why Some Companies Make the Leap… and Others Don’t, companies that are good-to-great companies employ the “Hedgehog Concept” which is based on an understanding of the following:

• What are you deeply passionate about?
• What can you be the best in the world at?
• What drives your economic engine?

If each of the above were circles, the Hedgehog Concept would be at the intersection.

If we bring this concept to warehousing product, fulfillment, and shipping, how many companies could claim to be the best in the world at it? Certainly, a few, like amazon.com or Zappos, are world class; however, many companies choose to outsource this function to a third party logistics company (3PL). A 3PL normally performs all the functions of our warehouse shipper but has some unique requirements. Imagine a warehouse on steroids. 3PL’s often ship thousands of packages a day for many different clients. Some have their warehouses divided for a dedicated section for each client with a separate shipping system in each area, like a mini-storage facility. Others have conveyor belts throughout the warehouse brining the packages to a central shipping area. Almost all of them have multiple shipping stations. Here are few of the problems they face:

1. Since 3PL’s are shipping packages to their customer’s customers, they often charge the freight to their customers account numbers. A 3PL could have hundreds of different account numbers and they need to make sure that packages are shipped correctly. Some do this by having business rules that receive data from the 3PL information technology system to insure that the correct account number is charged.
2. Because 3PL’s ship for a wide variety of clients, they receive their shipping files in a wide variety of formats. They may get an excel spreadsheet or a file with addresses to ship to or they may get an entire order file with line items to pick. They need a shipping system that can import orders in many formats. They could be flat files, xml, ODBC, or other formats. Flexibility is critical.
3. I once spoke to the owner of a 3PL that had over 40 free carrier provided systems. I asked him why he was willing to invest in technology when he had free systems. He told me that it was nearly impossible to keep track of all the data for shipping. Imagine running a $100 million corporation and having to ask your vendors for the data to create a monthly financial statement. He had to ask his carriers how much he was spending and try to compile all the data. He wanted consolidated reporting that would provide him with the information he needed to run his business.
4. Everything that a 3PL does is tracked so that they can bill their customers, so every shipment needs a job number. And there is no room for errors, so job numbers have to be validated.
5. Speed is critical; the fewer keystrokes the better. 3PLs want automation so they can process parcels as quickly as possible.

Warehouses that ship small parcels are different than the other types of shippers that I have discussed so far. They ship a much higher volume of packages, from hundreds to thousands of parcels a day. They can be manufacturers, distributors, or third-party logistics companies (3PL). A 3PL is a company that provides outsourced logistics services (more about 3PL’s in a future post).

Small parcels are packages that weigh less than 150 pounds and are typically shipped with UPS, FedEx, DHL, Regional Carriers ( Lone Star Overnight, Eastern Connection, OnTrac,), and the US Post Office. Parcel shippers may also be Less-Than-Truckload (LTL) shippers or full truckload shippers. The way parcels are processed is very different than LTL shipments. Each parcel has a separate tracking number and label. A LTL shipment is usually a pallet with many boxes and shrink-wrapped. The pallet is shipped as a single unit.

Companies that ship small packages send them directly to consumers (business to consumer or B2C) or to businesses (B2B).

Examples of B2C shippers include the following:

• books (Amazon.com)
• apparel and accessories(LandsEnd, Zappos)
• gift baskets and mail order (Harry and David)
• sporting goods (Callaway, TaylorMade)
• electronics (Best Buy)
• medical supplies (Liberty Medical)
• computers (Dell, Apple)
• drugs, vitamins (CVS,GNC)

Examples of B2B include the following:

• industrial supplies (Grainger)
• pharmaceuticals (Merk)
• automotive supplies (Michelin)
• office supplies (Staples)
• fasteners, bolts, rivets (Fastenal)
• electrical components (Westinghouse, Allied)
• industrial valves (Asco, Kingston)
• industrial chemicals (Dow, BASF)

Because of the sheer volume of packages that a typical warehouse sends, these shippers tend to be very sophisticated. Throughput and accuracy are the most important attributes that they look for in processing. Features that warehouse shippers look for include the following:

• Speed
• Multiple user processing
• Integration with Enterprise Resource Planning (ERP) or Warehouse Management Systems (WMS)
• Business rules
• Error checking
• Mode optimization
• Integration with material handling systems, such as conveyors, scales, label printers
• International processing capabilities
• Reports

I will be discussing many of these software features in future posts, so stay tuned.

One new idea can pay for this conference and save your firm thousands in shipping costs. The PARCEL Forum, October 5-7th at the Hyatt Regency O’Hare, Chicago, is the only conference and exposition dedicated to serving parcel shipping and logistics professionals of all sizes.

If you haven’t had a chance to check out the entire Conference Program, Click Here. You can also download our Conference Brochure which includes a registration form if you prefer to register via mail or fax.

Many of you are dealing with shrinking (if any) educational budgets. But, we’re all in this together! That’s why PARCEL has expanded the industry-first; Conference Travel Rebate Program. You make the commitment to attend the conference, and PARCEL will make the commitment to help cover some of your travel costs ($150 airfare or $50 drive-in rebate). On top of that, your conference registration includes admission to all of our Special Event food and beverage functions such as; Opening Day Keynote Luncheon, Opening Night Networking Reception,
Carrier Roundtable Luncheon and Conference Refreshment Breaks over the three day event.

Lastly, in keeping with the theme of adding more value, PARCEL Forum has strategically co-located with DOCUMENT Strategy Forum
and Mailing Systems Technology Conference. Register for PARCEL Forum, and you are given free access to any of the conference sessions taking place at these two events as well as the DOCUMENT Strategy Forum exhibit hall which is located right next door.

Advanced Registration ends on Friday, September 18th. This is your last chance to save up to $200 on your conference registration or receive a Free Exhibit Hall Pass to meet with 60 industry-leading companies.

Oh yeah, I almost forgot one more important thing. PARCEL will be giving away a $5,000 to one lucky attendee on Wednesday, October 7th in the exhibit hall between 11am -12pm. To qualify, you must participate in an on-site program and be present in the exhibit hall at that time.

I look forward to seeing you in Chicago!