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FedEx Suspends Money-Back Guarantee

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FedEx Suspends Money-Back Guarantee on US-Based Air Services for The Peak Holiday Shipping Season

As reported by FreightWaves, FedEx announced on their website that they will suspend the guarantee on nine separate air services beginning November 1, 2021, just seven months after restoring them.  The guarantees will then be restored on Jan. 16, 2022 according to FedEx. This date coincides with the expected “end of the holiday returns cycle”, which in years past brought the peak season to a close. However, the ongoing surge in delivery demand in the wake of the COVID-19 pandemic has upended traditional parcel-shipping cycles, forcing carriers to operate in what has become known as a “perpetual peak.”

FedEx Ground, the company’s ground delivery unit that will handle much of the domestic peak-season traffic, has struggled with service reliability for some time now due to the persistently increased demand and a severe labor shortage. However, there has been little discussion about the impact of increased traffic and labor shortages on the company’s air services.

FedEx reinstated the money-back guarantees on April 6, one day after rival UPS restored its guarantees on domestic next-day air services and a slew of international air offerings. UPS at that time also gave itself more latitude in its “next-afternoon” delivery schedule by extending the delivery deadline to 11:59 PM for making those deliveries and still keeping its guarantee. In the Pre-pandemic era, those deliveries were typically made around 3 p.m.

It is possible that FedEx and UPS are hedging as much as possible against demand spikes that could disrupt holiday delivery schedules. FedEx has set Dec. 15 as the cutoff date for shippers to tender parcels to its ground delivery network, which will process the lion’s share of holiday deliveries, and expect them to reach residences by Christmas Eve. For the second consecutive year, UPS will not publish a universal cutoff date for accepting ground-parcel shipments. Instead, UPS users will enter specific shipment information into a website calculator that will determine the specific cutoff date for that shipment.

Both carriers provided specific cutoff times for their expedited and air express products. The times vary depending on the service product selected. For example, parcels to be delivered by UPS in one day must be tendered no later than Dec. 23. For two-day deliveries, the deadline is Dec. 22. For three-day deliveries, the deadline is Dec. 21. Those have been UPS’ traditional cutoffs for those products, according to a company spokesman.

Unlike its time-definite products, UPS’ U.S. ground parcel service has no fixed delivery dates, though the company generally gives a range of one to five days for delivery depending on the origin and destination points. This geographic variability may make it hard for UPS to publish universal cutoff dates for peak-season ground traffic.

For those shippers expecting FedEx and UPS to reinstate their service guarantees for Ground shipments, don’t hold your breath!

 

Cost of Diesel Fuel Increases 7.1¢

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Adding to shipper’s woes regarding increased shipping costs, according to the Energy Information Administration, the National Average price for diesel fuel has soared by 7.1 cents a gallon to reach $3.477 a gallon.  That’s the highest price the nation has seen for diesel since the week of Dec. 8, 2014, when it was $3.535 a gallon. There are some significant highlights from this recent report as indicated below.

  • The cost of diesel is now $1.09 a gallon more expensive than a year ago.
  • Trucking’s main fuel increased in price for the fifth time in the last six weeks.
  • The price went up in all 10 regions in which data is tracked, led by a burst of 10.4 cents a gallon in the Midwest.
  • The one-week spurt is the largest since a matching 7.1-cent increase from the first week of March, 2021 when it climbed from $3.072 to $3.143 a gallon.
  • Surprisingly, the smallest increase was seen in California, where the price went up just 3 cents a gallon.  But to no one’s surprise, California’s $4.369 average diesel fuel price is the highest in the land.
  • Gasoline increased too but not nearly as severely; a 1.5-cent increase lifted its national average to $3.19.

As we all know, now that we are enter the winter season, we can expect these fuel prices to continue to increase as refiners pump up production of heating fuels.  The hit on shipper’s freight budgets will continue to be challenging.  Shippers will continue to be challenged to find ways to reduce their shipping expenses which will be a real challenge for sure.

Need help navigating higher shipping rates?  Reach out to us today.

More Supply Chain Disruptions in China

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Just when you thought things couldn’t get worse with Supply Chain Disruptions, now comes word that there are continuing power outages throughout China impacting factory production.  Many factories across China have begun closing early due to government mandated power outages which currently have no end date in sight. It is anticipated that the limited factory hours will continually slow down production across impacted provinces further straining already strained supply chains just as we enter the Peak Shipping Season.

Since the beginning of the nationwide crackdown in mid-September, it has affected mostly industries with high energy consumption, ranging from petrochemicals and textile printing to aluminum production.  As China prepares for Golden Week, a weeklong national holiday, the risk of extended shutdowns and further delivery delays of key industrial goods is heightened.

Need help navigating these disruptions? Reach out to us today we’re standing by.

USPS’ Upcoming Price Change

USPS: Two Yearly Increases Better Than One!

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Increased shipping costs in today’s Covid business environment is not new to shippers or to John Q. Public for that matter.  Add to that, rising inflation that we are beginning to experience and you can see an opening of the door to ever higher postage rates.  So, the U.S. Postal Service has announced a new rate hike schedule terming it “New Market Dominant Price Adjustment Schedule” and their intention is to raise postage rates twice a year going forward, but thank Goodness, not this coming January giving mailers a breather after two rate hikes in 2021.

The Postal Service states in its September 15th announcement, “to help customers better prepare for a new Market Dominant price adjustment schedule, the Postal Service will not raise prices on Market Dominant products, including Forever stamps, in January 2022.”

Instead, the next Market Dominant price adjustment is scheduled to be implemented in July 2022. Beginning January 2023, Market Dominant price adjustments will occur twice a year, (e.g. January 2023, July 2023, January 2024, July 2024, etc.). Market Dominant products include First-Class Mail (FCM), USPS Marketing Mail, Periodicals, Package Services and Special Services.

The July 2022 rate authority will include ten months of Consumer Price Index, (CPI) plus retirement, density, and non-compensatory class authorities as determined by the Postal Regulatory Commission (PRC). The January rate authority will include six months of CPI, plus any unused rate authority.  Subsequent July rate authority will include six months of CPI plus the retirement, density, and non-compensatory class authorities and any remaining unused rate authority according to USPS.

The Postal Service has submitted an official statement reflecting the above schedule with the PRC. The statement gives estimated filing and implementation dates for future adjustments of each mail class over the next three years.  To put mailers at ease, the Postal Service states that “it has some of the lowest letter mail postage rates in the industrialized world and also continues to offer a great value in shipping.”  But is that any consolation?  We think not!

Get a hold of rising shipping costs by calling us today.

USPS’ Upcoming Price Change

PRC Approves Temp Rate Adjustments for 2021

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The Postal Regulatory Commission (PRC) approved a temporary price adjustment for key package products for the 2021 peak holiday season. This temporary rate adjustment is similar to one in 2020 that anticipated heightened peak-season package and shipping demand, which typically results in extra handling costs.

The approved peak-season pricing will affect prices on commercial and retail domestic competitive parcels – Priority Mail Express (PME), Priority Mail (PM), First-Class Package Service (FCPS), Parcel Select, USPS Retail Ground, and Parcel Return Service. International products would be unaffected. The temporary rates would go into effect at 12:00 a.m., Central Time, on Oct. 3, 2021, and remain in place through Saturday, December 25, 2021.

This seasonal adjustment will bring prices for the Postal Service’s commercial and retail customers in line with competitive practices. No structural changes are planned as part of this limited pricing initiative.

“Delivering for America,” the Postal Service’s 10-year plan for achieving financial sustainability and service excellence, calls for appropriate pricing initiatives. The Postal Service has some of the lowest mail postage rates in the industrialized world and continues to offer great values in shipping. These temporary rates will keep the Postal Service competitive while providing the agency with the revenue to cover extra costs in anticipation of peak-season volume surges similar to levels experienced in 2020. The forecasted additional revenue from the time-limited increase will depend on the volume of packages shipped between Oct. 3 and Dec. 25, 2021 – the period the Postal Service historically considers its holiday peak season.

The approved price changes include:

Priority Mail, Priority Mail Express, Parcel Select Ground and USPS Retail Ground:
$0.75 increase for Priority Mail and Priority Mail Express, Flat Rate Boxes and Envelopes.
$0.25 increase for Zones 1-4, 0-10 lbs.
$0.75 increase for Zones 5-9, 0-10 lbs.
$1.50 increase for Zones 1-4, 11-20 lbs.
$3.00 increase for Zones 5-9, 11-20lbs.
$2.50 increase for Zones 1-4, 21-70 lbs.
$5.00 increase for Zones 5-9, 21-70 lbs.
ProductCurrent
Planned Increase
Parcel Select Destination
Delivery Unit (DDU)Starts at $3.30No Change
Parcel Select Lightweight (DDU)Starts at $2.15No Change
FCPS CommericalStarts at $3.01.30 cents
FCPS RetailStarts at $4.00.30 cents
Parcel Select Lightweight
(DSCF and DNDC)Starts at $2.55$1.00
Parcel Select DSCFStarts at $4.84$1.00
Parcel Select DNDCStarts at $6.85$1.00
Parcel Return ServiceStarts at $3.21$1.00

A full list of commercial and retail pricing can be found on the Postal Service’s Postal Explorer website https://pe.usps.com/text/dmm300/Notice123.htm

The final order approving the temporary price adjustment can be found here:  https://www.prc.gov/docs/119/119663/Order_5973.pdf. The price change tables are also available on the Postal Service’s Postal Explorer website at pe.usps.com/PriceChange/Index.

The Postal Service’s “Delivering for America” 10-year plan aims to reverse a projected $160 billion in losses over the next 10 years. The Plan’s growth and efficiency initiatives will spur cash flow and savings to make $40 billion in capital investments over the next 10 years – including approximately $20 billion towards the Postal Service’s mail and package processing network, facility upgrades and procurement of new processing equipment.

Need guidance on how to navigate 2021 shipping?  Reach out to us today to learn more.

Shipping Delays Likely to Extend into 2022

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As every importer knows Peak Season Shipping volumes usually dissipate once the holiday shipping season has “officially” ended at the end of December each year.  But this year, and next for that matter, will definitely be a different experience from the past.  As reported by Wall Street Journal, many US Port executives have been reporting that they anticipate congestion delays to continue well into 2022.

These ports are already congested and there are many additional ships just waiting to berth at West Coast Ports of Long Beach and Los Angeles.  Mario Cordero, Executive Director of the Port of Long Beach states that “I don’t see substantial mitigation with regard to congestion that the major container ports are experiencing.  Many people believe it’s going to continue through the summer of 2022.”  Adding to that belief is Griff Lynch, Executive Director of the Georgia Ports Authority who stated “We think at least midway through 2022 or the entire 2022 could be very strong.”

The major US Ports have forecasted container totals to exceed 2.37 million in August alone according to a Global Port Tracker report.  The National Retail Federation has estimated that 25.9 Million containers for the year 2021, breaking the record of 22 Million container load total from 2020.

As most importers have come to realize, these port congestion delays are only the beginning of the problem.  Once the ships are unloaded, the goods need to be moved inland to distribution points and ultimately to the final consumer.  Capacity issues within the US trucking and parcel industry have not abated and there is no magic bullet to relieve those capacity issues.  Shortages of items we usually have no problem obtaining will obviously continue and add to price increases based solely on the laws of supply and demand.

Obviously freight costs will continue their upward trend with some importers seeing ocean freight rates increase over 500%.  So, in addition to dealing with delays in getting products into a manufacturer’s or retailer’s inventory these manufacturers and retailers will have to deal with budgetary issues for at least another year.

What is your company doing now to control the movement of its goods to support its manufacturing requirements or retail customer needs while at the same time maintaining a budget that ensures your company will remain a viable business well into 2022?  Let’s have a conversation.