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Amazon in the Parcel Delivery Business- Really?

Hot off the presses, Amazon has announced that they will be launching a delivery service for businesses which will compete directly with FedEx and UPS.  If anyone is surprised by this news, they must have been sleeping under a rock for the past several years.  For some time now,  Amazon has been delivering many of its own packages as a prelude to jumping into the parcel delivery business for commercial and residential customers

The new service called Shipping With Amazon, or SWA, will start delivery operations in Los Angeles in the coming weeks providing delivery services in coordination with several merchants who sell their goods through the Amazon marketplace.  After this initial phase, Amazon will roll the program out to other cities which are expected to be added later on in 2018.  The expanded services will involve picking up and delivering packages for businesses that do not do business with Amazon, thereby directly competing with both FedEx and UPS.

And, it should also come as no surprise that SWA intends to undercut UPS and FedEx on price in an effort to compete head on with the current FedEx/UPS duopoly, something shippers have been salivating for over the past 20 years or so.  SWA however did not offer any specifics on pricing in this current announcement.

Amazon has been building this delivery network in bits and pieces for years now, including pilot testing SWA in London, expanding into the ocean freight business as an NVOCC, building a network of their own drivers who have the ability to make “in-home” deliveries, leasing some 40 aircraft and establishing a new cargo hub to ensure successful delivery operations.

For their part, (at least publicly), both FedEx and UPS do not appear to be overly concerned at this point.  Both companies have many battle scars from years of continually building and strengthening global networks and they both fully understand the financial resources required to be invested to be successful in this very competitive business.  However, we suspect down deep UPS and FedEx fully understand that Amazon, (SWA) certainly has the will and we believe the financial resources to actually be a competitive force in the parcel delivery marketplace.

One does have to wonder however, with Amazon’s current growth into cloud computing services, a Hollywood studio, grocery retail and home delivery services and now their desire to build a strong alternative for their employees medical costs with JP Morgan Chase and Berkshire Hathaway, are they spreading themselves too thin to accomplish all of these initiatives?  Only time will tell, however if the past is any indication of the future, when Jeff Bezos and Company put their minds to something they usually are successful and we believe they will be successful with their new SWA business.

USPS’ Upcoming Price Change

Breaking: New USPS January 2018 Price Change Information

According to the USPS, the following is the January 2018 Price Change Information. For further information, please visit https://pe.usps.com/

The January 2018 Price Change goes into effect on January 21, 2018. New postage statements associated with the January 2018 price change are available on Postal Explorer® at pe.usps.com. The Postage Statement information is in the January 2018 Price Change “Documents” link.

Postage Statement Usage

As of January 21, 2018, new postage statements are required for:

  • First-Class Mail®, PS Form 3600 FCM
  • Periodicals, PS Form 3541
  • International Mail, PS Form 3700

New prices are required for all mailings, no exception. Customers are required to transition to the new postage statements beginning January 21, 2018. Customers who cannot make the change to the new postage statements by January 21, 2018, must apply for an exception through their local BMEU office following the instructions for the January 2018 Price Change Postage Statement Exception Process posted on PostalPro at https://postalpro.usps.gov/Releases/Jan2018Release/psexceptioninstructions.

Plant-Verified Drop Shipment Mailings

In conjunction with the upcoming price change occurring on January 21, 2018, plant-verified drop shipment (PVDS) mailings will be verified and accepted as follows:

Current Prices — PVDS mailings verified and paid for before January 21, 2018, using the current prices, will be accepted at destination entry postal facilities through Monday, February 5, 2018, when presented using eInduction® or eVS® processes or with appropriate verification and payment documentation (PS Form 8125 or PS Form 8017).

New Prices — PVDS mailings may be verified and paid for beginning January 7, 2018, using the new prices, provided the shipments, when presented using eInduction or eVS processes, or with appropriate verification and payment documentation (PS Form 8125 or PS Form 8017), are not deposited at destination entry postal facilities before January 21, 2018.

  • For mailings with electronic documentation, mailers must enter a Mail Arrival Date that is on or afterJanuary 21, 2018.
  • For mailings with hard copy postage statements, USPS® acceptance employees must enter a Mail Arrival Date that is on or after January 21, 2018.

Questions concerning the exception process can be directed to the HQMailEntry mailbox.

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UPS sees some delivery delays after surge in online holiday orders

Here we are in the first week of December and we are already hearing that UPS has been experiencing delivery delays due primarily to large volumes of shipments after Black Friday.  Is this because on-line shoppers made their holiday buying decisions earlier than they have in the past, or is it due to more shoppers buying on line than previously expected?

Either way, this has to be a great concern for UPS and we believe for FedEx and USPS as well since the backlog is occurring this early in the holiday shipping season.  Typically when transportation pipelines get clogged this early in the holiday season it does not bode well for what’s coming down the line; and that is the “Last Minute” shoppers who haven’t even decided what their going to buy, let alone where they will make those purchases and when they will finally pull the trigger.  Stay tuned, this could get very interesting, or worse yet, very ugly in the weeks to come.

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USPS Announces Postal Increases Above Typical Inflation Targets

Did the USPS really receive a gift from the Postal Rate Commission allowing it to raise postal rates above typical inflation targets, or will it just be an exercise in futility?  Here’s the main point.  If USPS mail volume continues to decline, (and obviously that has been and will continue to be the trend in the long term), would raising fees for those declining services really help?  In our opinion, absolutely not.

However, USPS has seen explosive growth in package delivery services which is growing by leaps and bounds each and every year.  It would be prudent therefore for USPS to implement financial growth strategies for this portion of USPS revenues because the volumes are not dwindling, but rather continually increasing with no end of this growth in sight.

Wreath firm sues parcel carrier in alleged overbilling

An article in the Bangor Daily News about a wreath firm suing a parcel giant for alleged over billing caught our attention. 

For those companies that do not audit their parcel carrier invoices, here is a story that is not as uncommon as it may seem.  Outsourcing parcel carrier audits will assure that each and every package your company ships will be invoiced at the proper level and charged to the proper party in the business transaction.

Outsourced Parcel Audit firms have the expertise and technology to not only obtain refunds for late delivered products, but to also make sure your company only pays the proper amount it should according to negotiated contract agreements.  The best part, there are no up-front fees and no out of pocket expenses required to have this vital service provided.

Still not outsourcing your parcel carrier invoice audit?  The best time is between yesterday and tomorrow.

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Tony Nuzio featured in Newsday story on Parcel Rate Increases

BUSINESSCOLUMNISTSJAMIE HERZLICH

Newsday

By Jamie Herzlich

Higher costs may cause firms to raise free-shipping thresholds

Businesses advised to prepare for UPS, FedEx and Postal Service rate increases.

Updated December 3, 2017 8:49 AM

Shippers are faced yet again with a trio of price increases going into the new year.
Both UPS and FedEx have announced 4.9 percent average rate increases, and the United States Postal Service announced it will also increase prices, including a 3.9 percent average increase on most shipping services.
Shipping experts say increases may be higher for some shippers depending on what and where they ship, so they should prepare to incorporate the increases into their operating costs and look to negotiate cost savings where possible.
“As shippers continue to face constant carrier increases, they need to ship smarter and be mindful of the different ways they can decrease costs,” says Rich Michals Jr., president of Farmingdale-based Parcel Management Auditing & Consulting.
The average increases the carriers announced may not reflect the true impact, he says.
“They take a blended average,” says Michals, noting that most shippers ship packages between 1 and 15 pounds, which is where some increases could be greater in certain categories.
For example, for 1-pound, next-day packages the average increase from 2017 to 2018 is 7 percent for UPS, and for FedEx 1-pound priority shipping the hike is 7.4 percent, according to a chart provided by Hicksville-based ICC Logistics Services Inc.
Fees for oversized packages have increased 10.6 percent for additional handling from UPS and 9.1 percent for additional handling for FedEx, according to those same charts. UPS will add a second increase to this fee on July 8, says Tony Nuzio, founder of ICC Logistics.
“The key is understanding what you ship and where your products fall within the percentage increases,” he says.
Some other notable changes coming: Starting Jan. 22, FedEx will apply a dimensional weight factor of 139 to all SmartPost packages (an economical service that uses the Postal Service for last-mile delivery), according to Trevor Outman, president of Shipware LLC, a San Diego transportation management firm. Previously, FedEx didn’t apply dimensional weight billing (calculated using a package’s box dimensions rather than actual weight) to this service.
Also changing for UPS: Its dimensional weight divisor on packages measuring less than 1 cubic foot will be decreasing from 166 to 139, resulting in higher shipping costs, Outman says.
“The majority of shippers are unaware of the true financial impact from the announced 2018 general rate increases,” says Outman.
FedEx senior vice president Patrick Fitzgerald said in a statement: “This change will align FedEx SmartPost dimensional weight pricing with FedEx Express and FedEx Ground dimensional weight pricing. Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume.”
UPS in a general statement said: “Our rates reflect many changing business conditions, including costs, but also demand for our services, the competitive landscape and investments in new innovations and technology that will help our customers run their businesses better.”
The USPS didn’t institute any dimensional weight changes, which can give it a competitive edge, say experts.
But Christine Laureano, founder of Hampton Bays-based Ba6 Botanicals, a maker of handmade aromatherapy body care products, says the USPS increases will likely force her to moderately raise some product costs, particularly since some of her suppliers also have increased their shipping costs.
Laureano, who ships via priority mail and offers free shipping on orders of $75 or more, says while she’s grown accustomed to annual shipping increases, “it’s very trying.”
Some sellers may have to raise their free-shipping thresholds, says Nuzio, noting it’s important for companies to have continuous discussions with carriers to negotiate pricing.
Shippers may also consider having a package/box size analysis done to see if they’re using the right-sized boxes and look to reduce padding material where possible, says Michals.
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