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Optimize Your Business Health: Why Now is the Perfect Time for a Small Parcel Transportation Checkup

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Time for a Checkup!

Everyone knows how important it is to pay close attention to their personal health. Health guidelines will tell us that we need to have a physical once a year, see a dentist every six months, or to start having specific tests done once you reach a certain age.  Failure to abide by some of these guidelines or ignoring environmental issues could have painful, even dire results.

It is even more important to get engaged with your doctors if you notice any changes in your body, like new aches and pains, less energy, or if just don’t feel right. We are fortunate that our bodies can provide us with signs that it is time to check things out!

Where are we going with this?

At this point, you might be wondering why a Logistics company is writing an article about personal health?? Well the reason for this is that we feel that you can draw a parallel between how you approach your personal health and the way that you address the health of your current Small Parcel Transportation program!

However, the difference is that there are no specific guidelines that tell you when it is time for a Small Parcel program checkup.  Also, there may not be any obvious signs that you have issues with the health of your Small Parcel agreement or shipping program. Unfortunately, the uncertainty of how and when to examine your existing Transportation program can lead to undetected internal bleeding……. OF YOUR PROFITS!

Is it time for a Physical?

One of the first things that you need to consider when trying to determine if it’s the right time to assess the health of your Transportation program, is current market conditions. You need to “Check the Pulse” of the Small Parcel market, to determine if it’s safe to proceed. You don’t want to open negotiations in a market where capacity is tight, or when carriers are trying to boost margins. This could actually lead to worsening of health of your transportation program!

If you are wondering if current market conditions are appropriate to consider moving forward with an exploratory surgery of your Small Parcel agreement, the answer is an overwhelming YES! Recent developments in the Small Parcel arena have suggested that now is the perfect time to make a move.

Over the past few weeks, there have been some interesting developments with the major Small Parcel carriers that help to confirm that these carriers are, and will continue to battle for packages. First, there was the news that UPS had been awarded a significant air cargo contract by the United Stated Postal Service (USPS). This new agreement will greatly expand the existing relationship between the two organizations. The important thing to realize is that this business had been previously been handled by FedEx.

So, we feel that this will likely contribute to greater intensity in the battle for packages between UPS and FedEx. The loss in revenues that this will cause, along with the additional Air capacity this will create, will likely inspire FedEx to offer more competitive rates for Express packages.  This will help to intensify the battle for Air packages that typically provide higher margins for Parcel Carriers.

From the UPS perspective, they are still pushing hard to win back volumes lost last year during the Teamster negotiations. We have recently heard from customers that they are seeing more aggressive UPS discounting and pricing, in an effort to win back their volumes.

Also, in an interview on CNBC on March 26th, UPS CEO Carol Tome’ outlined her “1+2” plan to improve UPS Financials. She described that year 1 initiatives will revolve around efforts to grow “Volume, Revenue and Operating –Dollars”, and that years 2 and 3 they will concentrate on “Volume, Revenue, and Operating –Margin”. So, in our eyes, this can only be beneficial for shippers as when carriers stress their desire for volume and revenue growth, it typically suggests a willingness to increase discounts.

So, to sum things up- It’s time to book your appointment with your Doctor!

How to choose a doctor?

So now that you know that is time for an assessment of your Shipping program, what do you do?  You could just call in your carrier representative and tell them that you are looking for better rates, because you know that they are looking for volume. You can threaten to move your business “to the other guys”. However, we can tell you that this will most likely result in your carrier providing you with a lot of detail and presentations related to how their service provides tremendous value to your company. This will probably lead to a long, drawn out process, that will end with little or no movement on rates. Remember, the longer the process goes on, the longer you could be bleeding profits!

Basically, trying to negotiate your agreement without the help of the experts, is like trying to do your own personal health physical. Would you really consider checking all of your own vitals, and assessing your health based on information that you find on Google???

So, if you are really concerned about the health of your Logistics program you really need to engage with a company that has an in depth understanding of Carrier agreements and pricing. It is crucial to take a deep dive into the contents of your carrier agreements, including rates, discounts, and terms and conditions. You will need to understand how your agreement stacks up compared to other companies with similar shipping characteristics in order to determine if you have unhealthy agreements.

The best part of this is that the companies that provide these services (including ICC Logistics), do not charge a co-pay for a Transportation Program check-up!

Time for Surgery

Once the health of your Transportation and Logistics program has been properly assessed by a professional, they may find that you are in good shape and that there is no need for further action. Or they may find that you have some issues, and need to take action to avoid continued damage to the overall health of your business.

The bottom line is that there will need to be a solid strategy built to help cure the issues that are having a detrimental affect on your profits. This is the same thing that Doctors do when they identify a major health issue. They will prepare a plan of attack that will help to ensure the best outcome.

Please reach out to us today so we can explain how our surgical approach to negotiating Carrier contracts can help to ensure the long term health of your profits and business. We can assure you that you will be able to get an appointment with us a lot faster than you can get one with your Doctor!

Beyond the Price Tag

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Cultivating a Value-Centric Parcel Carrier Relationship

Navigating the intricate dance of a shipper/parcel carrier relationship requires more than a keen eye on the bottom line; it demands a shift in dialogue from the immediate allure of price to the enduring promise of value. 

This philosophy is not just about deflecting attention but about guiding clients to a vantage point where long-term benefits outshine short-term savings. Its here that the client-focused consultants can truly excel, helping decision-makers to see beyond the price tag and embrace the holistic value of their investments.  

Understanding the Price-Value Dichotomy

The fixation on price is a natural inclination for clients seeking to maximize their immediate gains from parcel carriers. However, this narrow focus can eclipse the broader picture of total cost and long-term value. The art of consulting is not just about presenting a product or service; it’s about leading a client through a paradigm shift—from price-conscious to value-aware.

How to Shift from Price-Conscious to Value Aware

1. From Price to Total Cost: 

A good logistics consultant helps a client to see beyond the tip of the iceberg. The dialogue should illuminate how your carrier’s offering reduces not just the monetary cost but also the cost of time, potential waste, and inefficiency. By articulating the broader cost implications, a good consultant can reframe the conversation to focus on the comprehensive value your provider’s solution provides.

2. From Savings to Differentiation: 

The allure of savings is potent, but it’s the differentiation that sustains a business relationship. When price is the only factor, it’s crucial to help clients pivot the conversation to what sets a carrier’s offering apart. This shift is about showcasing the unique benefits and superior outcomes that justify the price difference. It’s not just about what the service is, but what the service does differently—and better.

3. From Narrow to Broad Needs: 

Simplistic needs invite simplistic solutions. By broadening the conversation to encompass the full spectrum of the client’s complex needs, you create more value for your client.  A parcel carrier should be a partner, not just a provider.

Empathy as the Gateway to Value

Each conversational shift begins with two powerful words: “I understand.” This empathetic bridge reassures the client that their concerns are heard and validated. A good logistics consultant will work with you to find a parcel carrier that understands this important dynamic.  It’s the starting point for a dialogue that transitions from a transactional interaction to a consultative relationship.

The Focal Point 

In the end, what remains focal is what becomes important. By maintaining a steadfast focus on value, our clients can elevate the conversation, transcend the commoditization trap, and make better decisions that are not just good for today but great for tomorrow.  Learn how ICC Logistics is different by setting up a free consultation today.  Let’s help you get the value you deserve out of your parcel carrier relationships.

Turning Shipping Invoices into Revenue

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Many companies employ outsourced firms to pre-audit and pay their freight invoices.  This is not only helpful to catch all invoicing errors, but it also is a much less costly way to process freight invoices than typical in-house operations. Utilizing a pre-audit firm does not, and should not preclude company’s from also using a Post Audit firm to audit the results.

Post-auditing of freight invoices refers to the process of reviewing and verifying the accuracy of freight invoices after they have been paid. The purpose of post-audit operations is to identify any errors or overcharges in the billing process and recover any funds that were incorrectly paid during the initial audit process.  And yes, millions of dollars are recovered each year during the post audit process.

The post-audit process typically involves the following steps:

  1. Collecting Data from the carrier, such as invoice files, bills of lading, and delivery receipts.
  2. Collecting Freight Payment Data from the initial pre-audit firm, or in-house payables departments.
  3. Checking for Errors such as incorrect, or improper charges, incorrect weights, and incorrect classifications.
  4. Verifying Charges against the contracted rates to ensure that the charges are consistent with the terms of the contract.
  5. Resolving Discrepancies that are identified during the audit process directly with the freight carriers.  
  6. Recovery of Funds for any overcharges that are identified during the post-audit process. This may involve issuing a credit memo or receiving a refund.

Read more

FedEx’s New Rate Increases are Here!

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Everything you need to know about the new FedEx GRIs

Well, it’s that time of year again when we start to receive notices of General Rate Increases (GRI’s), for the major freight carriers.  To start, this year’s parcel carrier GRI notices have been led by FedEx and of course as we all know, this is just the beginning of next year’s GRI notifications.   

The magnitude of the announced FedEx increases comes as no surprise to us.  With all of the recent negative operational and financial news surrounding FedEx, it is not surprising that FedEx’s “AVERAGE” General Rate Increase for this coming year is significantly higher than it has been in the past.  For 2022, FedEx jumped their annual “AVERAGE” GRI from the previous year’s 4.9% to 5.9% .  This year, FedEx is increasing their Annual “AVERAGE” GRI to 6.9% .  Historically UPS’s GRI levels have matched or been very close to those announced by FedEx. We have no reason to believe that this year will be any different.

So, we expect that UPS will announce similar GRI’s in the near future.

It’s important to remember that the term “On Average” means some increases will be less than the 6.9% in certain categories, and some will of course be much higher than 6.9%.  Shippers should not be fooled into thinking the actual increase is 6.9% across the board.  And yet, you would be amazed at how many companies use the average increase figure for their annual shipping budgets. 

Parcel shippers really need to take the time to analyze their individual shipping characteristics to see exactly what the impact will be on their freight costs going into 2023. The FedEx rates will go into effect on January 2, 2023, shortly after parcel shippers incur the Peak Season shipping surcharges, which can also have an unexpected impact on Shippers bottom line profits. 

To put these increases into perspective, the following are some examples of what the “Actual” increase FedEx parcel shippers will experience. 

  1.       Ground Service, 2 Pound Package to Zone 5 – Actual Increase will be 7.6%
  1.       Priority Overnight, 5 Pound Package to Zone 2 – Actual Increase will be 8.5%
  1.       Standard Overnight, 10 Pound Package to Zone 3 – Actual Increase will be 8.5%
  1.       Two Day Delivery, 25 Pound Package to Zone 5 – Actual Increase will be 8.9%
  1.       Express Saver, 5 Pound Package to Zone 8 – Actual Increase will be 11.9%

And that is just the beginning.  The above package rate increases are also subject to a variety of surcharges that are also increasing.  Here is a brief overview of some of FedEx’s actual increases for some of the more common surcharges.

  1.       Address Corrections – 7.7% Increase
  1.       Delivery Area Surcharge – Home Delivery – 10.4% Increase
  1.       Extended Residential Delivery Area Surcharge Ground – 10% Increase
  1.       Oversize Express, Ground and Home Delivery – 17.2% to 22.7% Increase

Besides the GRI, Small Package carriers often introduce new rules and surcharges that can have a major impact on parcel shippers’ bottom lines.  It goes without saying, parcel carrier pricing continues to become more and more complex and difficult to manage on your own.  But remember, you don’t have to navigate these uncharted waters single handedly, there is help available.  

As we have done for over 10 years now, our Parcel Analytics experts has created newly updated 2022 vs. 2023 FedEx General Rate Increase Charts which are available free of charge just by requesting them on our website.   

And, if you really want to finally take control of your parcel shipping costs, reach out to us and speak with one of our Parcel Pricing Experts to discuss how your firm would benefit from our Contract Analysis and Benchmarking Services.       

 

 

“Temporary” Fuel Surcharges?

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US Businesses have been paying Fuel Surcharges to their carriers and logistics service providers for decades now, will that ever change?

 For those who have been involved in shipping for some time, you may recall that initially these Fuel Surcharges were implemented as a “temporary” surcharge to compensate the shipping industry for large spikes in fuel costs.  The theory was that when fuel costs would moderate the surcharges would disappear.  Well as we all know that never happened and will not happen now and in the future.  The word “temporary” is no longer used in conjunction with the words Fuel Surcharges.

In those early days when Fuel Surcharges were first introduced, many shippers balked at paying them because they felt that freight carriers and logistics service providers had obviously calculated fuel costs in their pricing before their rates were ever published.  So the Traffic Manager, as they were referred to in those days, felt that this was a double dipping approach by the carriers just to enhance their bottom lines.  That same argument might even be made today, but with the proliferation of Fuel Surcharges for all modes of transportation, the assessment of Fuel Surcharges is just part of the rate making process for all transportation and logistics service providers for the long term.

Some shippers are still balking at the implementation of fuel surcharges being assessed on accessorial services as some carriers have published in their operating rules, stating that Fuel Surcharges can be assessed on these accessorial services, such as Residential Deliveries, Inside Deliveries, etc.  To some, the assessment of Fuel Surcharges for services that do not involve fuel related costs, are just another way for carriers and logistics service providers to double dip.

The current inflationary pressures on US businesses, as well as the tragic events in Ukraine, have further exacerbated the increase in fuel costs with absolutely no end in sight.  This is a global crisis now and will be for the foreseeable future.

To think that these Fuel Surcharges have been totally absorbed by US Businesses over these many years is certainly not plausible.  Certainly, these businesses have adjusted their prices to their customers to absorb at least some of these increasing fuel costs.  But now we are starting to see businesses looking to implement a pass through Fuel Surcharge as a separate line item on their merchandise invoices to their customers.  Some business are even considering either an increase in the product cost to the customer, or for those businesses that charge a line item freight charge, increasing those costs to offset the current drastic increase in fuel related costs.  The danger here is that should fuel charges moderate, will these businesses reduce or even eliminate these increased fees.

The bottom line is that these continually rising fuel and transportation related costs for that matter, can no longer be absorbed entirely by US businesses and that ultimately the consumer will be paying these higher costs out of their own pockets.  It behooves every business to closely monitor their costs to find ways to control these skyrocketing costs so they do not end up behind the eightball.

We’d love to hear your thoughts on this subject.

ICC - UPS Rate Increase - 2016 - Breaking News

UPS adds “Peak Season” Shipping Surcharges

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We’re not sure if parcel shippers have been getting accustomed to having their rates increased every few months, but whether they are getting used to it or not, the parcel carriers are in the driver’s seat for sure; at least for now.

UPS has just announced another wave of surcharge increases, some going into effect on July 1, 2021.  UPS states in their official announcement that these increase are necessary for them to “ensure businesses and customers are able to meet their shipping needs while demand has increased for shipping services.”

Read the official announcement and get more details here.

As UPS goes, FedEx will probably be right behind with their surcharge increases.  And remember, we are not anywhere near the official “Peak Shipping” season.  The reality is that for as long as the parcel carrier volumes increase at record paces, shippers will need to adjust their budgets on a quarterly basis.  Annual Shipping Budgets are a thing of the past.  In addition, Single Sourcing may become a thing of the past as carrier capacity constraints will continue, at least for the foreseeable future so shippers will need to find other outlets for their excess parcel capacity.  But remember, the pendulum swings in both directions and if we have a downturn in the economy, which is a real possibility in the near future, the parcel carriers may be more inclined to “pay back” some of these increased costs with deeper discounts to retain their customers.

And, let’s not forget that the best thing a parcel shipper can do is have their parcel shipping costs Benchmarked by an Independent Third Party on a regular basis to make sure they are not paying more than they should, based on their ever-changing shipping characteristics.

Contact us today to learn more.