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UPS Teamsters Negotiations Begin

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Let the Games Begin- Knives Out!

On January 3rd, 2023, we published an article that described the challenges that shippers will face this year due to the upcoming UPS/ Teamsters Contract negotiations, (the agreement expires on July 31st, 2023). Our article provided some history and insight regarding how shippers will experience anxiety and risk this year, due to the contentious relationship that has developed between the Teamsters and UPS. Our article suggested that these negotiations will be “Loud & Late”, and that there would be a great deal of saber rattling. Well it looks like the predictions that we made have come to fruition very quickly!

On January 9th, 2023, the Teamster Leadership team kicked off a National Screening Committee meeting in Washington, DC to review proposals for the National Master Agreement negotiations. The committee was tasked with reviewing more than 4,000 pages of national proposals submitted by locals to the Package Division. In total, the Division received more than 11,000 Master Agreement proposals.

There were some very fiery and aggressive statements made during this kick-off meeting; 

“We’re going into these negotiations with a clear message to UPS that we’re not going past August 1,” stated Teamster President, Sean O’Brien in his remarks to the committee. “We have to deal with 22.4s, PVDs, subcontracting, part-time wages and other issues that we’re taking a hard line on with the company.” 

General Secretary-Treasurer Fred Zuckerman stated that “Sean is going to pick a fight with this company, and that fight is to get the very best contract we can get for our members. This contract is going to be unlike the contracts of the past 25 years where UPS comes in and says they want a cost-neutral contract. It’s not going to be a cost-neutral contract. We’re going to take from them what our members deserve.” 

However, UPS CEO Carol B. Tomé, who will be sitting in on her first contract negotiation, has said she expects the agreement to yield mutual benefits. Which helps to solidify the fact that the two parties are approaching these negotiations with very different expectations. 

The teamsters have also publicly stated that they have amassed a $350 million strike fund and shortened the time it takes for members to receive a payout from eight days to one. President Sean O’Brien has stated that “That’s some pretty good leverage. So, obviously the Teamster leadership has remained consistent in their promises to take a hard stance against UPS with their new agreement.  

UPS leadership has not made many public statements about these negotiations up until this point. Besides the comments listed above, Carole Tome stated on the company’s July 26th earnings call, that “We’re going to leave the negotiations at the bargaining table,” according to a transcript from Sentieo. 

She has also suggested that UPS Teamsters already receive better compensation than the rest of the delivery workforce. 

“Our workforce is very different than a lot of the workforces that you hear in the media every day that are trying to be organized. They’re not paid the way that our Teamsters are paid. These are great jobs that we value very much,” she said.

Based on the way that UPS has handled communications related to UPS Teamster Contracts in the past, we don’t expect to see a lot of public statements being made by UPS Leadership as these negotiations progress. UPS has historically chosen to keep customers updated about labor negotiations through direct contact from their management team. Typically, these communications are strictly verbal, which makes it harder for shippers to share details of the negotiation process with others in their organization. So, this will only add to the anxiety that UPS customers will be facing during these negotiating sessions. 

So, given the expectation that Teamsters leadership will continue to threaten and publicize their fight with UPS, while UPS leadership will limit their public comments, it will be extremely important for shippers to develop ways to obtain accurate and up to date information about the progress of these negotiations. Therefore, the ICC Logistics Services team is committed to staying close to this situation to ensure that we provide the most accurate and up to date information possible.

 

We will utilize our long term experience, expertise, unique insight and resources to provide timely and meaningful updates to our customers and followers. Don’t hesitate to reach out to ICC Logistics for questions related to this, or for help with any of your other Logistics needs! 

It’s Time to Consider Reshoring

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If we have learned anything from the Covid pandemic, it is that Supply Chains are forever encountering disruptions. Single sourcing, (while a great strategy for cost containment), is only as strong as its weakest link and when one link is weakened or broken, businesses are left with no options.

Global Supply chains depend upon the local environment and local economies of their supply sources, with no or very little control.  For example, companies are finally starting to show some real concern about China and their Zero-Covid shutdown policies and its impact on production. The Foxconn iPhone city in Zhengzhou employees more than 200,000 people.  According to Barrons, protests, quarantines and worker exodus are delaying the manufacture of 15 million smartphones and could cost Apple as much as $8 billion in the current quarter alone.  

This is clearly becoming an issue of Supply Chain resilience vs ability to deliver product as companies realize long distance-low-cost labor sourcing comes with a price.  Therefore, we believe more and more companies will look to move their Supply Chain closer to the end consumer with fewer intermediary parts.

China is no longer the low-cost production option it was in years past, as wages have increased dramatically in recent years.  So, are the rumors true about Apple? Will companies look to shift production to other Southeast Asia countries, like India? 

According to the Wall Street Journal, China exports are falling at the steepest rate in 2 years with exports to the US down 25% year-over-year while US Apparel imports from Vietnam are up 16% with China only up 4.9%. We believe Apple will be forced to move at least some production away from China, in the near future.  

Multi-Sourcing and Inventory Management 

Single sourcing, long the policy of lowering costs is coming with a cost of its own, Reliability.  In an earlier blog, we talked about inventory shortages, with companies needing to shift from “Just-in-Time” to “Just in Case” to secure enough inventory to maintain production levels and maintain an adequate quantity of product or face the loss of sales.  This shift of moving away from Single Sourcing will require companies to developing options, and contingency plans, that assure their supply chains are not only strong, but also very flexible and fluid.

As an example, airplane production is falling short of completion due to delays in delivering parts.  With travel surging again, demand is up while manufacturers struggle to ship their products.

The same is true in the auto manufacturing sector.  Inventory shortages are mounting, causing lost sales. Recently, a friend went to purchase a new car and was told of a 2 year wait, so he settled for a lesser model and recently took delivery.  His choice of course, but what if you don’t want a lesser model, is your only option to just wait it out?

North America is the most internationally focused and least home sourced region in the world, getting the greatest percentage of its goods from Asia-Pacific countries, while the Asia-Pacific region has been hardest hit by shipping complications.  Delays in obtaining raw materials and delays in shipping are causing the greatest slowdowns in production of and delivery of finished goods.  These 2 factors alone will cause companies to consider reshoring as they shift from cost to reliability.  But now the issue becomes finding reliable partners within your region.

What to do

With all the troubles in the world, will US Companies begin to think it just might be more economical to return sourcing and manufacturing to US soil?

“With labor rates in China doubling over the past few years, companies are now considering moving back to America” says Rosemary Coates, Executive Director, Reshoring Institute.

This sounds great and answers our original question.  YES, now just might be the right time to take things seriously and make the hard decisions before it is too late?” 

The head of one of the world’s largest logistics operators believes the supply-chain turmoil of the past two years is a prelude to deeper, long-lasting changes in trade patterns. Marie-Christine Lombard, president of France-based freight-forwarder Geodis, told the Wall Street Journal Logistics Report’s Paul Berger that globalization isn’t so much retreating as it is changing, with companies turning away from a single-minded push into China as they search for resilient operations. The shift began before the Covid pandemic but has accelerated more recently, Ms. Lombard says, driving greater complexity in how goods are manufactured and distributed. Companies are looking to move away from depending on a single country to source goods, she says, a strategy that demands that logistics operators manage flows between a wider range of origins and destinations. One hurdle remains, the infrastructure in developing markets that lags behind the ports and highways in long-established supply chains.

For America to regain its manufacturing prowess, we will need to automate production, redesign processes and extract labor costs.  In other words, rethink:

  • Where to manufacture?  
  • What to manufacture?
  • How to manufacture?
  • Who to manufacture with (source & supply chain partners)?
  • And how much inventory to hold? 

Companies can no longer depend totally on China and single source their Supply Chain needs. They will need options and multiple sources of suppliers; they will need to be agile and well prepared for delivery delays, parts shortages and must build contingency plans that take into account unexpected interruptions.

At ICC, we expect the unexpected.  We are with you every step of the way. We plan for interruptions and build in contingencies so you get your deliveries on time and on budget.  

Big Data or Bad Data?

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Big Data or Bad Data? 

“Big Data” is a large, complex data set coming from multiple sources, in a variety of formats, both structured and unstructured.

When it comes to Supply Chain and Logistics operations, you can be assured more data is coming in at accelerating speeds, in different formats and, from multiple sources.  In many cases, that data will come with inconsistencies and inaccuracies that will create what’s called “Bad Data”– which will cloud the value of the information received. 

“Bad Data” is becoming an increasingly problematic issue for US businesses as companies continue to grow the outsourcing of their supply chain and logistics operations on a global scale. 

Bad Data will ultimately lead to Bad Decisions

“Bad Data” is an inaccurate set of information, including missing key elements, incorrect information, irrelevant data, non-conforming data, duplicate data and poor entries (misspells, typos, variations in spellings, format etc.).  “Bad Data” is unstructured and suffers from quality issues. 

Utilizing “Bad Data” in your Supply Chain and Logistics business decisions can and WILL prove catastrophic. To prove this point, according to an IBM study, “Bad Data” costs companies $3.1 Trillion per year. 

That is a staggering figure and one that will surely increase in the coming years. 

Companies using “Bad Data” will subject themselves to:

  • Creating false information leading to poor business decisions and failed practices
  • Providing incomplete and inaccurate answers to management leading to wasted time, resources and finances
  • Generating irrelevant information leading companies down rabbit holes that should never be part of their decision making process  

What companies want and need is Complete and Accurate answers that allow them to drive innovation through:

  • Anticipating consumer demand to drive supply chain decisions
  • Building predictive models that enable development of new products and services
  • Reducing outages or shortages by achieving operational efficiencies
  • Tracking orders from sourcing to ultimate delivery to ensure 100% customer satisfaction
  • Continually minimize costs while at the same time maximizing service offerings 

Companies want and NEED “Clean Data”

Like the painter who tapes the perimeter of a room and carefully works the edges before rolling the wall, significant time must be spent curating and preparing the data before it can be properly analyzed. 

First, the data must be integrated from multiple sources and formats.  Then, companies must address the issue of volume and how to capture and manage the data before finally analyzing and acting.

Understanding “Bad Data” is an inherent characteristic of data collected in its raw form.  Data must be aligned with a company’s specific business goals to eliminate waste and irrelevance.  By aligning unstructured data with previously structured data, companies can design standards and governance that ensures the data is clean, accurate and manageable.

“Bad Data” can lead to:

  • Inaccurate and incomplete insights
  • Wasteful investments
  • Lost productivity
  • Ineffective and destructive Supply Chain Operations

In the end, “Bad Data” affects company bottom lines by shrinking margins and lowering company profits.

How to Fix “Bad Data”

Implementing a Data Quality Audit will help turn “Bad Data” into meaningful and insightful “Big Data”. The problem for many companies is that they do not have the internal resources and in some cases the expertise to accomplish this audit.  Therefore, utilizing a 3rd party auditing company will confirm the accuracy of your data while ensuring compliance and gaining easier access to good and useful data.  They start with the entry point of the data to avoid inconsistencies, reveal any sources of bad data and identify if these are coming from an outside vendor or internal sources.

The purpose of collecting data is to make good business decisions. 

Ensure your sources of data are:

  • Accurate
  • Complete
  • Relevant
  • Reliable

Understand what data your company needs and refine the process of collecting that data

Continually have a Third Party audit the data collection process

Avoid internal bias by utilizing the Third Party auditor on an ongoing basis

Your insights are only as good as the data that is being analyzed

Supply Chain costs are complex and in many cases decentralized.  A comprehensive Data Analytics approach of collecting “Big Data” from multiple sources and benchmarking that data from multiple similar competitors will provide greater insight and understanding of your supply chain operations.  This will ultimately lead to lower shipping costs and best service practices going forward.

Relying on experts in Supply Chain Data Analytics will ensure a company’s Big Data does not turn into Bad Data and will continually provide Good and Reliable Insights.  All this will lead to better service through greater efficiencies, improved productivity, lower costs and increased profitability.

 

Delayed Shipments Continue!

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One of the ramifications of working for a large integrated carrier for as long as I did, is that friends and family often came to me when they were having problems receiving something they ordered or sent.  So, besides managing relationships with some of UPS’s largest customers, in my spare time I was often asked for help or advice with personal shipments (Grandma’s lost shipment of cookies, critical parts needed for a friend’s business, daughter’s prom dress that had not arrived etc.). So, I was not surprised last night when my wife told me about a problem she was having with something that she had ordered on Black Friday.

She read the following email to me that she had received after inquiring about her order (names changed to protect the innocent).

Hey there Mary,

Thanks for reaching out. I’m sorry the fulfillment timeline might not work out this time. We know that many customers are experiencing an extreme delay in receiving their orders. No excuse will help now, but the truth is that we moved to a new (we thought more robust) fulfillment partner. They have failed to deliver, big time. We are rearranging inventory to another warehouse as we speak.

To make it up to you, we have refunded you in full to the original payment method for your order. We will still get this order shipped as soon as we can, and we expect more updates to come regarding your order status by end of week. You should’ve received an email confirmation of the refund as well. We apologize for the screw up, but thanks so much for ordering with us! We hope you can enjoy that order on us.

If you need anything further, please let me know! I’m happy to help.

Have a great day,

Elizabeth

This email totally struck a nerve, because I had just written a blog about delayed deliveries last week! This situation totally touched on the 3 points that I had written about; Honesty, Communication, & Choice! 

On the positive side, this shipper did an excellent job with the Honesty perspective. They acknowledged and explained the cause for the delay, and explained what they were doing to rectify the situation. They also kept the email positive and upbeat! 

But what did they do wrong here?  There are a couple major things that could have been done better. First and foremost is Communication. Obviously they knew about the problems they were having with their Fulfillment process. They could have done some damage control and proactively notified my wife of the delay. After all, she did place this order three weeks ago!

 I am certain that my wife would have felt a lot better if she had been made aware of the problem/ situation. Instead she was left wondering, and was forced to reach out to the company to inquire about her order. As described in my previous blog, she experienced the “salt rubbed in the wound” effect! Also, the shipper may have avoided the need to provide a refund if they had just provided a proactive update. 

However, the big miss here is with Choice! The company did acknowledge that they misjudged the abilities of the 3PL they had chosen to perform their Fulfillment. So, it is apparent that they did not perform the proper due diligence to determine this vendor’s capabilities. 

I cannot say that I blame the folks that made the decision to partner with a particular vendor. I realize that the E-Commerce Warehousing & Fulfillment space is large and complex. I do not envy today’s Supply Chain Professional that needs to juggle the daily demands of their jobs, and then make crucial decisions regarding choosing a 3PL that is equipped to support their company’s needs. Properly vetting out and managing a 3PL can be a full time job in itself!

The message that I would deliver to the folks that made this poor decision, as well as all others in the Supply Chain Logistics space is that there is no need to take on the daunting task of choosing the right 3PL by yourself. ICC Logistics has the expertise, knowledge and resources available to help you make the right Choices. I can assure you that your company will not need to send out painful emails like the one provided above if you allow ICC to assist you with choosing the right Fulfillment partner. At the same time, you may be able to give me one less order fulfillment issue that I need to deal with in my personal time. Thanks in advance for your help with this! 

Delayed Orders Are on the Rise

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“Your order has been delayed.” These are 5 words that e-commerce consumers hate to hear or see!

Anyone that has ever experienced a delay in receiving something they ordered knows how frustrating this can be. Unfortunately, in todays challenged Supply Chain environment, delays have become all too common.

There are a large variety of things contributing to a spike in the time it is taking for consumers to receive their orders these days. These include challenges with obtaining raw materials, Covid driven shut downs, worker shortages, Port congestion, cost reduction efforts, along with Carrier capacity issues to name just a few.

Given the wide range of supply chain challenges, shippers are left wondering what they can do to minimize the pain, suffering and anxiety that their customers are feeling due to the uncertainty that exists in the world.  After all you can only control what is controllable.

So what are the controllable factors that a shipper should consider to help drive customer loyalty?

  1. Honesty- It is extremely important to always be honest and upfront with customers. For example; If you don’t have the item in stock and can’t provide delivery to the customer within a reasonable amount of time, don’t take the order. Or at the very least, let the customer know when they can expect delivery prior to check-out, and allow them to decide if they can wait.

There is nothing worse than allowing a customer to use their valuable time to enter an order, only to receive later notification that the order could not be fulfilled.  This can contribute to customers losing trust in your company/brand.

It is important that shippers are honest with customers throughout the purchase and post purchase process. After all, Honesty builds Trust, Trust builds Loyalty, and Loyalty leads to more Sales!

  1. Communication- Once you have the order, it is now up to your Fulfillment operation and Carriers to get the order moving and delivered within the expected time frame. Unfortunately, these two things are not completely controllable. So, the bottom line is that you need to have a solid communication process in place, to inform your customer of these unanticipated delays.

As mentioned above, customers hate hearing that their order has been delayed. However, they hate not hearing anything even more! There is nothing worse than having a customer reach out to you proactively with a “Where is my order” called a (WISMO call). Having an order delayed without explanation or notification to the customer, it is like rubbing salt in a wound.

Shippers should consider implementing an internal process that notifies customers when there are delays prior to shipping. If/ when this occurs, the customer should be quickly notified. A simple email that informs the customer of the unanticipated delay will take a lot of pain out of the process. The message should be honest, apologetic, but upbeat. For example, the message could read:

“Sorry, but we were caught off guard with the popularity of our products. This has caused a delay in our ability to ship your order today. We know that you are excited about receiving your order, so our operations team is making every effort to get this shipped ASAP. We apologize for this delay, and are committed to insuring there are no further delays. Once again we apologize for any inconvenience and disappointment that this is causing for you. “

Or

“We tried our best to get your order out today, however we were not able to do so. We have prioritized your order and have confirmed that it will go out tomorrow. We know that you are anxious to receive our product, so we apologize for the frustration this may cause. Please be assured that we value your business and are equally disappointed that we could not get it shipped today.”

Similarly, Shippers need to have a process in place to inform customers when there are carrier driven delays. It is important for shippers to differentiate between Fulfillment vs Carrier delays. It has become somewhat of a common practice for shippers to point all delays towards their Carriers. Shippers often provide a tracking number to a customer even before the order has left their Distribution Center. So, customers often assume that all delays are due to carrier issues.

This is a great way to deflect away from your company. However, this could be equally damaging to the customer’s perception of your company/ brand. Customers are a lot more savvy these days. So, when they track a package in a carrier’s system and only see a “Label Created” event, it is likely that they will know that the shipper has not handed the package over to the carrier. So, failing to be honest regarding the nature of the delay, could be just as damaging as the delay itself. Furthermore, if the blame for delays is always passed onto the carrier, customers will be left thinking “Why do they use this carrier if there are constant delays?”

Implementing notifications for carrier delays should be an easy lift for most shippers if they are using the larger Integrated Carriers like FedEx and UPS. Both of these companies have off the shelf proactive notification products that are fairly easy to implement. Additionally, for shippers using a variety of carriers, regional carriers, or the USPS, there are a host of Post Purchase technology companies that can provide visibility and pro-active notification services. So, either way, it should be fairly simple to engage a process to inform customers when there are carrier delays. The cost to implement these processes often pays for itself due to the reduction of cost associated with the reduction in WISMO calls that this will drive.

When properly implemented, your customer will automatically receive notification of delays directly from your carriers. However, as an added step you may want to consider sending a direct communication from your company to acknowledge the issue and assure the customer that you are working on it. An email might read as follows;

“We notice that your order has been delayed due to an issue with our Carrier. Please be assured that we are working with them to help minimize this delay. We value your business and are committed to providing timely delivery for all of your orders. We apologize for the inconvenience that this may cause for you.”

  1. Choice – let’s face it. There are a lot of choices to make in the Supply Chain and Logistics world to help control the controllable. Shippers need to choose the right Fulfillment options, Carriers, and Technology to insure that they minimize issues. Shippers need to make the right decisions to help drive a best in class customer experience.

Questions that need to be answered include;

-Should we insource or outsource our Fulfillment operations?

-If outsourcing, who should we use?

-Where should our Distribution Center(s) be located?

-What carriers can contribute to the best customer experience?

-What technology should we use to help drive a best in class customer experience?

-How will we measure the effectiveness of the choices that we have made?

Surveys have shown that a negative customer experience is the reason 86% of consumers quit doing business with a company, and that good customer experiences lead 42% of consumers to purchase again. So it is imperative that shippers make the right decisions to minimize problems, and to have the right processes in place when problems do occur.

We know that making the right decisions can be a daunting task for shippers given the complex web of companies that exist in the Supply Chain & Logistics space. Thankfully there are companies that have a great deal of experience and insight that can help shippers make the right choices.

Please reach out to ICC Logistics to find out how we can help drive a successful Customer growth and acquisition strategy, and contribute to your company’s success.

 

UPS Maintains Guarantees For Certain Shipments

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UPS has announced that it will maintain its Money-Back Guarantees for peak-season deliveries of Next-Day Air shipments in domestic and international commerce.

This latest move by UPS is exactly the opposite of the decision by rival FedEx which said they will suspend their money-back guarantees for peak-season deliveries of air express shipments within the U.S. and for export from the US.  The FedEx suspension will be in place for the period from Dec. 13, 2022 to Jan. 2, 2023.

UPS’ Money-Back Guarantees for expedited international deliveries typically depend on the distance and the time zones separating the origin and destination points. For example, a package shipped on the evening of Nov. 29 from UPS’ main global air hub in Louisville, Kentucky, and bound for Cologne, Germany, (the carrier’s European air hub), will be guaranteed if the package arrives on Dec. 1 either by 2 p.m. or by the end of the day, depending on the air service selected.

For decades, FedEx and UPS offered money-back guarantees on late or missed deliveries for most  services , as long as affected shippers could provide sufficient proof of the original service commitments.  However, both carriers suspended all money-back guarantees during the spring of 2020 as pandemic-related changes in buying behavior sent delivery volumes spiking and made it impossible for the carriers to honor all of their guarantees. Both service providers subsequently reinstated their Money-Back Guarantees for Next-Day Air services. However, neither company has reinstated their Ground Service Guarantees.

Because ground deliveries are relatively low margin, the carriers have no financial incentive to restore money-back guarantees for this service,  and risk relinquishing already thin profits.  Over the past several years, both parcel carriers have been placing provisions in their customer contracts to eliminate any Money Back Guarantees.  Many customers have taken exception to those provisions as they feel they will lose sight of the overall service they are receiving.  Many are at least opting for maintaining exceptions for Next-Day Air Services, since these shipments are so much more costly.

Most industry experts don’t expect FedEx or UPS to fully restore service guarantees, partly because there is no overwhelming  pressure from the market to do so. In addition, it can be costly and time-consuming for shippers to scour numerous invoices to unearth the proof the carriers generally require to issue a refund.

The good news is that Third Party Parcel Audit Service Providers (like ICC Logistics!) have the expertise to perform all of these service audits and typically only charge their customers a percentage of the actual refunds received and without any up-front costs.

Therefore, any  shipper that ships a decent amount of volume should surely consider on-boarding an outsourced Parcel Auditing process to recover these lost revenues.  There really is no down side to this!