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Nationwide Rail Strike Still a Possibility

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Just when everyone thought this was a no longer an issue to be dealt with, a majority of almost 12,000 unionized railroad workers voted to reject a tentative labor agreement which was brokered in part last month by President Joe Biden.  This would be the first refusal by members of a dozen labor groups that must accept the deal or risk a strike.

More than 6,600 members of the Brotherhood of Maintenance of Way Employees, voted against the tentative agreement compared to 5,100 votes in favor, the division of the International Brotherhood of Teamsters said in a statement Monday.

The vote results in what is known as a “status quo” period, in which no strike can take place while the union resumes bargaining with freight railroads, according to the statement. No “self-help” may occur until after Nov. 19 at the earliest, it said.

The result signals continued discontent over pay compensation, working conditions and sick-leave policies among some of the more than 100,000 union-represented workers of US freight railroads. Lengthy, contentious labor talks were at an impasse until a hands-on push by the Biden administration helped secure a “preliminary accord” with just hours to spare before a work stoppage that risked halting the flow of some 40% of long-haul US cargo.

The National Carriers’ Conference Committee, which represents freight railroads in the labor talks, said it was disappointed by the outcome of the vote. The rejection does not “present risk of an immediate service disruption” because both sides have agreed to maintain the status quo as they discuss next steps in the labor disagreement process.

At this point in time, four other unions have approved the pact, while seven more are scheduled to vote through mid-November. If one union were to go on strike, others could refuse to cross the picket line, and rail companies could respond in kind with a nationwide lockout. That’s what triggered the last rail shutdown way back in 1992, when the International Association of Machinists went on strike against CSX. It took less than an hour for the other freight companies to lock out their workers.  So there is a real threat of a nationwide rail strike, especially if other unions reject the previously negotiated pact.

“Railroaders do not feel valued,” BMWED President Tony Cardwell said in the statement. “The result of this vote indicates that there is a lot of work to do to establish goodwill and improve the morale that has been broken by the railroads’ executives and Wall Street hedge fund managers.”

Rail shippers should stay tuned as this will certainly be a protracted negotiation process.  Reach out to us with questions or if you have concerns about your current or future shipments via rail.

U.S.P.S Announces New Prices for 2023

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U.S. Postal Service Announces New Prices for 2023-Forever Stamp to Rise Three Cents

The old adage, “what goes up, must come down” certainly does not apply to any parcel shipping rates.  To no one’s surprise, the United States Postal Service, (USPS), has filed a notice with the Postal Regulatory Commission (PRC) of price changes to take effect Jan. 22, 2023. The new rates include a three-cent increase in the price of a First-Class Mail Forever stamp from 60 cents to 63 cents.

If favorably reviewed by the Commission, (and there is no reason to believe it will not be approved), the proposed increases will raise First-Class Mail prices approximately 4.2 percent to offset the rise in inflation. The price changes have been approved by the Governors of the U.S. Postal Service.

 

  • The price for 1-ounce metered mail will increase to $0.60, and the price to send a domestic postcard will increase to $0.48.
  • A 1-ounce letter mailed to another country would increase to $1.45. There will be no change to the single-piece letter and flat additional-ounce price, which remains at $0.24.
  • The Postal Service is also seeking price adjustments for Special Services products including Certified Mail, Post Office Box rental fees, Money Order fees and the cost to purchase Insurance when mailing an item.

The proposed Mailing Services price changes include the following:

ProductCurrent PricesPlanned Prices
Letters (1 oz.)$0.60$0.63
Letters (metered 1 oz.)$0.57$0.60
Domestic Postcards$0.44$0.48
International Postcards$1.40$1.45
International Letter (1 oz.)$1.40$1.45

According to USPS sources, as operating expenses continue to rise, these price adjustments provide the Postal Service with much needed revenue to achieve the financial stability sought by its “Delivering for America 10-year plan.” The prices of the U.S. Postal Service remain among the most affordable in the world.

The PRC will review the changes before they are scheduled to take effect. The complete Postal Service price filing, with prices for all products, can be found on the PRC website under the Daily Listings section at prc.gov/dockets/daily. The Mailing Services filing is Docket No. R2023-1. The price tables are also available on the Postal Service’s Postal Explorer website at pe.usps.com/PriceChange/Index.

And the constant reminder we receive from the USPS every time they increase rates, “the Postal Service generally receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.” 

For more information on this or to find out how to navigate rising transportation and logistics costs, please contact us.

Understanding Parcel Carrier Rate Increases

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The Devil is in The Details

Following FedEx’s recent General Rate Increase, (GRI) announcement, shippers are anxiously awaiting the anticipated GRI announcement from UPS.  As is customary, there is an expectation that the UPS GRI will be in line with FedEx’s announced 2023 GRI level, which increases rates on average (6.9%). With these annual GRI announcements it is not uncommon for shippers to focus solely on carrier package zone and rate charts to try to determine the impact of these annual increases. However, it is becoming increasingly important to pay close attention to new carrier accessorial rate changes, as these increases can also have a significant impact on parcel shipper’s bottom lines. 

What We’ve Seen in the Past

In 2022 UPS shifted approximately 2700 Zip Codes (approximately 7% of US Zip Codes) from their Extended Delivery Area Surcharge list, to a new list called “US 48 Remote Zips.” They then implemented a new Remote Area Surcharge for these zip codes in the contiguous US.  Prior to this, the Remote Area Surcharge only applied to certain Zip Codes in Alaska and Hawaii.  This increased the surcharge for these packages from the Extended Area Surcharge of $6.50 for Ground Residential shipments and $4.10 for Ground Commercial shipments, to the Remote Area Surcharge of $12.00 per package. An increase of almost 100% and 300% respectively. 

FedEx has jumped on the bandwagon with this new Surcharge for 2023. Their recent GRI announcement included a new Remote Area Surcharge in the amount of $13.25, which applies to almost 4000 Zip codes in the US, which includes almost 10% of US Zip Codes).

On top of this, it is important to point out that historically the major parcel carriers have also increased the number of Zip Codes that are subject to Area Surcharges. For example, in 2018, UPS listed approximately 23,700 zip codes that were eligible for the Delivery Area, Extended Area, and Remote Area Surcharges.  In 2022, the number of Zip Codes receiving these surcharges are approximately 25,600, an increase of over 8%. 

What’s Most Likely To Happen with UPS

Based on what we have seen in the past, along with the fact that FedEx has introduced this new fee to 48% more Zip Codes than UPS, it seems likely that UPS will increase their Remote Area Surcharge rate as well as increasing the number of impacted zip codes.  Given UPS’s new “Better Not Bigger” business strategy, it would only make sense for them to take actions to avoid customers shifting higher cost to serve packages to them without being properly compensated.

Given the complex nature of Small Package pricing, it is crucial for shippers to develop better visibility and understanding of their base rates and all surcharges they are subject to, but also to gain a better understanding of all of their parcel carrier contract terms and conditions.  In addition, it is crucial to implement processes to provide comprehensive audits of their invoices to ensure payment accuracy. 

We encourage you to reach out to ICC so we can show you how our unique industry experience, insight and technology can help uncover these types of hidden costs that can be hurting your bottom line. 

So, Do We Really Have a New Rail Labor Agreement?

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According to a report in The Hill, as well as several other sources, the White House-brokered agreement to avert a railroad strike may have the potential to fall apart.  That would threaten widespread economic disruption right before the midterm elections.

Rail workers are set to vote on the tentative deal reached between unions and railroads Thursday, 9/22/2022. And, if any of the 12 rail unions fail to ratify the new contract, nearly 125,000 rail workers could be headed for a strike.  The agreement reached would mandate two-person crews, cap health care costs and allow workers to take time off for medical appointments or other scheduled events without being penalized, all key concessions which were won by the unions.

The deal also provides a 24 percent raise over five years, back pay and cash bonuses, similar terms to those offered by the White House-appointed presidential emergency board (PEB) last month.  But nearly 36 hours after the agreement was announced, rail workers said they still didn’t have concrete details on sick leave and voluntarily assigned days off. That’s raised some doubts about just how strong the new contract language really is.

Ron Kaminkow, an organizer at Railroad Workers United, which represents rank-and-file railroaders, said that there’s “a lot of anger, confusion and hostility” toward the new agreement, which many workers feel is intentionally vague.  Rail workers are apparently disgruntled and feel like they have a lot of leverage at this point.  A locomotive engineer at Norfolk Southern who asked to remain anonymous for fear of retaliation stated, “I know I’m not going to accept anything less than what we deserve.”

The two largest rail unions warned during negotiations that their members wouldn’t approve a contract that doesn’t quell outrage over unpredictable scheduling, unsafe working conditions and a lack of sick leave. For the strike threat to end, workers would need to feel that the proposed contract is far stronger than the deal offered by the PEB. A survey of rail workers at the SMART Transportation Division found that nearly 8 in 10 would have voted to reject that contract.

Another dilemma is that the tentative agreement reached last Thursday only applies to SMART and the Brotherhood of Locomotive Engineers and Trainmen, the two largest rail unions, but not the other unions that agreed to contracts based on the less worker-friendly PEB guidance. Those include nearly 5,000 rail workers at the International Association of Machinists and Aerospace Workers who voted to reject the PEB contract and authorize a strike last week. The union said it would resume negotiations this week and hold off on a strike until at least Sept. 29. Vote counting is certain to drag into October, potentially setting up a key deadline at the height of election season.

Robert Bruno, a professor of labor and employment relations at the University of Illinois, predicted that the deal will ultimately pass but with a “sizeable number of ‘no’ votes.”  “I would be surprised if the bargaining committee misread what the rank and file would support. That doesn’t mean that it will pass with supermajorities,” Bruno said. “That will signal a level of continuing grievance on the part of the membership. It wouldn’t surprise me if a fairly substantial number of members voted ‘no’ in part because of how genuinely abused they feel.”  Bruno also said that the fact that sick leave and voluntarily assigned days off are the sticking points and not wages may inspire more “no” votes from workers.

A strike would shut down the U.S. railroad system, which carries nearly one-third of the nation’s freight, shutting down large portions of the economy. Enormous amounts of food, fuel and other key commodities would have no way to reach their destination.

Reach out to us if you have specific questions we’d be happy to answer them.

USPS Likely to Raise Postage Rates in Jan

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On the heels of implementing new Peak Season Surcharges, the US Postal Service is likely to raise postage rates again in January 2023.  Inflation is expected to hit the 2022 budget by over a billion dollars, U.S. Postmaster General DeJoy told USPS Governors at their August 9 meeting.

The USPS announced last year it would raise postage prices twice a year beginning in 2023.

“As everyone knows, inflation has hit the nation hard, and the Postal Service has not avoided its impact,” DeJoy said. “We expect inflation to exceed our expectations by well over a billion dollars against our planned 2022 budget.”

“Because of this, my recommendation to the governors will be to remain on course to raise prices again in January,” he said.

The USPS reported in the third quarter inflation has impacted operating expenses. Compensation increased $198 million, or 1.6 percent, primarily due to wage increases in labor agreements tied to inflation. Highway transportation expense increased $131 million, or 10.1 percent, primarily due to higher diesel fuel costs. Other operating expense increased $373 million, or 14.9 percent, reflecting higher fuel prices for delivery vehicles and an increase in rent and utilities.

“I will soon begin to evaluate what we will be doing in 2023 as I pledge to keep the mailing community informed,” he said. “We must deal with the reality of our financial status and the impact inflation will have on our improvement strategies.”

The USPS under the direction of Mr. DeJoy is keeping a close watch on income and expenses as all businesses should be doing.  Treating the USPS like a business is certainly a change from the past.

Are you struggling to control raising shipping costs?  Reach out to our experts today to help you navigate the changes and look for ways to lower costs while increasing service.  We’re standing by.

USPS Rates 2022 Peak Season

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U.S. Postal Service Announces Proposed Temporary Rate Adjustments for 2022 Peak Holiday Season

The United States Postal Service recently filed notice with the Postal Regulatory Commission (PRC) regarding a temporary price adjustment for key package products for the 2022 peak holiday shipping season. This temporary rate adjustment is similar to ones in past years that help cover extra handling costs to ensure a successful peak season.

The planned peak-season pricing, which was approved by the Governors of the Postal Service on Aug. 9, would affect prices on the following commercial and retail domestic competitive parcels: Priority Mail Express (PME), Priority Mail (PM), First-Class Package Service (FCPS), Parcel Select and USPS Retail Ground. International products would be unaffected. Pending favorable review by the PRC, the temporary rates would go into effect at 12 a.m. Central on Oct. 2 and remain in place until 12 a.m. Central Jan. 22, 2023.

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 US Postal Service continues to report that it “has some of the lowest postage rates in the industrialized world and continues to offer great values in shipping. These temporary rates will keep USPS competitive while providing the agency with the revenue to cover extra costs in anticipation of peak-season volume.”

The proposed price changes include:

Priority Mail and Priority Mail Express:

                Commercial:

o             $0.75 increase for PM and PME Flat Rate Boxes and Envelopes.

o             $0.25 increase for Zones 1-4, 0-10 lbs.

o             $0.80 increase for Zones 5-9, 0-10 lbs.

o             $0.75 increase for Zones 1-4, 11-25 lbs.

o             $2.80 increase for Zones 5-9, 11-25 lbs.

o             $3.00 increase for Zones 1-4, 26-70 lbs.

o             $6.50 increase for Zones 5-9, 26-70 lbs.

                Retail:

o             $0.95 increase for PM and PME Flat Rate Boxes and Envelopes.

o             $0.30 increase for Zones 1-4, 0-10 lbs.

o             $1.00 increase for Zones 5-9, 0-10 lbs.

o             $0.95 increase for Zones 1-4, 11-25 lbs.

o             $3.20 increase for Zones 5-9, 11-25 lbs.

o             $3.25 increase for Zones 1-4, 26-70 lbs.

o             $6.45 increase for Zones 5-9, 26-70 lbs.

First-Class Package Service, Parcel Select Ground, and USPS Retail Ground:

Commercial:

o             $0.25 increase for Zones 1-4, 0-10 lbs.

o             $0.40 increase for Zones 5-9, 0-10 lbs.

o             $0.75 increase for Zones 1-4, 11-25 lbs.

o             $1.60 increase for Zones 5-9, 11-25 lbs.

o             $3.00 increase for Zones 1-4, 26-70 lbs.

o             $5.50 increase for Zones 5-9, 26-70 lbs.

                Retail:

o             $0.30 increase for Zones 1-4, 0-10 lbs.

o             $0.60 increase for Zones 5-9, 0-10 lbs.

o             $0.95 increase for Zones 1-4, 11-25 lbs.

o             $2.70 increase for Zones 5-9, 11-25 lbs.

o             $3.25 increase for Zones 1-4, 26-70 lbs.

o             $5.85 increase for Zones 5-9, 26-70 lbs.

ProductCurrent
Planned Increase
Parcel Select Destination
Delivery Unit (DDU)Starts at $3.50.25 cents
Parcel Select DSCFStarts at $3.77.75 cents
Parcel Select DNDCStarts at $4.84.75 cents
USPS Connect LocalStarts at $3.95No Change
Parcel Select Lightweight (DDU)Starts at $2.32No Change
Parcel Select Lightweight
(DSCF and DNDC)Starts at $2.72No Change
Parcel Return ServiceStarts at $3.37No Change

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

As is customary, the PRC will review the proposed prices before they are scheduled to take effect on Oct. 2. Complete USPS price filings, with prices for all products, can be found on the PRC website’s Daily Listings section at prc.gov/dockets/daily. Price change tables are also available on the Postal Service’s Postal Explorer website at pe.usps.com/PriceChange/Index.

The US Postal Service likes to remind us that it “generally receives no tax dollars for operating expenses and relies on the sale of postage, products, and services to fund its operations.”