As part of its overall strategy to enhance its shipping offerings, the United States Postal Service (USPS) filed a procedural filing with the Postal Regulatory Commission (PRC) notifying the commission of the Postal Service’s intention to replace its existing First-Class Package Service category with USPS Ground Advantage. USPS Ground Advantage will feature two-to five day service standards for packages up to 70 pounds.
The filing streamlines and simplifies package shipping options for customers and enhances the Postal Service’s ground product offering with the anticipated summer 2023 launch of this improved ground product.
In the filing, the Postal Service is notifying the Commission of its intent to rename the First-Class Package Service product and introduce the Postal Service’s enhanced ground product — USPS Ground Advantage. USPS Retail Ground, Parcel Select Ground, and First-Class Package Service will be incorporated into USPS Ground Advantage.
Over the past year, the Postal Service has focused on improving its package offerings by improving service reliability, lowering prices, and simplifying shipping product offerings, including:
Lower Prices for Shipping Services. In January 2022, the Postal Service implemented new pricing for Shipping Services. As a result of the implementation of approved price changes, shipping rates for USPS Retail Ground products were reduced by 7 percent, and rates for Parcel Select Ground were reduced by 12 percent, on average. USPS Retail Ground and Parcel Select Ground prices remain at the lowered, January 2022 rates.
Improved Reliability Through Upgraded Service Standards. In August 2022, the Postal Service implemented upgraded service standards for its USPS Retail Ground and Parcel Select Ground products, aligning service standards with the current First-Class Package Service product within the contiguous United States. Service standards for these products were accelerated from two-to-eight-days to two-to-five-days for the same affordable price.
Simplifying Shipping Product Offerings. On October 28, 2022, the Postal Service was granted approval by the PRC to remove USPS Retail Ground from the Competitive product list, eliminate Parcel Select Ground from the Parcel Select product, and expand First Class Package Service to 70lbs among other enhancements.
Clearly USPS is continuing its efforts to compete head on with UPS and FedEx for Ground package services. With a possible work stoppage at UPS this summer, this new service and previous lower price offerings might be just what the doctor ordered.
Need help navigating this change or looking to get a hold of your shipping expenses? Reach out to one of our parcel experts today to help.
In our last article related to the UPS/Teamsters negotiations that we published on January 17th, 2023, we mentioned that UPS had made limited comments regarding this topic, due to their desire to “leave the negotiations at the bargaining table.” However, UPS leadership became more vocal about this topic over the last couple of weeks. So, we felt it was important to provide our customers and followers with details of what has since transpired.
First of all, on January 18th, 2023, UPS published their first ever Jobs and Opportunities report.
Although at first glance this might appear to have nothing to do with the upcoming Teamster contract negotiations, one has to consider the timing of the release of this report. This report was released immediately following the aggressive statements made by Teamster leadership earlier this year, which we detailed in our January 17th article.
Additionally, the details provided in this report showcase the quality of the compensation and benefits that UPS provides to their 350K Teamster employees. The report highlights the fact that Full Time UPS Drivers receive an average of $95K in base salary, top notch healthcare benefits, along with $23K per year in defined pension contributions. So, this certainly points to UPS efforts to inform the public, their customers, and existing employees that UPS Teamsters are already the highest paid in the industry. This does appear to be a major positioning move on behalf of UPS
In addition to the UPS Jobs report, the UPS Leadership team has made recent comments related to the upcoming Teamster negotiations. On the UPS 4th Quarter 2022/Full Year earnings call that was held on January 31st, 2023, UPS CEO, Carol Tomé, proactively made statements during her address to the investor community. On the call she stated that “We are well prepared for negotiations and are focused on achieving an agreement that is a win for our employees, a win for the Teamsters, and a win for UPS and our customers. We have great jobs with industry-leading pay and benefits.” However, she then went on to restate her position, that UPS feels that it is best to leave the details of the negotiations at the bargaining table.
Later in the call, one of the Financial Analysts covering the call stated that there has been a great deal of rhetoric and big press about the situation which might make customers uneasy about the situation. He went on to ask Carol what message she would want to provide to customers in an effort to ease their concerns. Carol’s response provided a little more insight than has been provided to date.
She said that “Without getting into the details of what will take place at the bargaining table, I think it’s important to remember that Teamsters have been part of the UPS family for more than 100 years. So, over 10 decades, we’ve negotiated many, many contracts. This is not our first rodeo.” She then went on to make additional comments that were designed to ease some of the fears customers are facing. Carol mentioned that “a win, win, win is very achievable because we are not far apart on the issues.”
She then described some of the things that UPS and Teamsters agree on, including the fact that both Teamsters and UPS agree that a healthy and growing UPS is good for all. She also mentioned mutual concern for the amount of days and hours that drivers are forced to work, due to the e-commerce explosion that has occurred over the last few years.
In the last UPS-Teamster contract, a new/ lower paid driver category was created, called a 22.4 Driver. These drivers work Tuesday through Saturday and carry a maximum hourly wage of $30.24, vs regular drivers who max out at $42.00 per hour. However, the current UPS-Teamster agreement limits the number of 22.4 Drivers that the company can hire. Therefore, the company often pays weekday drivers overtime to work on Saturdays.
Carol Tomé implied that concerns about extreme driver working hours should not be a difficult issue to overcome. She stated “And candidly, we think, with just a few tweaks to our existing contract, we can work this out. So, we’re not far apart. We’re aligned. We just need to work it out.”
Teamster General President Sean O’Brien has stated in the past that “We’re open to finding a solution to the seven-day week delivery because that’s what the competition is doing, but the existing staffing solution is not working for us. So, his comments do suggest that the Teamsters are aligned and agree that there needs to be a solution to the issue.
Although there appears to be alignment on some of the key issues that UPS and the Teamsters are facing, there are still some major questions and concerns that need to be considered;
How flexible will UPS and Teamsters be on the issues that they are aligned on?
What issues are they not aligned on?
Will the Teamsters push to eliminate the lower paid driver category, and demand more full time/full paid driver jobs?
Can UPS support the added costs driven by the need to add jobs, increase wages, and improve working conditions?
Will the Teamsters agree to accept a lower annual wage increase for current workers, in return for more job creation?
Can all of these items be worked out in advance of the agreement expiration on July 31st, 2023?
But the biggest questions of all are:
How will all of this impact shippers that have already had to absorb major increases in rates, driven by record level rate increases?
What can shippers do to protect themselves from the increase in costs that a new UPS-Teamster agreement will likely drive?
Thankfully, ICC Logistics will continue to monitor this situation to ensure that our customers and followers are aware of key developments in the process. Also, please be sure to reach out for us to discuss ways that we can help you mitigate the impact of ever increasing carrier costs. We are certain that this will be a valuable investment of your time.
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!
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!
“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?
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!
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.”
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 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!
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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.”
