The Shipping Environment: What You Need to Know for 2013 and Beyond

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Shippers, find out what the ongoing changes at the USPS - and increased parcel carrier fees - mean for your business. Learn how technology can reduce these costs and make operations more efficient. If …

Shippers, find out what the ongoing changes at the USPS - and increased parcel carrier fees - mean for your business. Learn how technology can reduce these costs and make operations more efficient. If your organization ships even a few parcels a day this presentation is for you.

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  • 1. The Shipping Environment: What You Needto Know for 2013 and Beyond
  • 2. Your PresenterJohn Kruzan is in charge of the Transportation Management Solutions Marketingat Pitney Bowes. John’s background in transportation management includes hisrole as Director of Strategic Partners and Business Development at DHL Expressand Manager of eCommerce at Airborne Express.In these various roles, John designed, developed and implemented new productsand sales programs for the business and consumer segments. His in-depthunderstanding and hands-on experience with technical applications, eCommerceplatforms, internet marketing tactics and analytics help guide businesses of allsizes to the best transportation management solutions. The Mail and Shipping Summit April 8, 2013 2
  • 3. Current State of Transportation Transportation costs constitute up to 7% of a company’s expenditures Carrier rates and fees rise every year, especially on the small parcel Supply chains are being lengthened by Internationalization and ecommerce Compliance and regulatory requirements are becoming more burdensome and complicated The ability to optimize shipments is diminished Ability to monitor carriers’ performance and use it to create meaningful metrics and benchmarks Different departments – transportation, procurement, accounting – are in silos and are not sharing the same information The Mail and Shipping Summit April 8, 2013 3
  • 4. Market Trends – Shipping Management Highly Fragmented, Often Overlooked Market  The “MRO” of Logistics (Companies underestimate spend)  Parcel Pricing is Complex (Surcharges, Dimensional Pricing)  Represents about 20% of total Transportation Spend  80%+ of Retail Non-Store Fulfillment  Parcel Shipping Tends to be Isolated (Little Visibility or Planning) Parcel and LTL are Fastest Growing Segments of Spend Direct to Consumer Increased Cross Boarder Consumer Shipping Regional Delivery on Multi-Modal Transport Store to Consumer Fulfillment The Mail and Shipping Summit April 8, 2013 4
  • 5. Costs are going up…  FedEx (2013)  FedEx Ground and FedEx Home Delivery services 4.9  FedEx Express 3.9%  UPS (2013)  UPS Ground 4.9%  UPS Air 4.5  Rates represent an “Average” across all zones and weights  Impacts lower weights, shorter zones  “Real” GRI could be as high as 8%  Does not include Accessorials or Fuel The Mail and Shipping Summit April 8, 2013 5
  • 6. Impact of Carriers’ General Rate Increase (GRI) 35% 30% 30% 25% 20% 15% 10% Increase 5% Over 5 years 0 2007 2008 2009 2010 2011 2012 Ground FDX/UPS UPS Air FDX Air Percentage increase the same for each Carrier USPS has increased parcel rates as well Price of Less-than-truckload (LTL) shipping has increased and capacity diminished Source Logica The Mail and Shipping Summit April 8, 2013 6
  • 7. One of the main drivers for transportation increases Forecast: US Online Retail Sales 2012 to 2017 Online sales are expected to top $370B by 2017 The vast majority of these are B2C parcels Another factor is the growth of ecommerce in Asia-Pacific and Source: Forrester Research, Inc. South America Brick and mortar retail is also changing networks to optimize online sales Carriers are changing service-offering to address this shift in capacity The Mail and Shipping Summit April 8, 2013 7
  • 8. But are companies responding to the challenge? According to the Aberdeen Group, only 20% of large shippers can be considered “Best-in-Class”:  Transportation decrease of 2.5%  Overall on-time rate of 97  Measured transportation performance weekly This is compared to the bottom 30% where:  Costs have increased 6%  On-time ratio was a meager 85%  Performance evaluation was less than 15x/year Added to this shipping has become a Customer Service issue as well… Whether “free” shipping or returns, the box has become an extension of a company’s brand The Mail and Shipping Summit April 8, 2013 8
  • 9. Getting a handle on all the moving pieces…  Need greater visibility and control over their parcel strategy  Leads to greater reduction in overall costs (from Aberdeen)  How do you develop a strategy which increases control, decreases costs and enables greater visibility?  Start with technology, with defined, implemented business rules The Mail and Shipping Summit April 8, 2013 9
  • 10. Evaluate the Shipping Habits of Your Organization Can anyone send overnight packages? What tools do your employees have to select a carrier service based on price and delivery objectives? What time does the package really have to be delivered? Are employees aware of the incremental costs that the carriers assign? Are signatures required? Or just proof of delivery? Can Thursday and Friday shipments be sent via a more cost- effective deferred service? Are there pick up times to qualify for certain services (e.g. next day ground to certain zip codes) and are you meeting those commitments? Does your company use manual air bills? The Mail and Shipping Summit April 8, 2013 10
  • 11. Create Business Rules & Enforce Them Employees should identify absolute delivery objective, not carrier and service  Choose the latest service level that will  still meet a specified delivery objective  Limit ‘Signature Required to select business-critical documents Eliminate or control access to manual airway bills Designate and/or restrict shipping privileges Assign cost centers to packages via an automated solution Utilize controls in automated solutions that designate or restrict users for shipping privileges & assign costs to departments or cost centers The Mail and Shipping Summit April 8, 2013 11
  • 12. Things to consider Automate shipping processing Diversify your carrier mix Employ zone skipping or use “Postal Hybrid” products Break down Information silos through integration Create an audit process for every invoice The Mail and Shipping Summit April 8, 2013 12
  • 13. Is the U.S. Postal Service an Option? The USPS is definitely an option for parcel shipping One of the main complaints of the USPS Parcel Products is its not like a private carrier Parcel is the USPS’ growth area Intelligent Mail Package Barcode (IMpb) is the Postal Services newest tracking technology for parcels The barcode contains significant package-level detail  Mailer ID , Service Indicator (What class and special services were used), Source Identifier , Serial Number and the 5-digit zip code IMpb creates greater visibility for Postal Service parcels The Mail and Shipping Summit April 8, 2013 13
  • 14. IMpb Required on all First-Class Package Services, Parcel Select, Parcel Select Light Weight, Bound Printed Matter, Media Mail and Library Mail Parcels in order to claim Presort and entry pricing. Effective January 28, 2013 with an added transition period until July 28, 2013 The Mail and Shipping Summit April 8, 2013 14
  • 15. Questions?Every connection is a new opportunity™