TF 108 MEGA SESSION Everything You Wanted to Know but Were Afraid to Ask As a parcel shipper, you hear things... New carrier services, acquisition rumors, policy changes. What's true and what's spin? A PARCEL Forum exclusive, here's your chance to ask former carrier executives and two of the top parcel consultants in the US ANY question on your mind. Questions such as: What's the truth about FedEx and UPS policies about working with third-party consultants? What's the single best way to reduce costs in today's environment? Will any third player, whether the U.S. Postal Service or regional carriers, make a play to gain significant market share from the Big Two? How can you gain leverage in your carrier negotiations? What's the best deal you can get from a third-party consultant? And many more! There are no sacred cows in this session. Everything is on the table. Because of the sensitivity of this session, attendees will be asked to sign non-disclosure agreements.Implications & Predictions of USPS Financial CrisisNo Saturday delivery1/20/12 rate increasesFuel surcharge? 2012 Parcel PricingAnnouncements?2011 reviewCovidian case study 3rd Party NegotiatorsUpdate on AFMS lawsuitPolicies in reviewReasons for policyLegal implications of disclosing confidential informationEffectiveness of policyEffects of policy for shippersEffects of policy for 3PNsEffects of policy for carriersHow to select a 3PN and Negotiating with the Negotiators State of the Parcel IndustryAcquisitionsCarrier Pricing PredictionsElimination of 3 cubic foot gimmeIncentives no longer to apply to fuelImpact of Regional players Best Ways to Reduce Costs in 2012
Also in 2006, moved increase from February to January. Reason given, to better align to our customer’s budgeting. Result, $85M for the month!
Started in 2005 at $3.62. Since, net rates are up $1.22 which is a 26.2% increase.
Identify how currently impacting your costsWork with carriers to reduce back-end charges, or capture on the front-endAll surcharges are negotiable; some can be waived!Utilize prepaid shipping productsSoftware/information solutionsRDI software to identify residential addressesAddress cleansing s/w to avoid address correctionReal-time APIs with discounted rates/fuelDownload DAS ZIPsExplore UPS Scan-based billingEnhances reconciliation & allocation Avoids bill for shipments manifested but not shipped; lost packagesMinimize audit expenseUPS Shippers – Implement scan based invoices (Scan Based Billing is a new billing model that aligns the billing of a shipment with operational activities. Under the Scan Based Billing model, the billing process begins when we capture a physical scan. Final billing will occur after delivery or in the absence of a delivery scan billing occurs based on a previous physical scan.)Shipments billed based on physical scans. Avoids a bill for:Shipments manifested but not shippedLost packagesMost post manifest charges will appear on the same bill as the original transportation chargesEnhances reconciliation and cost allocation processes by having most transportation and post manifest charges on the same billImproves cash flow by allowing shippers to bill their customers the total transportation charges more timelyCan reduce the need for extensive auditing
Both FedEx and UPS on the same day (4/23/10) announced to Field Sales very similar policies that they won't work with third-party consultants. It's now the subject of an ongoing Department of Justice Antitrust investigation. Do you think UPS and FedEx colluded to boycott third parties?
Parcel Forum 2011
TF 108 MEGA SESSIONEverything You Wanted to Know but Were Afraid to Ask Rob Martinez Gerard Hempstead President & CEO President Shipware, LLC Hempstead Consulting www.shipware.com www.hempsteadconsulting.com
Topics for Discussion• Ground Rules• NDA• What’s discussed in this room, stays in this room• No media press
Suggested Topics• Implications & Predictions of USPS Financial Crisis• 2012 Rate Increase• Pricing Benchmarks• 3rd Party Negotiators – Update on AFMS lawsuit• State of the Parcel Industry• Carrier Pricing Predictions• Impact of Regional players• Best Ways to Reduce Costs in 2012
Steps taken past 12 months to reduce parcel costs? (Check all that apply) 48%50%45%40% 34%35%30% 26% 27%25%20% 12% 13%15% 9%10% 4% 5% 0%
Minimum Charge Strategies• Negotiate Minimum Shipment Charge – Percent off – Dollar off• Quarterly rebate contribute savings to minimum charge*• Explore per ounce rating (USPS, SmartPost, etc.)
Strategies for GRI• Fix incentives to previous year’s tariffs• Cap increases – Maximum – % below general – Include minimum charges as % or $• Rebate
DIM Strategies• Do nothing; contract already above the standard 194• Negotiate the new factor to something greater than 166 or “grandfather” the 2010 dim factor• Redesign corrugated packaging and packing configurations• Switch carriers (pending UPS GRI announcement) 1
Solutions for Res & DAS• Negotiate concessions• Identify charges in advance• Download DAS ZIP table• RDI• Sourcing alternatives• Ask for commercial address• Rebate
Accessorial Charges Solutions• Understand impact• Negotiate concessions – All accessorial charges are negotiable! – Percent or $ off – Range from 0-100%• Software solutions (mitigate and/or charge back) – Residential surcharge – Address Correction• Scan based billing• USPS options
Accessorials negotiated at least a 25% incentive: (Check all that apply)35% 31%30% 26% 25%25% 22% 22%20% 15% 15% 16%15% 12% 10% 9%10% 6% 5%5%0%
If you could change your UPS or FedEx PricingAgreement, what would it be? (Check all that apply) 69%70%60% 55%50%40% 31%30%20% 15% 13% 12%10% 5%0% Better Better terms Fewer No rolling >Term >Payment Other discounts surcharges averages or terms Eds
Upper Tier Incentives by Service TypeService Incentive Percent of ShippersNext Day Air/Priority Overnight 61% or Greater 19%Two Day Air 51% or Greater 21%Ground (1 to 10 Lbs) 41% or Greater 18%Ground (11 to 30 Lbs) 46% or Greater 12%Ground (31 to 50 Lbs) 51% or Greater 10%Ground (51 to 150 Lbs) 51% or Greater 7%
Thank You For Attending OTHER PRESENTATIONS THIS WEEK Monday, Oct 24, 9:00 am - 4:00 pm WS 100 PRECONFERENCE - Inside Parcel Rate Negotiations Tuesday, Oct 25, 10:00 am – 10:45 am PL 502 SURVEY RESULTS - Pricing Benchmarks, Trends and Cost- saving Strategies Wednesday, Oct 26, 9:00 am – 9:45 am Rob Martinez, MQC, CMDSS TM 206 Low-Cost Delivery Options for Residential Shippers President & CEO Wednesday, Oct 26, 2:45 pm – 3:30 pm Office 858.538.3359TF 108 MEGA SESSION - Everything You Wanted to Know but Were www.shipware.com Afraid to Ask email@example.com