UPS will introduce peak season surcharges targeting shippers that experience 10% to 20% volume increases during the holiday season. Accurately forecasting shipment volumes will be challenging for shippers and the major carriers. Shippers considered "disruptive" due to shipment size or timing may face additional costs. The article provides recommendations for shippers to determine if they will be affected and to request cost projections from carriers to better plan for potential increases.

1. qreviewJuly - September, 2015 /// NO.4/Q3
Transportation Impact Quarterly Review
Parcel news you can use.
transportationimpact.com
SURCHARGES
PEAK SEASON
SNEAK
PEAK
PARTNERSPOTLIGHT
HowNASCAR’sall-timewinsleaderbuilt
aracingempireonstandards PAGE 6
FEDEX’SSECOND
2015FUELHIKE PAGE 8
“DISRUPTIVE”
PAGE 4
Areyoua
shipper?

2. “Disruptive” Shippers Partner Spotlight
Carrier Efficiency
Fuel Me Twice
UPS shippers that experience 10% to 20%
surges in volume this holiday season could
see peak season surcharges.
Learn how NASCAR’s all-time wins leader
built a racing empire on standards
Efficiency was the underlying theme in
UPS’s July 28 shareholder announcement.
FedEx’s second 2015
fuel hike headlines rate
increase announcement.
4-5 6-7
12-15
8-11
Before you ink your next carrier
agreement, carefully peruse the fine
print for any language relating to
your ability to request guaranteed
service refunds. Many times, the
carrier will slip language into an
agreement that waives a company’s
right to request credit for shipments
that did not meet service guarantees.
In other cases, the language will
give a company the right to request
them only if the carrier’s delivery
rate falls below a certain percentage.
Your customers expect you to take
ownership when things don’t go as
planned. Why should your company
expect any less?
QREVIEW is a quarterly newsletter published by Transportation Impact. All content in this publication is under inter-
national copyright laws. No part of the content can be reproduced in any form without the prior written permission of
Transportation Impact.
GuaranteedServiceRefunds
Q-Tip
S
ince our company’s inception in
2008, we have had the privilege
of getting to know some power-
ful people in the business world.
Our travels seemingly have taken
us everywhere, and we have built relation-
ships, both personal and professional, with
our clients that will last a lifetime. One thing
that always strikes me is the commonalities
we all share on many levels; mainly that we
all once started somewhere small.
That understanding was the foundation
for Transportation Impact’s Small Business
Forum, held locally near our headquarters in
Emerald Isle, N.C. Through a great part-
nership we have developed with Carteret
Community College we host the event
annually, giving local business owners in
our area the opportunity to network with us
and with each other to better understand
the professional challenges we all face and
to share experiences and ideas on how to
overcome them.
Our sole hope is that something, anything
might reaffirm, or even reignite, the passion
and persistence that turn good ideas into
great ones for all those who so well embody
what makes America great.
It is an exercise we take pride in, mainly
because we can share the lessons we have
learned along our path to becoming the
company we are today. More important,
though, are the lessons we learn from other,
much smaller companies. You see, relation-
ships help small business thrive, a notion
that tends to get lost in the shuffle as com-
panies grow into larger entities. Whether
you are a local mechanic or an executive at
one of the largest companies in the world,
you only will go as far as the relationships
you build will take you. It is easy to lose
sight of the human element once engrained
in high stakes business endeavors, where
consequences, positive or negative, are
far-reaching. That fact remains, however,
that it is good business to do business with
people you trust.
Over the years, trust is something we con-
tinue to work hard at. Our mission is simple:
we do what we say we will do. It is our
responsibility to carry out that mission, not
just at work, but in our community. The local
businesses that surround us have played a
role in the success of our organization. All
the relationships we have built along the
way are important to our success and the
success of those around us.
Our forum serves as a constant reminder
that it is the individual, not the idea, that is
most important. As John Wooden once said,
“Little things make big things happen.”
So that is what is in it for us: a reminder to
never lose sight of the little things. In order
to think big, you have to think small. In the
end, we are all in some ways only as good
as the people around us. We simply strive to
surround ourselves with good people, one
person at a time.
Keith Byrd
Co-Founder, Principal Partner
Transportation Impact
 kbyrd@transportationimpact.com
ContentsWelcome
ANALYZESTRATEGIZEREALIZE /// [3][2] /// QREVIEW · July-September, 2015 · NO.4/Q3 /// transportationimpact.com

3. UPSCEO David Abney
announced in early
February that the world’s largest
shipper would introduce peak
season surcharges for residential
shipments beginning this year.
Recently, another high-ranking
UPS exec said that there will be
no formal announcement of such
changes and that the carrier will
notify affected customers on
a case-by-case basis, targeting
companies that experience 10%
to 20% surges in volume or that
are otherwise disruptive to UPS’s
supply chain.
The move is undoubtedly one to
help UPS home in on what has
become a consistently moving
target: small package volume
during peak shipping season.
Both major national carriers
faced the scorn of the public
in 2013, when higher-than-ex-
pected volumes resulted in late
and missed deliveries in and
around the holiday season. UPS
in particular again made news
earlier this year when it posted
disappointing 2014 fourth-quar-
ter earnings, which it attributed
to the high costs associated with
bringing on enough manpower
to ensure that the same mistakes
from a year prior were not made
again, leaving the world’s largest
shipping company well prepared
and underutilized.
As hunting for last-minute holi-
day deals continues to become
more of a trend for consumers,
predicting how long those buyers
will wait to trigger their ship-
ments through the supply chain
has stumped even behemoths
FedEx and UPS.
The implementation of peak sea-
son surcharges (assuming FedEx
stays its demonstrated course
of acting in step with its primary
competitor) will put the onus of
this difficult task on individual
shippers. And with summer draw-
ing to a close, the uncertainty has
the potential to handcuff holiday
plans for certain companies,
which could face huge cost
increases, according to a senior
supply chain executive at one of
the world’s large shippers.
UPS will structure this surcharge
in a manner that will require
relatively detailed forecasting,
he said, something his team
Decisions
based on pre-
dictive analy-
sis will amount
to a shot in the
dark for many
shippers . . .
is a need that will quickly be
thrust to the forefront. With-
out any official announce-
ments, however, this need will
remain hard to define, forcing
shippers to stand idle and
hope for the best.
Predicting the future, espe-
cially with any accuracy, has
plagued mankind since the
dawn of time. From the econo-
my to the weather, financial
investment to horse races,
many claim to have found a
surefire formula, but few, if
any, have proven to be much
more than coincidentally good
at it. Some of the most sophis-
ticated data-driven compa-
nies on earth have scores of
analysts clambering through
mountains of empirical data
in search of a philosophy, a
formula . . . anything that will
stick. And, for the most part,
all remain within arm’s reach
of the drawing board.
Therein lies an intriguing chal-
lenge for companies without
those resources. Decisions
based on predictive analysis
will amount to a shot in the
dark for many shippers and
prove altogether impossible
for others.
So, what is a shipper to do?
The first step should be to
contact your carrier to deter-
mine whether your company
will fall victim, whether you
tend to flood the network
around the holiday season,
have odd-sized shipments,
or both. Items like mattresses
and outdoor grills can clog
carrier supply chains, creating
exceptions in an otherwise
heavily automated process.
Even the aspects that still
require human interaction,
like the actual delivery, can
encounter issues when, say,
a driver has to deliver a new
bed frame to the third floor of
a rural apartment building. If
your shipments fall into this
“disruptive” category, you
should ask your carrier how
these yet-to-be-announced
changes will apply to you.
Request a Projection
From there, it will make sense
to determine what additional
costs your company is likely
to incur, which, on its face,
should be relatively simple to
address. Using historical data,
it should be fairly easy to
ascertain how much has been
spent during peak seasons
past. Take that number to your
carrier and request (if not
require) a hardline projection
of how much that number will
increase. This will show your
carrier that you are on your
toes, and will give you tan-
gible leverage during future
negotiations.
Once a cost analysis has been
performed, it should be rela-
tively easy (conceptually, at
least) to identify other areas
where costs can be cut to
mitigate the increases. Even if
the savings you identify will
take time to realize, it is better
to have them spill over into
2016 than to never surface
at all.
Your Carrier’s Input
Of course, while cost is an im-
portant part of the equation, it
may only go so far in helping
you determine the range in
which you will fall when the
holidays roll around. For that,
you will need to put your
partnership to the test. Ask
your carrier for input on what
a realistic expectation should
be. If you do not have the
resources to develop a pre-
diction you are comfortable
with (and many companies do
not), there is nothing wrong
with asking the carrier to lend
you its resources; in a sense,
to help you play by its rules.
The benefit of shifting more
of that responsibility toward
the carrier is twofold: first,
you will not bog down your
own staff, already up to their
necks in planning for peak;
and, second, you will generate
leverage that could serve you
well should things fail to go as
planned. If the carrier is in on
the plan, after all, it would be
hard to dodge accountability
if the plan has holes.
When price is parallel be-
tween the two carriers, part-
nership is a key differentiator.
Use it to your advantage.
has scrambled to implement
in-house. The only alterna-
tives were soaring costs or
even a scenario in which UPS
would have the right to refuse
packages if the company hit
a commitment ceiling prior to
the end of the peak shipping
season.
Other sources say that UPS
plans to assist customers with
preparation, but the fact that
predicting shipment volumes
has continued to befuddle
both major carriers — each
possessing some of the most
sophisticated technology in
the world — illustrates the
obstacle shippers still have
in front of them. The trick-
le-down effect could essen-
tially mean that the major
carriers could end up dictating
their customers’ businesses to
a significant degree. Shippers
lagging beneath their thresh-
old commitments may need to
further decrease what already
are typically bottom-dollar
prices in an effort to funnel
more product through their
loading docks, and thus erode
profit. Those in jeopardy of
exceeding their commitments
could face an even more
problematic scenario, in
theory, by having to structure
deals in a manner that would
actually dissuade customers
from purchasing their product
after a certain date, and thus
forfeit revenue.
Accurate Forecasts
With dynamic changes to fun-
damental small package pric-
ing services on the horizon
for some shippers, the ability
to perform accurate forecasts
Peak SeasonSupply Chain Solutions
shipperstopaythepricethisholidayseason
SURCHARGES
PEAK SEASON
SNEAK
PEAK
ANALYZESTRATEGIZEREALIZE /// [5][4] /// QREVIEW · July-September, 2015 · NO.4/Q3 /// transportationimpact.com

4. RichardPettyMotorsports
you’ve ever experienced a
NASCAR race from inside the
track, then you know it’s a differ-
ent experience than just about
anything else. Without really ever
knowing it, you’re immersed in the
race-day rituals of the drivers and
their teams, free to mix and mingle,
If
its partners isn’t solely the
association with the
on-track greatness
of the sport’s big-
gest star. Instead,
it’s much simpler.
“It’s about being
valuable partners,”
said Richard Petty,
co-owner Richard Petty
Motorsports. “How can
we help you grow, how can we
help your business, and in return,
hopefully you can help us compete
on the track, or help with Victory
Junction or anything else under
our umbrella. It doesn’t matter
what business you’re in, we’re all in
this together to try and get better.”
The entire Petty family is in on the
act, and it’s about far more than
racing. Petty has several charita-
ble arms under his umbrella that
provide effective and affordable
marketing opportunities for a
variety of corporate sponsors.
While his RPM Sprint Cup team
obviously is the more traditional
draw for companies hoping to tap
into the unequivocal loyalty of race
fans, other, perhaps more estab-
lished brands can find additional
opportunities of a more charitable
nature.
The Petty Family Foundation
encompasses several humanitarian
efforts, including Victory Junction,
Paralyzed Veterans of America,
Hospice of the Piedmont and The
Preston Robert Tisch Brain Tumor
Center at Duke University.
Walk that same line
“Our partnership with Richard
Petty Motorsports started simply
with an introduction through the
Petty Family Foundation and all of
the great things that organization
stands for and represents,” said
Transportation Impact Co-Founder
Travis Burt. “For us, when we start-
ed out as a smaller company we
were looking for ways to give back,
and the Petty family model was a
great fit for us. We saw everything
the Petty name meant to so many
people and aspired to walk that
same line in many ways as our
company grew.
“Richard Petty rose to tremen-
dous fame. Even those who have
no affiliation with or affinity for
NASCAR know that he is an iconic
figurehead in American culture.
Understanding that and looking
at how he has decided to use his
fame for the betterment of others
was something we found very
admirable, and thus began what we
are confident will be a longstand-
ing partnership with several facets
of Petty’s entities.”
as everyone else. And at Richard
Petty Motorsports, the treatment
feels an awful lot like family.
People in all walks of life know
the Petty name. Anyone with even
the most remote awareness of the
sport can tell you that “The King”
arguably is the greatest stock car
driver who ever lived. Any Richard
Petty loyalist would argue only that
there is no argument, that Petty
is the best to ever pilot a racecar,
period.
Beyond the racetrack
With so much fame and adulation
surrounding him, there is a unique
reach that accompanies any asso-
ciation with Richard Petty, one that
extends far beyond the racetrack.
But where his race team, Richard
Petty Motorsports, truly benefits
More info
richardpettymotorsports.com
Richard Petty, Co-Owner of Richard Petty Motorsports
How can we help you grow, how can we help your
business, and in return, hopefully you can help us
compete on the track, or help with Victory Junction
or anything else under our umbrella.
to come and go as you please.
Contrarily, imagine yourself inside
any other professional sanctuary
prior to a game. You likely would
feel like an elephant in the locker
room; in the way and on the re-
ceiving end of those kinds of looks
that remind you that you don’t
really belong.
That’s the draw for NASCAR spon-
sors: the level of inclusion. There
is no totem pole. Whether your
logo is on the B-post – the space
just to the rear of the driver-side
window – or the hood of the No.
43 Ford, you’re treated the same
PARTNERINGwith a purpose
How NASCAR’s all-time wins leader built
a racing empire on standards
ANALYZESTRATEGIZEREALIZE /// [7][6] /// QREVIEW · July-September, 2015 · NO.4/Q3 /// transportationimpact.com
Partner Spotlight

5. Parcel News FedEx Rates
Fuel Me
Twice…
FedExwill waste little time
in hitting customers where it hurts
– their pockets – based on the latest
in a long-running, well-documented
chain of price increases.
In a release posted to its website on
September 15, the world’s sec-
ond-largest shipping company offi-
cially announced that it will increase
shipping rates by an average of 4.9
percent, effective January 4, 2016.
The announcement was merely a
formality, since shippers have grown
accustomed to these increases at the
turn of each calendar year.
But while the timing and delivery are
always generally the same, there is a
key difference in the 2016 version,
which is that two key facets will be
put in place before 2016. E-commerce
and oversize package shippers will have
to start spending early, thanks to fuel
table changes and unauthorized package
surcharge adjustments that will take
effect November 2, more than two full
months before the rest of the increases
are implemented.
FedEx pointedly stated that unautho-
rized packages – those that exceed the
FedEx Ground published length and
weight limitations – will cost more and
will be handled solely at FedEx Ground’s
discretion.
Less clear, however, was the amount
by which the surcharges for fuel and
unauthorized shipments will rise, and
probably for good reason. The publish-
ing of the new fuel tables and a deeper
dive into the actual rate structure
highlight substantial changes that
will cost customers significantly. A
package that exceeds the published
maximum dimensions in the FedEx
Ground network will cost $110 –
91.3 percent more than last year
– effective November 2, and the fuel
surcharge will increase at least 0.75
percent, and could spike nearly two
percent depending upon the per
gallon price of diesel or jet fuel.
The timing, of course, is unarguably
dictated by the peak season – the
heavy shipping period surrounding
the holidays that has plagued both
carriers in each of the last two years
– that will kick off just a few days
later. Nearly doubling the price of
unauthorized shipments will do one
of two things for FedEx: dissuade
customers from clogging its supply
Second2015fuelhikeheadlines
rateincreaseannouncement
ANALYZESTRATEGIZEREALIZE /// [9][8] /// QREVIEW · July-September, 2015 · NO.4/Q3 /// transportationimpact.com

6. SERVICE FEDEXFIRST
OVERNIGHT
FEDEXPRIORITY
OVERNIGHT
FEDEXSTANDARD
OVERNIGHT
FEDEX2DAY
A.M.
FEDEX
2DAY
FEDEXEXPRESS
SAVER
FEDEX
GROUND
RESIDENTIAL
SURCHARGE
FEDEXHOME
DELIVERY
2012 $48.40 $22.40 $18.80 $13.92 $12.10 $11.35 $5.49 $2.55 $8.04
2016 $54.09 $26.09 $23.83 $18.04 $15.69 $14.83 $6.94 $3.25 $10.19
$Change $5.69 $3.69 $5.03 $4.12 $3.59 $3.48 $1.45 $0.70 $2.15
%Change 11.8% 16.5% 26.8% 29.6% 29.7% 30.7% 26.4% 27.5% 26.7%
5-Year Cumulating Avg. Rate Change
Parcel News
sorial charges, are what keep
shippers guessing. The net
impact customers feel when-
ever they turn the calendar
typically is more significant
than the 4- to 6-percent aver-
age price hikes.
3-year plan
Companies that continue to
trade down from premium
services, for instance, will
continue to experience dis-
proportionate increases, since
those services will receive
the largest price hikes in
2016, nearly 8 percent across
all zones for all packages
weighing between 1 and 30
pounds. This trend started
when FedEx laid out a 3-year
plan to generate $1.7 billion
in “profitability improvement”
in October 2012.
Targeted for the bulk of that
improvement, FedEx said at
the time, was its Express seg-
ment, which was still feeling
the effect of a lagging eco-
nomic recovery and, ironically,
higher prices for jet fuel.
Back then, the Zone 2,
1-pound minimum for a FedEx
Home Delivery package was
$5.49, plus a residential sur-
charge of $2.55, which netted
a published rate of $8.04.
Next year that same package
will cost 26.7 percent more,
with a base rate of $6.94
and residential surcharge of
$3.25, resulting in a net rate
of $10.19.
Fuel surcharge for FedEx Ground will increase 0.75% to 1%,
effective 11/2/2015, depending on price of diesel fuel.
FedEx has continued to raise prices on non-premium services
disproportionate to premium services over the past five years.
Fuel surcharge for FedEx Express will increase 1.5% to
1.75%, effective 11/2/15, depending on price of jet fuel.
ATLEAST BUTLESSTHAN SURCHARGE
$1.27 $1.35 0.50%
$1.35 $1.43 1.00%
$1.43 $1.51 1.50%
$1.51 $1.59 2.00%
$1.59 $1.67 2.50%
$1.67 $1.75 3.00%
2015 FedEx®
Express
FUELSURCHARGETABLE
(EFFECTIVEFEB.2,2015)
ATLEAST BUTLESSTHAN SURCHARGE %CHANGE
$1.19 $1.23 1.50% 1.50%
$1.23 $1.27 1.75% 1.75%
$1.27 $1.31 2.00% 1.50%
$1.31 $1.35 2.25% 1.75%
$1.35 $1.39 2.50% 1.50%
$1.39 $1.43 2.75% 1.75%
$1.43 $1.47 3.00% 1.50%
$1.47 $1.51 3.25% 1.75%
$1.51 $1.55 3.50% 1.50%
$1.55 $1.59 3.75% 1.75%
$1.59 $1.63 4.00% 1.50%
$1.63 $1.67 4.25% 1.75%
$1.67 $1.71 4.50% 1.50%
$1.71 $1.75 4.75% 1.75%
2015 FedEx®
Express
FUELSURCHARGETABLE
(EFFECTIVENOV.2,2015)
ATLEAST BUTLESSTHAN SURCHARGE
$2.11 $2.29 2.50%
$2.29 $2.47 3.00%
$2.47 $2.65 3.50%
$2.65 $2.83 4.00%
$2.83 $3.01 4.50%
$3.01 $3.19 5.00%
$3.19 $3.37 5.50%
$3.37 $3.55 6.00%
$3.55 $3.73 6.50%
$3.73 $3.91 7.00%
$3.91 $4.09 7.50%
$4.09 $4.27 8.00%
2015 FedEx®
Ground
FUELSURCHARGETABLE
(EFFECTIVEFEB.2,2015)
ATLEAST BUTLESSTHAN SURCHARGE %CHANGE
$2.20 $2.29 3.50% 1.00%
$2.29 $2.38 3.75% 0.75%
$2.38 $2.47 4.00% 1.00%
$2.47 $2.56 4.25% 0.75%
$2.56 $2.65 4.50% 1.00%
$2.65 $2.74 4.75% 0.75%
$2.74 $2.83 5.00% 1.00%
$2.83 $2.92 5.25% 0.75%
$2.92 $3.01 5.50% 1.00%
$3.01 $3.10 5.75% 0.75%
2015 FedEx®
Ground
FUELSURCHARGETABLE
(EFFECTIVENOV.2,2015)
This year’s trend of FedEx’s
perceived angst about
unpredictable e-commerce
and oversize shippers also is
evident in the service-level
discount matrices published
in conjunction with the an-
nouncement.
Keep shippers guessing
While shippers expect prices
to increase annually, the
details of the individual
service-level increases that
FedEx bakes into its annual
published average, in addition
to the increases in its acces-
chains with big, awkward
packages, or pay the carrier
handsomely for the effort of
moving those packages from
A to B. Fuel hikes should pro-
vide top-line revenue relief,
which is desperately needed
to rally support from inves-
tors, when Q2 2016 earnings
are announced on December
17. As of September 25, FedEx
shares were down nearly 17
percent on the year, putting
the stock on pace to post its
first calendar-year loss since
2011. It is up 70 percent since
that time.
Without minimum relief, the discounts most
high-volume shippers enjoy lose value with
every increase added to the base rate.
By comparison, the net
rate for that same package
shipped FedEx First Overnight,
one of the carrier’s more pre-
mium services, has increased
only 11.8 percent.
To make matters worse,
without minimum relief, the
discounts most high-volume
shippers enjoy lose value with
every increase added to the
base rate. Each time that rate
rises, the price floor eats away
the net discount received by
the customer. The result for
the shipper is costs that are
higher still, and fluffy margins
for the carrier.
Trading down costs
Of course, weights and zones
vary widely, and any combi-
nation of the two could yield
vastly different results. Ship-
ments that carry higher base
costs will not be impacted by
minimums, and depending
on individual discount levels,
there likely exist opportuni-
ties for customers to operate
cost-effectively within a lane
that makes sense. Finding that
balance, though, is not easy,
and it is clear from the latest
round of price hikes that
FedEx will continue to make
sure trading down comes at
a cost.
FedEx Rates
ANALYZESTRATEGIZEREALIZE /// [11][10] /// QREVIEW · July-September, 2015 · NO.4/Q3 /// transportationimpact.com

7. Shipping Strategy Taking Stock of Carrier Efficiency
Inside the carrier quest to become more lean
TakingStock
ofCarrier
EFFICIENCY
E
fficiency was the un-
derlying theme in UPS’s
July 28 shareholder
announcement, during
which the world’s largest
shipping company said
that second quarter 2015 diluted
earnings per share were $1.35,
a 12% increase over adjusted
results for the same period in
2014.
All segments improved profit-
ability and expanded margins,
according to UPS, much to the
delight of shareholders, evi-
denced by the 7 percent jump in
the share price the next day.
“Pricing initiatives continue to
drive base rates higher,” accord-
ing to a news release posted to
the UPS website. Also contained
in that release was UPS’s select-
ed financial data from its Form
ANALYZESTRATEGIZEREALIZE /// [13][12] /// QREVIEW · July-September, 2015 · NO.4/Q3 /// transportationimpact.com

8. 20-percent surges in vol-
ume are targets, as are other
customers UPS deems are
disruptive to its supply chain.
Oversize package surcharges
are also in play for companies
that ship large products that
slow down the carrier’s op-
eration. These charges could
be implemented only during
peak season or permanently
in certain, yet-to-be-deter-
mined instances.
Of course, no shippers will be
immune to the general rate
increases that are announced
annually, usually in late
October or early November.
With seemingly so many other
moving parts in play this year,
the effects of those hikes
could feel more compounded
that usual, especially for cus-
tomers subject to the pricing
changes outlined above.
With so much at stake, it is
no wonder that efficiency
and optimization have taken
the business world by storm.
Companies everywhere are
looking for the upper hand,
and the good ones are finding
answers right under their
noses, by effectively utilizing
their own data to understand
their respective businesses in
granular detail. While it obvi-
ously is a great time to be a
UPS or FedEx shareholder, the
same can be said for being an
analyst. There is no shortage
of solutions clamoring to be
found; no shortage of work, in
other words. The challenge,
though, is a company’s ability
to combine analytical skill
with market knowledge suffi-
cient enough to build a strong
foundation for lower costs
through statistical analysis.
While many have one or the
other, possessing an in-house
expert (much less an entire
team of them) capable of mar-
rying data and market pricing
knowledge is a luxury typi-
cally afforded only to larger
companies, and you would be
surprised how many of those
do not possess the knowledge
they think they do.
A study of 500 high-volume
parcel shippers with net an-
nual parcel spends between
$200,000 and $30 million
found that less than 15
percent have market appropri-
ate rates for companies with
similar spend and shipping
characteristics.
Fortunately, shippers without
these resources do have
options.
Leverage relationships
First, savvy companies can
leverage their carrier relation-
ships to make ends meet. UPS,
in particular, has begun telling
customers that the carrier will
not make them go it alone
when the pricing changes
shake out. By leveraging a
carrier relationship, high-vol-
ume shippers can request that
their carrier help shoulder the
load. With an army of analysts
and engineers (most or all of
whom specialize in this sort of
thing), the carrier should have
all the necessary data to make
as good a prediction as any
with regard to how a specific
company should prepare for
the road ahead. Depending
on the nature of that rela-
tionship, however, that advice
could come with a price tag.
Even if the carrier is willing to
provide insight at no cost to
the customer, there is still an
unsettling element of letting
the fox guard the henhouse,
in a matter of speaking. Ship-
pers should use caution and
understand that FedEx and
UPS have their own margins
to protect, and that their sales
reps are only empowered with
a limited amount of knowl-
edge. (UPS arguably is more
profitable than ever, after all.)
Simply put, it would be good
practice to vet any advice they
provide to prevent unforeseen
issues down the road.
3PL data analysis
Second, options for third-par-
ty input abound, many of
which are capable of provid-
ing the insights needed to
make sound business deci-
sions on a quick turnaround,
as dictated by an ever-
changing market. With large
customer sets from which to
extract data for comparison to
your account, a qualified and
properly vetted third party is
uniquely qualified to perform
powerful data analysis from a
customer perspective. Good
ones can determine whether
your rates are competitive
and provide a wealth of
actionable intelligence across
many different departments.
Great ones will even highlight
optimization opportunities
you are currently ignoring, or
unaware of, many of which
could greatly improve the
overall health and efficiency
of your supply chain. While
those services, too, will come
at a cost, the decision then
boils down to the net benefit
to your organization. The lat-
ter should result in more net
costs savings and efficiency
enhancements that benefit
you, the customer.
Of course, which road is best
for your company is a case-
by-case scenario. The only
universal truth is that changes
are coming that could have
significant impacts on the
bottom lines of companies
that are ill prepared.
The carriers are pacing the
field in terms of efficiency,
showing us all how profitable
that can be. If you are an
investor, the numbers suggest
that you should take notice.
If you are a shipper, likewise,
you should take action.
A study of 500 high-volume parcel shippers with net annual parcel spends between
$200,000 and $30 million found that less than 15 percent have market appropriate
rates for companies with similar spend and shipping characteristics.
Shipping Strategy Taking Stock of Carrier Efficiency
10-K and other filings with the
Securities and Exchange Commis-
sion, which highlighted several
suggestive factors that could
attribute to the carrier’s strong
performance.
For the quarter, operating
expenses dropped 10 percent,
while operating profit soared 162
percent. Net income rose 171
percent and UPS reported 8.7
percent net income as a percent-
age of revenue, up 172 percent
from a year prior.
These numbers point to the fact
that UPS’s efforts to become
more efficient are working, and
working very well. The numbers
contained within the report point
to revenue decline in premium
air services and increases in
deferred air and ground ser-
vices, two segments that saw the
steeper price increases when the
2015 general rate increase was
announced last year, substanti-
ated by steep volume growth in
domestic deferred air services.
Home in this season
The evidence seems to point to
the fact that UPS’s efforts to more
heavily increase prices of services
they know their customers will
use most are lining their pockets.
And as both major global carriers
begin to home in on the holiday
season – which has pestered
them both in each of the last two
years – the true cost of carrier
profitability still appears to fall
down to their customers.
With changes promised to over-
size package surcharges and the
advent of peak season surcharg-
es for certain shippers, both
carriers are poised to prevent, or
at least limit, the recurrence of
issues that have led to each carri-
er’s disappointing fourth quarter
in each of the last two years.
Contrarily, however, FedEx and
UPS customers will face an
increasingly tough road ahead as
they struggle to remain compet-
itive in the face of increasing
costs for necessary services.
Peak season surcharges
UPS is considering assessing
peak season surcharges on a
customer-by-customer basis.
Customers that experience 10- to
Excellent 3PL data
anlysis will high-
light optimization
opportunities you are
currently ignoring, or
unaware of, many of
which could greatly
improve the overall
health and efficiency
of your supply chain.
ANALYZESTRATEGIZEREALIZE /// [15][14] /// QREVIEW · July-September, 2015 · NO.4/Q3 /// transportationimpact.com

9.  Emailed $419 worth of automated address corrections to distribution center.
 Scheduled monthly email audit-savings report for parcel review meetings.
 Set up GL coding for web orders, service department and warehouse.
 Noted $1,284 in soft-dollar savings opportunities and customized dash-
board with Air-to-Ground report.
Whatdid youdo
before your first cup of coffee?
Schedule a 20-minute Parcel Intelligence Dashboard demo and learn how you
can optimize your shipping spend and capture all your FedEx and UPS refunds.
transportationimpact.com // info@transportationimpact.com // 252.764.2885