Pulse on Parcel: Tips for Navigating Rate Increases and Service Disruption
As parcel carriers like UPS and FedEx make headlines for driver negotiations, potential strikes, rate hikes and more, brand solutions providers must keep a pulse on the news with backup plans ready.
This trending topic was the focus of a recent Brand Chain Member Meetup. We spoke with Glenn Miller, president of distributor management solutions at DemandBridge, who joined the meetup and has years of experience in this area. Below is his advice, edited for clarity and length.
As freight costs continue to rise over the years, it’s become much harder for distributors to compete with the Amazon Effect. Customers are acclimated to free or low cost freight. My advice to combat this is as follows:
- Negotiate your shipping contracts with the carrier or carriers you primarily use. Use outside resources that specialize in this versus trying to do it yourself. The key to getting the best overall savings is through analyzing data, patterns and spends. This allows you to focus on the best rate improvements where the majority of your spend goes. This is generally in ground shipments, but every company is different.
- Optimize your shipping process. Again data helps here. Small reengineering with your suppliers to reduce carton size can make a big difference in overall costs.
- Keep your customers informed. Be transparent about increased shipping costs. Unless they’re living off the grid, your customers are well aware of the inflationary pressures of the past few years, including in shipping and fulfillment costs. Consider options like free shipping over a certain dollar amount or flat rate shipping. Regardless, communicate and stay transparent to build trust.
- Consider alternative shipping options. Do some research on other carriers and rates. Implement software into your process that shops rates across carriers (UPS, USPS, FedEx, etc.). Most, if not all, of these software platforms can utilize any negotiated rates agreements inside the software.
- Consider utilizing an outside firm to do a regular and consistent parcel audit. Many of these are the same firms that can help negotiate your agreements and file claims based on your agreements. They generally provide parcel intelligence software to watch where your spend is going over time, too, letting you make smarter business decisions and prepare for next negotiation cycle.
- Always work with your suppliers. If they have multiple facilities, ensure that whenever possible they’re shipping from the nearest location possible to your end customer.
Dealing With Strikes and Disruption
Should a parcel carrier experience a stoppage in service, researching alternative carrier options needs to be expedited by distributors. Chances are if one carrier experiences a disruption, the others can handle an influx of volume.
With the duopoly that FedEx and UPS have on the market and the disruption it would cause, there’s always a chance the White House would step in to maintain service and foster brokering a settlement.
It pays to make sure customers understand that if there’s a strike, delivery delays could occur. It’s prudent to inform your customers — plan ahead and order early!
Supply Chain Resources to Keep on Hand
By Glenn Miller