• “New Normal” includes Freight and Accessorial Increases 4.9%-9.5%
• FedEx Introduces 6% late payment fee
• “Frozen Tiers” to end October 2020
• Learn how to mitigate these new increases, See below

​FedEx announced their 2021 General Rate Increase on Monday evening, September 14th. Overall, FedEx Ground Home Delivery, Express and International rates, will increase an average of 4.9%. Accessorials, fees and surcharges will see an increase of 4.9% -9.5%. While base freight rates mirror last year’s rate increase of 4.9%, Accessorial fees and surcharges will continue to add to the carrier’s bottom line. Although SmartPost and Ground Multi-Weight service increases have yet to be posted, suffice to say they are on their way. 

Given the recent rounds of Peak charges introduced over the past few months, 2021 Rate increases should be of no surprise. Due to the ecommerce explosion, rising costs, capacity and yield management concerns, carriers have went on the “offensive”. If you were fortunate enough to have your revenue tiers temporarily “frozen” due to COVID, FedEx will be thawing them out in mid-October. If all of these changes are not enough to digest, you will also want to make sure you pay your bill on time or else you will receive a 6% late payment fee, courtesy of FedEx. 

Keep in mind that these increases are only “service level” averages, while fees and surcharges will incur entirely different increases. Each company’s impact is uniquely dependent on a variety of factors. Let AFMS help you sort out the changes and how they will affect your business.

To get down to the details of this increase AFMS has prepared an expert analysis that you can find here.

Many companies too preoccupied with the key factors of their business to pay close attention to their shipping. This is especially true of small businesses, which rely on a smaller workforce and may not have the time or resources to sit down and go through their parcel shipping contracts line by line.
However, if you're not paying attention to your shipping at all, then you may find yourself losing more money than you think. That said, how can your business save money on shipping costs over time without sweating the details? Here are three ways you can save some serious money.

1. Shipping refunds. A guaranteed service refund ensures that a problem caused by your carrier is handled by your carrier and not by you, the business owner. For instance, if a package was delivered late or not delivered at all, a guaranteed service refund ensures that your business isn't the one paying for the customer's refund. It's important not to sign a shipping contract that contains a guaranteed service refund waiver, or GSR waiver, because it keeps you from holding your carrier accountable. If your carrier isn't required to deliver packages on time, then there's nothing stopping them from delivering them late. As a result, your business takes the fall for the late shipping and ends up paying out of pocket for a problem you didn't cause.


2. Flate-rate shipping. Major shipping companies offer flat-rate shipping options. USPS has the cheapest flat-rate shipping, making it ideal for entrepreneurs and other small business owners. Order a few flat-rate boxes from different shipping companies to determine which boxes work best for shipping your products. You'll want to calculate the cost of shipping, shipping time, and box size to determine which flat-rate boxes will save you the most money. Don't hesitate to contact shipping providers to ask for more information about different rates based on the distance the package is traveling.


3. Negotiate your shipping rates. The U.S. is the biggest market by parcel expenditure, making up $119 billion of the $317 global expenditure on parcel shipping. AFMS offers professional and experienced parcel contract auditing and benchmarking to determine where your business can save money on shipping costs. From there, we can help to provide parcel contract optimization and negotiations support to help your business get the best possible deal in your shipping contract.

Ready to get started with parcel contract negotiation? We've got you covered. For more information on how AFMS can help your business save money on shipping, contact us today.

When it comes to parcel contract auditing and parcel contract optimization, there are a few key terms you ought to know: RFI and RFP. RFI and RFP stand for refund for information (RFI) and request for proposal (RFP). Both differ from request for quotation (RFQ).

RFI and RFP each serve different purposes throughout the procurement process, but both are used to obtain important information. The more you know about these RFx documents, the more you can do as a business to improve your position when it comes to shipping and your shipping contract. Both RFI and RFP are instrumental in cost savings, risk mitigation, and process standardization.

What is a request for information?

A request for information is a document meant to gather information about the capabilities and qualifications of carriers. All an RFI does is request information. It doesn't obligate you to any carrier and doesn't obligate a carrier to your business. Businesses use an RFI to figure out which carriers they ought to invite to the RFP stage. This part of the process may include current shipping partners and new candidates to help expand your shipping efforts. It's not uncommon to expand your network and to bring on new, qualifies carriers to help increase your business' reach in the marketplace and build credibility.

What is a request for proposal?

The next step in the procurement process is the request for proposal. The RFP is a formal request for shipping companies to provide detailed business proposals that can meet your company needs. Your RFP needs to be specific and granular, containing all the information that you need.

A good RFP is effective, innovative, and receives complete responses that give your business the ability to compare shipping companies equally. Each RFP is different based on the needs of the business. However, each effective RFP provides the necessary information that suppliers need to achieve accurate and important responses from carriers.

Seek out parcel shipping contract negotiations support

If you're not sure how to successfully create an effective request for proposal or if you're not sure how to navigate your requests for information, a professional team of parcel shipping contract negotiators can help. With over $2 billion in refunds and credits going unclaimed by U.S. businesses every year, it's important to make sure you're getting the most bang for your buck when it comes to choosing a shipping carrier. Contact the parcel pricing experts at AFMS for more information on contract negotiation support.

The U.S. Postal Service has been hit hard by the COVID-19 pandemic, suffering a $4.5 billion net loss in its most recently reported quarter. After decades of operating without taxpayer subsidy, the public service received no rescue funding since the beginning of the COVID-19 crisis. To stay afloat, the USPS has been prohibiting overtime and cutting transportation costs.

Many small businesses and entrepreneurs rely on the USPS to make shipments. This is especially true of international entrepreneurs who may otherwise have to pay substantial shipping costs that are more expensive than the item being shipped. An end to the USPS could not only mean a significant loss to small businesses but also a shift toward larger carriers like FedEx.

Gradually shifting in-house

Larger carriers like FedEx and UPS use the postal service as a way to hand off their deliveries to make the final mile. In 2018 alone, there were 87 billion parcels shipped worldwide. However, in 2019, FedEx stopped using the postal service to make those local deliveries. Instead, it began insourcing 2 million packages daily using its SmartPost service.
COO Raj Subramanium said in March that the move to bring services in-house was an economic decision, but it was a major financial blow to the postal service because FedEx was as much a customer of the USPS as the USPS was of FedEx.

Potential price changes

President Donald Trump called on the USPS to increase its package rates to compete with privatized delivery services. However, the USPS is a public service and the agency's Board of Governors has been hesitant to increase rates for mail. While the USPS could come out ahead of its competition in terms of pricing, the shippers who use its services won't be happy about the new rates and may turn to other carriers like FedEx.

Don't accept your contract at face value
Should the U.S. Postal Service close its doors for good, large-scale delivery services like FedEx may take advantage of the new situation by increasing their prices or inserting carrier GSR waivers into their contracts. It's important that you never accept your contract without FedEx contract pricing optimization and negotiation support. Without FedEx contract pricing optimization, you're leaving your business open to the risk of being taken advantage of.

AFMS offers parcel contract auditing, benchmarking, and FedEx contract pricing optimization to ensure your business is always paying the right price for shipments. For more information about our parcel shipping contract negotiations support, contact AFMS today.

August 7, 2020 Update
This is the most aggressive Peak Season pricing strategy we have seen UPS take.  It is geared towards E-Commerce / Residential Shippers and the goal seems to be to 2-fold:

1. Control the influx / flow of weekly package volume into the UPS network between Nov 15th 2020 - Jan 16th, 2021.   

UPS is using Price to try and drive shippers' behavior to help them better control and manage Peak Season weekly package volume flow in their network.  The 3 tier surcharge matrix in section F seems to be designed to control the rate of volume a shipper plans to tender to UPS each week during the peak Period and / or for shippers to spread package volume to other Parcel Carriers: USPS, FedEx, Ontrac, Lasership each week during the peak period.

2. UPS is going to make more $$$ in Peak 2020.  

UPS and their new CEO, Carol Tome, know shippers are in a very tough situation due to COVID-19 and have to use Parcel Carriers to drive sales and get products to customers.  She has said publicly that UPS needs to get smaller and charge more for their services.

https://www.bloomberg.com/opinion/articles/2020-07-30/ups-new-ceo-carol-tome-has-impressive-earnings-debut  


AFMS helps companies mitigate these carrier announcements.  Please feel free to contact us today and let us review the impact on your company.

E-commerce businesses are thriving right now. In fact, up to 2,760 packages are shipped every second. However, despite a thriving market, shipping costs are still one of the highest expenses when it comes to order fulfillment. With the surcharge increases recently implemented by FedEx and UPS are here to stay, it comes as no surprise that many businesses are questioning their shipping carrier strategies.

Compared to traditional retail companies, e-commerce businesses typically employ small parcel providers. But it's important to consider your options as your business grows to determine whether using multiple carriers or using a single carrier is in your best interest.

Know what your business needs

Multiple carriers aren't for everyone, and the volume of your shipments isn't always enough to consider making the switch away from a single-carrier arrangement. A regional carrier may be all your business needs if it's the most efficient strategy for your shipments and if your company's service level is your top priority. Regional carriers are typically best for when your shipments are concentrated in a single geographic location. Their rates and other fees may also be more competitive compared to national carriers.

However, it may be worth considering national carriers if your business begins to see the following:

• A dramatic increase in orders


• A surge in business in other geographic locations


• Increasing problems with your regional carrier

Keep in mind that parcel contract auditing and parcel contract optimization are both essential to the success of your shipments whether you're using regional or national carriers or both. If your business doesn't meet your customers' expectations when it comes to delivery, then it'll be your brand reputation that takes the hit, not your carrier.

Have professionals conduct a parcel audit

When your business is comparing rates and determining whether using multiple or single carriers is best, it can be helpful to understand how your shipping rates are determined with your current carrier. Professional parcel pricing experts can conduct an audit on your current parcel contract and shipping history to determine if you've been paying for late deliveries, returns, or overcharges.

From there, you can get a more accurate idea of what your business would be paying your carrier after parcel contract optimization is conducted. This gives you the ability to compare shipping carriers, rates, and methods more accurately when choosing whether to use multiple carriers or switching to a new regional carrier.
​
If your business needs assistance with parcel contract optimization, parcel shipping contract benchmarking, or contract auditing, AFMS has you covered. For more information on our services, contact AFMS today.

Every year, businesses ship billions of parcels across the country and worldwide to deliver their products to happy customers. In 2018 alone, approximately 13 billion parcels were shipped. To ensure that customers stay happy and get their parcels on time, businesses rely on carriers and shipping contracts to transport their products. However, because carriers also need to make money, it's not uncommon for shipping parcel contracts to try and take advantage.

To help you avoid wasting money on services that you don't need to pay for, here are a couple of the most common contract errors that your parcel contract is actually hindering rather than helping your business and what you can do to stop it.

You've signed a GSR waiver

You want to carefully review before agreeing to sign GSR waivers when you're signing a parcel contract. If you've signed GSR waivers in the past with your current carrier. This is a problem for several reasons. First, there's a chance you've been paying for product returns that aren't your responsibility. GSR waivers waive the right to late delivery refunds. That means your carrier isn't responsible for getting your customers' packages to them on time.

Seldom is your business is the one paying for a refund if your customer's package gets lost in the shipping process even if the loss is the fault of your carrier. Another reason is, your customer satisfaction may be damaged.

You have discounts in areas you don't use

There are 400-500 options carriers have available to their shipper knowing which options are best for you is a massive challenge. Your parcel contract may have great discounts in many of the areas, but those discounts are for areas that your business doesn't use, then you're not getting the savings you think you are. Many companies are offered these "Extended" discount to sign a GSR waiver. It's essential to know what service levels, package characteristics, and zones you use. AFMS offers a new customer analysis of these areas you have waived GSR recovery.  We can tell you your loss costs.  You'll know which areas will have the biggest impact on your parcel budget when you sign a new contract.

AFMS understands how overwhelming it can be to determine whether you're getting the right services, discounts and terms when it comes to shipping. Our parcel pricing experts will help to make sure that you're not being overcharged for shipping services. To learn more about our parcel contract negotiation services, contact AFMS today.

This past May, U.S. parcel shippers were hit with major price hikes from FedEx and UPS when the delivery services implemented domestic surcharges at short notice. UPS increased their surcharges on May 31 with FedEx close behind, increasing surcharges on June 8 to keep up with the competition. With the COVID-19 pandemic increasing the number of e-commerce shipments made, it wouldn't come as a surprise to see these surcharges jump up again soon.

Oversize fees, delivery area surcharges, and accessorial charges are always prepared to increase. That being said, it's important to make sure your business isn't being taken advantage of during parcel contract negotiations. To help you avoid losing money, here are three items your business needs to negotiate with FedEx and UPS throughout the rest of this year.

GSR Waivers

When you're getting ready to renew your parcel shipping contract, you mustn't sign a GSR waiver. A GSR waiver is a Guaranteed Service Refund that prevents a shipping client from recovering the costs to ship a package if the carrier delivers a package late.

GSR waivers, such as the FedEx Money Back Guarantee and UPS refunds, are typically added to parcel contracts in exchange for additional discounts and extra incentives. However, despite these discounts and incentives, it's important not to sign a FedEx Money Back Guarantee or UPS refund guarantees. This is because, if you check your parcel audit, GSR waivers such as the FedEx Money Back Guarantee can end up costing you 3% to 5% in lost revenue because carriers won't be held accountable for late deliveries.

Weight Surcharges

The U.S. is the biggest market by parcel expenditure, making about one-third of all money spent on parcel shipping. Weight surcharges have increased for both FedEx and UPS. Weight charges apply at 50 pounds (actual weight) instead of the current 70 pounds. That's a significant cost for shippers at $24 per instance. It's in your best interest to request a discount with your carrier to find a way to offset this increase in expenses.

If you can't get a discount for these new weight surcharges, consider exploring your network with an RFI, or Request for Information. An RFI can help you determine which carriers to invite to a Request for Proposal (RFP) if they meet your requirements through the RFP process. Switching carriers can help your business expand its network and build credibility in the marketplace.

Rate Caps

For different UPS and FedEx service levels there are different rate caps. A rate cap is crucial for parcel shippers when it comes to saving money on shipments because it helps to keep rate increases in check. However, rate caps are limited only to transportation charges. Still, depending on the UPS and FedEx service levels where charges are expected to increase, negotiations can be made to limit that rate increase to improve savings.

Looking for parcel contract negotiation support?

It's no secret that parcel contract optimization and negotiation is challenging, especially when you're not familiar with making parcel audits. Fortunately, you don't need to sweat your parcel audits when you work with AFMS. AFMS has the experience you need for parcel shipping contract negotiations support. For more information about our freight pricing support and negotiation services, contact AFMS today.

​It's no secret that parcel contract optimization is necessary for both businesses and carriers what with over $2 billion in refunds and credits going unclaimed by U.S. businesses every year. In fact, according to the Washington Post, neither Amazon nor the Post Service knows for sure what the revenue from their parcel shipping contract is despite the fact that Amazon uses the Postal Service for up to 40% of its shipping.

​Parcel contract optimization ensures that both parties are acting in compliance with their shipping contract and that no party is being overcharged. Parcel contract auditors will analyze contracts for service errors and to determine if any refunds or discounts are in order.

However, the parcel contract optimization market has been affected by the COVID-19 crisis like many other markets have been, and the future of the market is expected to shift. That being said, what market changes can we expect to see and what trends should people be aware of? Here we'll dive into the parcel contract optimization market pre-and-post pandemic.

Pre-Pandemic: Carriers Shifting Gears

Prior to the pandemic, the parcel industry saw significant changes. FedEx chose not to renew not one but two contracts with Amazon, UPS signed a five-year labor contract, and the US nearly departed from the Universal Postal Union.

E-commerce deliveries were growing for multiple carriers. This was especially true for FedEx, which began delivering packages on Sundays via Ground. FedEx also started allowing FedEx Express to hand off some of its deliveries to Ground when they were in the last mile. The trends that were expected to come in 2020 included General Rate Increases from carriers, expectations from consumers for faster deliveries, and increases in carrier capacity.

Current Pandemic: What Is the Market Doing?

With so many Americans staying home and social distancing to combat COVID-19, the e-commerce market has climbed 49% and retail sales have dropped significantly. Additionally, mail volumes are falling and putting greater pressure on profit for the United States Postal Service. Parcel volumes are growing and helping profitability, but the USPS isn't able to profit through types of shipment.

What Trends Are Expected in the Future?

According to Barron's, the probability of change happening for the USPS and other carriers is higher because of the COVID-19 pandemic. Issues that may have seemed small prior to the pandemic are now highly visible, and some shippers specializing in consumer products may continue to see their volumes climb while overs will see declining demand.

Shippers who have seen their volumes decline ought to be wary of their carrier pricing and discount structure. With e-commerce shipments expected to continue to rise and the USPS looking to improve its profit margins, parcel contract auditing, negotiating, and optimizing will be more important than ever. That's where AFMS comes in.

AFMS has parcel pricing experts your business needs to analyze shipping contracts and to provide parcel contract negotiations. For more information on parcel shipping contract benchmarking and contract optimization, contact AFMS today.

​​Many businesses feel confident in their ability to review their own parcel shipping contract when the time comes to renew their contract with their carrier. However, parcel shipping contracts can be difficult to navigate when you're not entirely sure what you're looking at, and you might just end up paying more for shipping than you need to.

This is where the parcel contract pricing support of AFMS comes in. AFMS offers a wide array of services including parcel contract negotiation, parcel contract auditing, and parcel contract optimization to make sure you're getting the most bang for your buck. Here are some of the benefits you can expect to take advantage of when you get parcel contract pricing support.

Know what not to sign

When you choose to work with parcel contract pricing support, you can feel secure knowing that you won't be signing anything that could do your business financial harm. For instance, in many parcel contract negotiations, there's a carrier GSR waiver. Your business should never sign a carrier GSR waiver.

A carrier GSR waiver, or a money-back-guarantee waiver, can mean a loss of revenue between 3-5% for your business. With parcel contract pricing support, you could obtain better incentives and discounts by keeping the Service Guarantee Policy part of your agreement.

Catch possible overcharges

In 2018 alone, there are 87 billion parcels shipped worldwide. Depending on the number of parcels your company ships, it can be difficult to spot overcharges. The good news is that, with support from parcel contract auditors, you can determine whether or not your carrier is overcharging you for your shipments.

Parcel contract auditors can not only ensure that your carrier is acting in compliance with your contract but also that there are no refunds that are in order. AFMS can audit your contract to correct discounts, identify service errors, and more.

Identify changes in the contract

It's all too easy to overlook details and contract changes when you're conducting your own parcel contract negotiation. Unfortunately, even the smallest of contract changes can have a domino effect. An overlooked detail can impact transit times, discounts, and service errors. Professional support during your parcel contract negotiations reduces the risk of signing off on a change that could negatively affect your business.

Interest in working with parcel pricing experts? We've got you covered. For more information on parcel shipping contract benchmarking and contract optimization, contact AFMS today.