AFMS
  • HOME
  • ABOUT US
  • SERVICES
    • PARCEL
    • USPS
    • LTL/FTL
    • RAIL/INTERMODAL
    • AIR FREIGHT
    • OCEAN FREIGHT
    • CANADA
    • EUROPE/ASIA
  • AUDITING & REPORTING
  • CONTACT US
  • ARTICLES & TIPS
  • GLOBAL CLIENTS
  • AFMS Careers

Articles & Tips

Understanding Our Carrier Invoice

5/2/2017

0 Comments

 
By Brittany Beecroft
​Vice President, AFMS
We invest time, resources, and money into negotiating our contracts. But are we dedicating the same attention to our carrier invoices? How do we know what we negotiated is what we are actually receiving? In a world of effective incentives, dim weights, and ground residential fees, understanding the invoice is equally important as understanding the agreement.

Base Rate
Before we look for discounts, we need to confirm the base rate is accurate. Most shippers fall under the current year’s service guide. However, if you are the select customer who received a custom list rate, this is stop #1 on your invoice. On the UPS invoice, the rate is called “Published Charges;” FedEx is “Transportation Charge.” Doesn’t hurt to do a quick spot check every quarter to verify the charge. Base rates and data often get overlooked in importance, but they are two key triggers to incorrect savings and invoice overages.

Net Rate
We pay it — do we understand it?
For FedEx, we’ll look at a few areas — Earned Discount, Performance Pricing, and Fuel. If you assessed a fee, the charge would appear here as well. Earned Discount and Performance Pricing show a negative charge as they are reducing the Transportation Charge (Base Charge). They reflect the discounts found on your agreement. Fuel and Fees are additive to the net Transportation Charge. The amount you’ll pay is the “Total Charge.”
For UPS, we see "Incentive Credit." So we’ll see each published rate reduced (versus the net fees with FedEx). "Billed Charge" is your net charge, with "Total" being the amount you’ll pay. We can verify Incentive Credit against the agreement to compare the contract discount with the effective discount.
So we did some simple math to reduce the base rate and produce a total charge. But what drove those charges? How do we know what Earned Discount incentive to use? How do we know if our package was rerated for weight? FedEx and UPS provide that information to us — we just need to know where to look.

Tier Discount
Agreements are set up to reward shippers for gross transportation spend. And carriers put this spend on your invoice to track tiers and discounts. When we talk about falling off tier, but we don’t know how close to the next threshold we are, we simply need to reference our invoice against our agreement. For UPS, we see average weekly revenue, along with the date range, shown below the Published Charges/Incentive Plan. Because the UPS agreement is generally set up with weekly tiers, the invoice reflects the same spend. FedEx tends to mirror its agreement structure, as well, showing the annualized revenue threshold. The threshold language is shown in smaller print directly above the sender/receiver information, which is next to the charges we previously reviewed. Look at the listed tier, cross-reference on your agreement for the corresponding discount, reduce the base charge by this amount — and do a quick scan of your entire threshold structure to make sure you aren’t dollars away from dropping to a lower tier and losing discount.

Billed Weight
Like the tiers, invoices are a great tool to understand your data and shipping trends better — all provided to you by the carrier.
On the UPS invoice, we want to scroll down to “Adjustments & Other Charges.” Here we’ll see which packages rerated on dimensional weight. UPS shows customer entered dimensions and audited dimensions, as well as the rerated weight and new charges. That new charge is your net charge to be paid, regardless if you billed your customer on actual weight.
For FedEx, we see the rerate within the “Charge” section: actual weight versus rated weight. If the two weights show a significant gap, we have work to do on the divisor, the minimum, and/or the actual packaging.
0 Comments

Is Your Contract Intact? - Parcel Industry Article

2/8/2017

0 Comments

 
By Brittany Beecroft
One of the biggest mistakes a shipper can make is to nickel and dime a negotiation. Routinely chipping away at pieces only weakens the entire structure. Visualize your agreement as a milk bottle pyramid, with each bottle being a section in your contract. Can you skillfully hit each object and still keep your contract - and bottom line - intact?

OBJECT: MINIMUMS
UPS offers rebates - a quarterly incentive program paying shippers on a percentage of net transportation spend. Rebates reflect incentive off net transportation spend, less fuel and any applicable accessorials. Generally tiered, the revenue bands are determined by a customer’s 52-week rolling net average.
Simple enough. We negotiate spend levels... Click here to read the full article
0 Comments

AFMS - ASSESSMENT OF the 2017 UPS & FedEx RATE INCREASE

12/21/2016

0 Comments

 
UPS Anounces Ahead of FedEx for the First Time in 2 Years.
UPS and FedEx recently announced their 2017 rate increase. These annual  increases usually average around 5%, creating a significant impact on companies shipping costs.  Now it's the time to begin the work, so that these increases can be minimized.  AFMS will do a NO CHARGE ANALYSIS of your current shipping profile, along with how these rate increases will effect you.  ​
2017 UPS Rate Increase

  • 5.4% increase in 1-5 lb. ground rates
  • Air Residential Surcharge increases 9.6%; now at $4.00
2017 FedEx Rate Increase

  • FedEx List Rates Mostly Lower Than UPS
  • FedEx Accessorial Rates Also Different, Mostly Higher
  • Express & Ground DIM Factor Now at 139
0 Comments

Stepping up to the PLate to Negotiate

12/1/2016

0 Comments

 
In Parcel Magazine's September-October 2016 Issue, Brittany Beecroft of AFMS tells us how:
"Small parcel shippers understand the nature ofthe General Rate Increase, and they attempt to mitigate the increase accordingly. We can negotiate a solid contract, but if our understanding and visibility of data suffers, so can our expected savings. Is there a one-size-fits-all approach to negotiation? No. Are there bases every shiper should cover? Absolutely."
Click here to read the full article.
Picture
Picture
0 Comments

Incorporate the Inbound to Optimize the Outbound

10/1/2016

0 Comments

 
In Parcel Magazine's September-October 2016 Issue, Brittany Beecroft of AFMS tells us how:
"The trend of shifting from the procurement department to transportation managers in order to blend inbound and outbound into your contract can inherently create savings." Click here to read the full article
Picture
Picture
0 Comments

fedex - Additional Handling Surcharge

6/2/2016

0 Comments

 

Effective June 1, 2016

Additional Handling Surcharge. A surcharge applies to any FedEx Ground® package that measures greater than 48 inches but equal to or less than 108 inches along its longest side. Prior to June 1, 2016, a surcharge applies to any FedEx Ground package that measures greater than 60 inches but equal to or less than 108 inches along its longest side. All other Additional Handling Surcharge size, weight and packaging parameters remain unchanged. The surcharge remains at $10.50 per package. This change applies to shipments within the U.S. and from the U.S. to Canada. See the Jan. 4, 2016, FedEx Service Guide for details.            

​
http://www.fedex.com/us/2016rates/other-changes.html
0 Comments

Federal Express vs UPS -  the Difference Is In The Details  

11/18/2015

0 Comments

 
Picture
UPS GRI: Similar, but Different from FedEx on 2016 Rates
The Difference is in the Details
Dan Malech, AFMS
Fewer and fewer price differences between the two carriers; UPS & FedEx prices will now be nearly identical for many services
UPS announced their 2016 UPS rates and for the first time, with the exception of Three Day Select and 2DA Letter, Air services match FedEx Express services penny for penny in the continental US.  Therefore, UPS will be discontinuing their Standard Rates that they had created to match the FedEx Express Rates.  UPS will once again only have Daily rates, with only Three Day Select and 2DA Letters varying from FedEx.  The UPS and FedEx continental Ground rates are also identical.
Accessorial Charges
Just like last year, nearly all of the accessorial charges will be identical for the two carriers. Fuel is the one exception, with UPS fuel surcharges tending to be 1.25 to 1.75 percentage points higher.  For November, UPS will have a 23.5% higher ground fuel surcharge than FedEx and an astounding 63.6% higher air fuel surcharge.
Third Party Shipments
For the first time ever, UPS will apply a 2.5% service charge on all Third Party shipments. This could have quite an impact depending on the bill type mix in your portfolio.
Domestic Express
To reiterate, the 2016 domestic express base rates will now be identical for the two carriers. In the past, FedEx Express has priced their base rates somewhat higher than UPS. However for 2016, The Next Day AM, Next Day PM, 2nd Day AM PKG, and 2nd Day PM PKG rates are identical. Over the last few years, UPS has made an effort to lower the gap between it and FedEx on the express front, and that effort is now all but finished.  In order to get to the point of matching FedEx UPS had to have a higher rate increase to achieve this.  See below for average increases by service.  Furthermore, UPS has done away with their Standard Rate charts that had filled that price gap. The one exception is 3 day air, where FedEx rates are an average of 19.8% higher than UPS, and with some weights and zones over 60% higher.    
International Shipments
UPS international increases are somewhat higher than the domestic increases, with some weights and zones up just shy of 9%. The rates up to 25 Lbs take a relative low increase of about 3.5%, but over 25 lbs are closer to 7%.
Here are the average UPS increases by service:
  • Ground Commercial 5.8% 1-5 lbs zones 2-8 (4.75% 1-70 lbs.)
  • Ground Residential 5.5% 1-5 lbs zones 2-8 (4.73% 1-70 lbs.)
  • Next Day Air AM: 5.9%
  • Next Day Air Saver PM: 6.4%
  • 2 Day AM Air: 8.5%
  • 2 Day Air: 8.0%
  • 3 Day Select: 6.8%
  • Ground Hundredweight: 4.7%
  • Air Hundredweight: 5.7%-7.4%
  • Ground Standard to Canada: 5.8% 1-5 lbs (3.4% overall)
  • International Express OB Lanes:
    •  China: 6.3%
    • UK, NL, FR, DE: 5.9%
    • HK, TW, JP, SG: 6.4%
    • KR, TH: 6.5%
  • International Saver OB 5.0%
  • International Expedited OB 5.6%

For a complete cell by cell analysis of the UPS & FedEx 2016 increases, contact AFMS at 800-246-3521
0 Comments

AFMS - Assessment of 2016 FedEx Rate & Accessorial Increases

9/18/2015

 
Picture
FedEx has announced their service rate increase; both express AND ground, before UPS once again. The FedEx rate change will be effective Monday, January 4TH, 2016.  FedEx has announced that their ground and express rates will take a general rate increase of 4.9%.   (See document below for more information)

FedEx to Increase Shipping Rates for Express, Ground and Freight Services

9/15/2015

 
FEDEX EXPRESS, FEDEX GROUND AND FEDEX FREIGHT, SUBSIDIARIES OF FEDEX CORP., WILL INCREASE SHIPPING RATES EFFECTIVE JANUARY 4, 2016.
FedEx Express will increase shipping rates by an average of 4.9% for U.S. domestic, U.S. export and U.S. import services.
FedEx Ground and FedEx Home Delivery will increase shipping rates by an average of 4.9%. FedEx SmartPost rates will also change. FedEx is also increasing surcharges for shipments that exceed the published maximum dimensions (“unauthorized packages”) in the FedEx Ground network and updating certain fuel surcharge tables at FedEx Express and FedEx Ground effective November 2, 2015. (Click here to read more)

parcel magazine - dont get taken by surprise

5/1/2015

 
PLAN NOW
For Big Dimensional Charge 
Increases Coming in January.
By DOUG CALDWELL 
VP of International for AFMS Global Logistics Management Service in Portland Oregon.
Late on a Friday afternoon in early May, FedEx dropped a bombshell - effective January 1, 2015, all ground shipments, regardless of size, will be subject to DIM (short for dimensional) charges. For many shippers, this will amount to a double-digit rate increase, and that will be on top of the yet-to-be-announced 2015 rate increases (last year’s increase was 4.9%). Currently, only an estimated 15% of FedEx ground shipments — those 3 cubic feet or greater — are subject to these charges. FedEx now delivers about 4.6 million ground packages per day, so that’s 3.9 million new daily packages that will now be subject to the charges.

Read More
<<Previous
Forward>>

    Archives

    October 2019
    August 2019
    July 2019
    October 2018
    August 2018
    July 2018
    June 2018
    December 2017
    August 2017
    May 2017
    February 2017
    December 2016
    October 2016
    June 2016
    November 2015
    September 2015
    May 2015
    December 2014

    Categories

    All

AFMS Corporate Office
10260 SW Greenburg Road Ste. 1020
Portland, OR 97223
800.246.3521
www.afms.com
RADAR LOGIN