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.
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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.