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.

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.

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.

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.

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.

​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.

View Original Article On FedEx website by clicking here.

When planning your budget, it helps to know the estimated cost of shipping. Here are the details of our shipping rate changes for list rates, surcharges, fees and other factors that can affect your shipping rates. Plus, you can download shipping rates for FedEx Express, FedEx Ground and FedEx Freight.

UPS continues to provide essential service amid the ongoing coronavirus outbreak to support the needs of their customers. Their goal is to ensure businesses and customers are able to meet their shipping needs while demand has increased for shipping services.

Please see this document for details: