The Shipping Environment: What You Need to Know for 2013 and Beyond

The Shipping

Environment:

What You Need

to Know for 2013

and Beyond

April 8, 2013 2 The Mail and Shipping Summit

Your Presenter

John Kruzan is in charge of the Transportation Management Solutions Marketing

at Pitney Bowes. John’s background in transportation management includes his

role as Director of Strategic Partners and Business Development at DHL Express

and Manager of eCommerce at Airborne Express.

In these various roles, John designed, developed and implemented new products

and sales programs for the business and consumer segments. His in-depth

understanding and hands-on experience with technical applications, eCommerce

platforms, internet marketing tactics and analytics help guide businesses of all

sizes to the best transportation management solutions.


Transportation costs constitute up to 7% of a company’s expenditures

Carrier rates and fees rise every year, especially on the small parcel

Supply chains are being lengthened by Internationalization and ecommerce

Compliance and regulatory requirements are becoming more burdensome and complicated

The ability to optimize shipments is diminished

Ability to monitor carriers’ performance and use it to create meaningful metrics and benchmarks

Different departments – transportation, procurement, accounting – are in silos and are not sharing the same information

Current State of Transportation


Market Trends – Shipping Management

Highly Fragmented, Often Overlooked Market

The “MRO” of Logistics (Companies underestimate spend)

Parcel Pricing is Complex (Surcharges, Dimensional Pricing)

Represents about 20% of total Transportation Spend

80%+ of Retail Non-Store Fulfillment

Parcel Shipping Tends to be Isolated (Little Visibility or Planning)

Parcel and LTL are Fastest Growing Segments of Spend

Direct to Consumer

Increased Cross Boarder Consumer Shipping

Regional Delivery on Multi-Modal Transport

Store to Consumer Fulfillment


FedEx (2013)

FedEx Ground and FedEx Home Delivery services 4.9

FedEx Express 3.9%

UPS (2013)

UPS Ground 4.9%

UPS Air 4.5

Rates represent an “Average” across all zones and weights

Impacts lower weights, shorter zones

“Real” GRI could be as high as 8%

Does not include Accessorials or Fuel

Costs are going up…


35%

30%

25%

20%

15%

10%

5%

0

2007 2008 2009 2010 2011 2012

Impact of Carriers’ General Rate Increase (GRI)

Ground FDX/UPS FDX Air UPS Air

30% Increase Over 5 years

Percentage increase the same for each Carrier

USPS has increased parcel rates as well

Price of Less-than-truckload (LTL) shipping has increased and capacity diminished

Source Logica


Forecast: US Online Retail Sales 2012 to 2017

Source: Forrester Research, Inc.

One of the main drivers for transportation increases

Online sales are expected to top $370B by 2017

The vast majority of these are B2C parcels

Another factor is the growth of ecommerce in Asia-Pacific and South America

Brick and mortar retail is also changing networks to optimize online sales

Carriers are changing service-offering to address this shift in capacity


But are companies responding to the challenge?

According to the Aberdeen Group, only 20% of large shippers can be considered “Best-in-Class”:

Transportation decrease of 2.5% Overall on-time rate of 97 Measured transportation performance weekly

This is compared to the bottom 30% where: Costs have increased 6% On-time ratio was a meager 85% Performance evaluation was less than 15x/year

Added to this shipping has become a Customer Service issue as well…

Whether “free” shipping or returns, the box has become an extension of a company’s brand


Getting a handle on all the moving pieces…

Need greater visibility and control

over their parcel strategy

Leads to greater reduction in overall costs

(from Aberdeen)

How do you develop a strategy which increases control,

decreases costs and enables greater visibility?

Start with technology, with defined, implemented business

rules


Evaluate the Shipping Habits of Your Organization

Can anyone send overnight packages?

What tools do your employees have to select a carrier service based on price and delivery objectives?

What time does the package really have to be delivered?

Are employees aware of the incremental costs that the carriers assign?

Are signatures required? Or just proof of delivery?

Can Thursday and Friday shipments be sent via a more cost-effective deferred service?

Are there pick up times to qualify for certain services (e.g. next day ground to certain zip codes) and are you meeting those commitments?

Does your company use manual air bills?


Create Business Rules & Enforce Them

Employees should identify absolute delivery

objective, not carrier and service

Choose the latest service level that will

still meet a specified delivery objective

Limit ‘Signature Required' to select business-critical documents

Eliminate or control access to manual airway bills

Designate and/or restrict shipping privileges

Assign cost centers to packages via an automated solution

Utilize controls in automated solutions that designate or restrict users for shipping privileges & assign costs to departments or cost centers


Things to consider

Automate shipping processing

Diversify your carrier mix

Employ zone skipping or use “Postal Hybrid” products

Break down Information silos through integration

Create an audit process for every invoice


Is the U.S. Postal Service an Option?

The USPS is definitely an option for parcel shipping

One of the main complaints of the USPS Parcel Products is its not like a private carrier

Parcel is the USPS’ growth area

Intelligent Mail Package Barcode (IMpb) is the Postal Services newest tracking technology for parcels

The barcode contains significant package-level detail

Mailer ID , Service Indicator (What class and special services were used), Source Identifier , Serial Number and the 5-digit zip code

IMpb creates greater visibility for Postal Service parcels


IMpb

Required on all First-Class Package Services, Parcel Select, Parcel Select Light Weight, Bound Printed Matter, Media Mail and Library Mail Parcels in order to claim Presort and entry pricing.

Effective January 28, 2013 with an added transition period until July 28, 2013

Every connection is a new opportunity™

Questions?

Entertainment & Humor

The Shipping Environment: What You Need to Know for 2013 and Beyond