Head Teacher Forum June 2011. TAFE NSW-Sydney Institute Head Teacher Forum 2011.
Parcel Forum 2011
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Transcript of Parcel Forum 2011
TF 108 MEGA SESSION Everything You Wanted to Know but
Were Afraid to Ask
Rob MartinezPresident & CEO
Shipware, LLCwww.shipware.com
Gerard HempsteadPresident
Hempstead Consultingwww.hempsteadconsulting.com
Topics for Discussion
WHATEVER YOU WANT• Ground Rules• NDA• What’s discussed in this room, stays in this room• No media press
Suggested Topics
• Implications & Predictions of USPS Financial Crisis• 2012 Rate Increase• Pricing Benchmarks• 3rd Party Negotiators
– Update on AFMS lawsuit• State of the Parcel Industry• Carrier Pricing Predictions• Impact of Regional players• Best Ways to Reduce Costs in 2012
USPS: Financial Status, Predictions & Implications
2012 General Rate Increase
General Rate Increase History
Year Ground Air Intl Fuel 2004 1.90% 2.90% 2.90% Introduced DAS 2005 2.90% 2.90% 2.90% 2006 3.90% 5.50% 5.50% 2% Fuel Reduction2007 4.90% 6.90% 6.90% 2% Reduction2008 4.90% 6.90% 6.90% 2% Reduction2009 5.90% 6.90% 6.90% 2% Reduction 2010 4.90% 5.90% 5.50% 2% Reduction 2011 4.90% 5.90% 5.50% 2% Reduction; DIM Changes 2012 ? 5.90% ? 2% Reduction
TOTAL 34.20% 43.80% 43.00% 5 YEAR AVERAGE 5.10% 6.30% 6.34%
Ground Minimum Shipment Charge
2006 2007 2008 2009 2010 2011$3.00
$4.00
$5.00
$6.00
$3.80 $4.00
$4.20
$4.57
$4.84
$5.17
Up 48% since 2005!
Minimum Charge > Announced
2007 2008 2009 2010 20110.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
5.26%5.00%
8.81%
5.91%
6.82%
Announced Increase 4.90% 4.90% 4.90% 4.90% 4.90%
Aver6.36%
2012 ??? $5.42 = 4.9%$5.48 = 5.9%$5.53 = 6.9%
Strategies to Reduce Parcel Costs
Steps taken past 12 months to reduce parcel costs? (Check all that apply)
Renegotiate
d rates
Customer
pays
Greater USPS,
consolid
ators & re
gionals
Zone sk
ipping
Outsource
d to 3PL
Audit invo
ices
NothingOther
0%5%
10%15%20%25%30%35%40%45%50%
48%
34%
26%
9%4%
27%
12% 13%
Minimum Charge Strategies
• Negotiate Minimum Shipment Charge– Percent off– Dollar off
• Quarterly rebate contribute savings to minimum charge*
• Explore per ounce rating (USPS, SmartPost, etc.)
Strategies for GRI
• Fix incentives to previous year’s tariffs• Cap increases
– Maximum– % below general– Include minimum charges as % or $
• Rebate
DIM Strategies
• Do nothing; contract already above the standard 194• Negotiate the new factor to something greater than 166 or
“grandfather” the 2010 dim factor • Redesign corrugated packaging and packing configurations • Switch carriers (pending UPS GRI announcement)
13
Solutions for Res & DAS
• Negotiate concessions• Identify charges in advance• Download DAS ZIP table• RDI • Sourcing alternatives• Ask for commercial address• Rebate
Accessorial Charges Solutions
• Understand impact• Negotiate concessions– All accessorial charges are negotiable!– Percent or $ off– Range from 0-100%
• Software solutions (mitigate and/or charge back)– Residential surcharge– Address Correction
• Scan based billing• USPS options
Third Party Negotiators
Outside consulting firm to negotiate your carrier contract w/in last 12 months
12%
85%
3%
YesNoWe tried, carriers opt out
Feelings on carrier policy on 3PNs
Not aware Not concerned, don't use them
Up to carriers Who are they to tell me what to do?
0%
5%
10%
15%
20%
25%
30%
35%
35%
30%
6%
29%
Primary motivation for UPS & FedEx 3PN policy? (Check all that apply)
Rate confidentiality Money/margin Avoid adversarial relations Don’t know0%
10%
20%
30%
40%
50%
60%
70%
29%
63%
13%
24%
Do you think UPS and FedEx colluded to boycott third parties?
Yes No Don’t know0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
48%
11%
41%
Pricing Benchmarks
Accessorials negotiated at least a 25% incentive: (Check all that apply)
DAS
Residen
tial Fu
el
Large
Package
AHSCOD
Dangerous G
oods
Weekly
Service
Print L
abel
On Demand Pickup
Yes, b
ut <25%
No, have not n
egotiated
Don't know
0%
5%
10%
15%
20%
25%
30%
35%
26% 25%22%
15% 15%
6% 5%
16%
10% 9%12%
31%
22%
If you could change your UPS or FedEx Pricing Agreement, what would it be? (Check all that apply)
Better d
iscounts
Better t
erms
Fewer
surcharg
es
No rollin
g avera
ges or E
ds>T
erm
>Paymen
t term
sOther
0%
10%
20%
30%
40%
50%
60%
70%
55%
15%
69%
31%
13% 12%5%
Correlation of Monthly Parcel Volume and Overnight Incentives Received
<40% 41-50% 51-60% 61-70% >71%0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
< 10,00010,000-24,99925,000-49,99950,000-99,999> 100,000
Upper Tier Incentives by Service Type
Service Incentive Percent of Shippers
Next Day Air/Priority Overnight 61% or Greater 19%
Two Day Air 51% or Greater 21%
Ground (1 to 10 Lbs) 41% or Greater 18%
Ground (11 to 30 Lbs) 46% or Greater 12%
Ground (31 to 50 Lbs) 51% or Greater 10%
Ground (51 to 150 Lbs) 51% or Greater 7%
Thank You For Attending
Rob Martinez, MQC, CMDSSPresident & CEO
Office [email protected]
OTHER PRESENTATIONS THIS WEEK
Monday, Oct 24, 9:00 am - 4:00 pmWS 100 PRECONFERENCE - Inside Parcel Rate Negotiations
Tuesday, Oct 25, 10:00 am – 10:45 amPL 502 SURVEY RESULTS - Pricing Benchmarks, Trends and Cost-
saving Strategies
Wednesday, Oct 26, 9:00 am – 9:45 amTM 206 Low-Cost Delivery Options for Residential Shippers
Wednesday, Oct 26, 2:45 pm – 3:30 pmTF 108 MEGA SESSION - Everything You Wanted to Know but Were
Afraid to Ask