Category: Featured Article

2022 Word of the Year: Co-opetition

January 7, 2022

Introducing co-opetition which puts small-to-midsize retailers on an even field with the “big three.”  Co-opetition means teaming up on the back end, to succeed on the front end.

Looking back on all the broken links of the supply chain that snarled global supply chains in 2021, one rectifiable issue stands out: capacity. Lack of capacity plagued many retailers, but among those most affected were small to mid-size retailers. These e-commerce businesses cannot compete for capacity with retail goliaths.

In the first days of 2022, Logistics Managers’ Index (LMI) released its monthly survey-based gauge, compiled by researchers at five U.S. universities. It predicted that “the bigger-than-usual rush to stockpile products on U.S. retail shelves and in warehouses ahead of the holidays might give way to an economic hangover of sorts.”

As retailers are faced with a dire need to move this excess inventory, they’ll require a shipping solution that offers access to more capacity and greater flexibility.  If there was ever a time to disrupt the supply chain, it’s now.

Introducing co-opetition which puts small-to-midsize retailers on an even field with the “big three.”  Co-opetition means teaming up on the back end, to succeed on the front end.  

Co-opetition is all about capacity. While it may have been anathema to speak to any retailer just a few years ago, to talk about working with your “enemy,” the time is now to disrupt the supply chain by doing just that.  Pre-pandemic retailers couldn’t keep up with giants and 3PL fulfillment also used the same shippers.  With COVID, their business accelerated, while others fell behind in part because they lacked access to shipping capacity.

If there is one thing retailers have learned is that their most valuable assets are their brand and their inventory – not the means of moving their inventory. Co-opetition allows retailers to focus on the product, while sharing capacity to move their products.  They are realizing that supply chain is not competition – scale is competition. The goal of co-opetition is to simplify relationships and bring scale and efficiency to the business of moving inventory.

The time is NOW to be BETTER TOGETHER: the name of the new game is co-opetition.

What You Should Know About UPS’ and FedEx’s 2022 Rate Increases

November 24, 2021

As peak season begins and retailers work to get around allocations from the duopoly, they have to start planning for 2022 and the huge price increases from FedEx and UPS.

Here is what to expect from UPS:

  • an average net increase of 5.9% for UPS Ground, UPS Air, and International services; and
  • an average net increase of 5.2% for UPS Air Freight within and between the U.S., Canada, and Puerto Rico

In addition to the overall price increases, UPS is continuing to punish large package shippers with its pricing efforts. The message is clear: if you want to ship large packages at UPS, you will pay a premium to do so. The large package surcharge will increase within the 8%-16.7% range and the additional handling weight/dimensions will increase from 5.2%-13.9% depending on zone. And the majority are increasing by more than the announced 5.9%.

For all retailers, UPS is also continuing to penalize lightweight shippers, with ground minimum charges increasing 6.9%, from $8.76 to $9.36, with 1 pound-to-5 pound packages to increase by almost 8%, with most of the largest percentage changes in the lower weights and fairly consistent across zones.

Additional charges Increases: Delivery Charges; Pickup Charges Remote/Extended Delivery and Pickup Charges; Residential Surcharge; Return Services w/ Pickup; Saturday Delivery and Pickup; Signature Required Services; Additional Handling, Large Package and Over Maximum Limits; Oversize Pallet Handling Surcharge; and Peak Surcharges.

UPS confirmed what most of the marketplace has already concluded – UPS is focused on driving profits first and is far less focused on maintaining relationships with their customers. Increases for 2022 will be larger than those in the past and this “peak” is highly unlikely to end anytime soon.

 

Here is what to look for from FedEx:

FedEx’s rates will increase by an average of 5.9%. Premium services will experience higher increases than Ground, especially in shorter zones.

  • Priority and Standard Overnight shipments for zones 2-4 will increase by 7.1% or more.
  • Express Saver rates for zones 2-4 will increase by as much as 9.8%.
  • Ground service rates will increase by about 6.0% across all zones.

What about the Ground minimum?

That’s changing from $8.76 per package to $9.36 per package – an increase of 6.8%.

How will the Residential surcharge be impacted?

More shippers will trigger the post-peak Residential surcharge. Plus, that surcharge will cost considerably more:

  • Shippers will trigger the Residential surcharge sooner – when they hit 25,000 packages rather than last year’s threshold of 30,000 packages.
  • The $0.60 per package Residential surcharge that will go into effect for high-volume weekly shippers on January 17, 2022 represents a 100% increase over last year’s $0.30 post peak Residential surcharge.

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    What about the Ground minimum?

    That’s changing from $8.76 per package to $9.36 per package – an increase of 6.8%.

    How will the Residential surcharge be impacted?

    More shippers will trigger the post-peak Residential surcharge. Plus, that surcharge will cost considerably more:

    • Shippers will trigger the Residential surcharge sooner – when they hit 25,000 packages rather than last year’s threshold of 30,000 packages.
    • The $0.60 per package Residential surcharge that will go into effect for high-volume weekly shippers on January 17, 2022 represents a 100% increase over last year’s $0.30 post peak Residential surcharge.

    What’s happening with the Additional Handling and Oversize surcharges?

    FedEx’s Additional Handling and Oversize surcharges are both changing from flat fees to zonal ones. And depending on how far packages ship, it could wind up costing companies up to 38% more than they’re currently paying.

    • Only Zone 2 shipments will cost a bit less (just $0.25) for Additional Handling in 2022.
    • For Zones 3+, all other Additional Handling charges will see prices ranging from:
      o $17.50 to $21.50 for dimensional (up 9.3 – 34.3% from this year’s charge of $16.00)
      o $27.50 to $31.50 for weight (up 7.8 – 23.5% from this year’s charge of $25.50)
      o $16.00 to $18.00 for packaging (up 14.3 – 28.6% from this year’s charge of $14.00)
    • Customers of U.S. Express and FedEx Ground will pay Oversize surcharges of anywhere from $110.00 to $145.00 per package (up 4.8 – 38.1% from this year’s charge of $105.00).
    • FedEx Home Delivery customers will be charged anywhere from $135.00 to $170.00 per package (up 3.8 – 30.8% from this year’s charge of $130.00).

     

    Are there any new surcharges?

    FedEx has also added several new charges – or modified existing ones – to make the terms more favorable for its bottom line. For example:

    • Ground Economy (formerly called SmartPost) shippers will also be subject to a new $1.00 per package surcharge for any package that is classified as “delivered or returned.”
    • The International Out-of-Pickup-Area and Out-of-Delivery-Area surcharge will be based on a tiered zip code list.

    There is a silver lining in the shipping marketplace. Companies like AirTerra are the answer to the aggressive price increases and unilateral capacity caps hitting retail and DTC brand shippers by the duopoly. AirTerra built a nationwide delivery network that provides a super reliable,
    cost-effective option for zones 6-8 parcel shipping as well as the shorter zones – whether you need more capacity, more reliable delivery times, or just a more competitive price.

    In summary, retailers shouldn’t wait until peak season is over to avoid high shipping costs, because additional charges await you in 2022. It’s time to utilize companies like AirTerra rather than wasting more money with the duopoly.