Tag: Market Trends

Co-opetition Isn’t New, It’s Improved

February 3, 2022

COVID laid bare an uneven retail playing field, and exposed supply chain issues, with the “Big 3” giants gaining market share at the expense of small and mid-size retailers.

On top of that, smaller retailers and brands have become accustomed to logistics and supply chain management that derails supply chain planning capacity planning with constant and unexpected rate increases from transportation providers compounded by a seemingly endless drumbeat of capacity and labor issues that continues to chip away at their bottom line.

The good news is that retailers are grabbing a lifeline: each other. While competing for the hearts, minds, and wallets of consumers on the front-end, they are discovering that they can gain real economies of scale in fulfillment and shipping by co-operating on the back-end of retail logistics. The goal of this model of “co-opetition” is to aggregate relationships and bring scale and efficiency to the business of moving products through the supply chain.

Co-opetition isn’t new; decades ago, brands began to shift product sourcing offshore to contract manufacturers, often right alongside direct competitors utilizing the same facility. This move allowed those brands to manage their cost of goods and selling price points by leveraging the economies of scale.

Today, retailers and brands are deploying co-opetition at the other ends of the supply chain – sourcing and shipping.  After all, supply chain sourcing co-opetition is already in play in last-mile delivery as competing brands’ parcels ride side-by-side on national carriers’ delivery vans to reach the customer.

AirTerra is an innovative parcel shipping and supply chain company that solves ecommerce challenges in a unique way so retailers and brands of all sizes can compete on a level playing field. Embracing co-opetition with AirTerra, small and midsize retailers can implement a diversification strategy for capacity planning and supply chain planning. The result is logistics and supply chain management that provides access to more capacity, greater flexibility, and benefit from simplified pricing, contracts, onboarding, and carrier management, all without the additional cost required to manage multiple carriers. It’s Diversification Simplified.

Brands that embrace “co-opetition” take control of their collective destinies to meet ecommerce challenges, banding together on all stages of shipping retail logistics—from the fulfillment center to the customer’s door.

Why Retail is Embracing “Co-opetition”

While the pandemic-era global supply chain has been strained to its limits with the unprecedented and unanticipated major consumer shift to eCommerce, retailers are meeting the future by embracing a totally new way of doing business: co-opetition.

To compete and even survive in this challenging environment, retail logistics executives are discovering that they can achieve economies of scale and overcome supply chain issues by sharing their logistics and supply chain management operations. The new model of “co-opetition” helps smaller retailers and brands compete on an uneven playing field with the “Big 3” retail giants, who have been pocketing an ever-greater share of consumer dollars by leveraging their scale and scope to take over the free shipping, fast delivery game.

Small and mid-size retailers are discovering that they thrive when they focus their mindshare and finite resources directly on customer-facing priorities through better product design, merchandising, store operations, and marketing. In the past, their fragmented “go it alone” approach to back-end systems such as logistics and supply chain management, especially amidst eCommerce challenges, siphoned off large chunks of precious capital and margin.  No more.

AirTerra, a logistics company, is driving co-opetition by creating market-based access to shippers and carriers, enabling new and innovative service retail logistics delivery models, and opening latent capacity to support supply chain planning and capacity planning. By aggregating parcel volume from multiple shippers within a few metropolitan areas, AirTerra is able to lower shipping costs while getting your product moving down the road to your customer.  The result: diversification simplified.

As the world starts to see a light at the end of the pandemic tunnel, the retail world is looking to the future with a new way of thinking about supply chain management …and a new way of business. Teaming up on the back-end while competing (and succeeding) on the front-end is co-opetition. And it’s working.

Supply Chains Respond to Labor Challenges

January 14, 2022

As the pandemic continues to influence the workforce in unprecedented ways, the “great resignation” coupled with COVID sick-outs have created the perfect storm of labor shortages across the board. Most severely impacted may be supply chain operations.

As the pandemic continues to influence the work force in unprecedented ways, the “great resignation” coupled with COVID sick-outs have created the perfect storm of labor shortages across the board. Most severely impacted may be supply chain operations.

The Big Picture

According to a recent report in the Bureau of Labor Statistics as reported in Forbes, “there were 10.9 million open positions as of the end of July 2021, yet only 6.7 million hires were reported. This disparity is compounded by an increasing number of voluntary separations, with the number of employees leaving their jobs reaching 930,000 in July alone.” 

According to Kristen Fowler, Vice President at JMJ Phillip Executive Search,   

“Employers do not have the labor or capacity to effectively manage, process and unload U.S. imports, and the resulting slow delivery times and shipping delays have rippled across the entire supply chain.”

Keep on Truckin’?

What does that mean for e-commerce retailers?  The short answer is bad news, but there is good news on the road ahead as shippers pivot to meet a stark reality:

The American Trucking Associations estimates that in 2021 the truck driver shortage will hit a historic high of just over 80,000 drivers (the difference between the number of drivers currently in the market and the optimal number of drivers based on freight demand).

At current trends, the shortage could surpass 160,000 in 2030. This forecast is based on driver demographic trends, including gender and age, as well as expected freight growth. Because there is no single cause of the driver shortage, that means there is no single solution, according to the Association. 

Driver shortages are a contributing factor to the shipping capacity challenges facing small and mid-size retailers. It’s become apparent that carrier diversification is essential if they are to compete on an even playing field with the “big three” e-commerce businesses.

Carrier Diversification Simplified

In the past, carrier diversification has meant expensive, multiple contractual arrangements, lengthy, complex documents, hidden charges and tracking difficulties. The good news is that today, small and mid-size retailers can achieve carrier diversification simplified.

AirTerra provides “all-in” pricing, based on several factors, including distance from the retailer’s distribution center to the AirTerra sorting center, destination, and size of your parcel. This pricing model means there won’t be any surprise surcharges.

AirTerra can keep its pricing low because it aggregates demand across mid-size retailers, gaining scale in price negotiations with final mile delivery providers. In addition, the company utilizes “zone skipping” in its middle mile delivery service, enabling cost-savings on every delivery, which gets passed on to its customers.

Most importantly, carrier diversification means that AirTerra customers have a built-in buffer against the labor shortages that will continue to plague the trucking industry. 

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.

Carrier Diversification: Keep it Simple

According to the trade publication Freight Waves, “the parcel-delivery world of 2022 will look very much like it did in 2021…

According to the trade publication Freight Waves, “the parcel-delivery world of 2022 will look very much like it did in 2021…big carriers will hold the upper hand, and they will use their leverage to make hay while the sun shines. Volumes will remain elevated as e-commerce activity escalates to unprecedented levels. Demand will continue to exceed supply even though the national carriers are adding meaningful capacity to their networks and migrating to seven-day-a-week deliveries to improve fluidity.”

The article asserted that “last year, parcel shippers were advised to diversify their carrier bases in order to reduce their reliance on FedEx Corp. and UPS Inc. Heeding that call, however, was easier said than done.”

What they got wrong is the prediction that “it will likely be just as challenging next year,” because 2022 will actually be the year that the supply chain is disrupted. The big carriers will lose their stranglehold on small and mid-size retailers who are discovering that carrier diversification is now not only necessary but simple.

How can carrier diversification be simplified to offer a level playing field to small and mid-size retailers? AirTerra has found the way forward.

AirTerra is an innovative parcel shipping company that solves ecommerce challenges in a unique way so retailers and brands of all sizes can compete against the “big guys,” with:

  •   Access to more capacity
  •   Greater flexibility
  •   Simplified pricing, contracts, onboarding and carrier management
  •   No additional costs

By aggregating demand, utilizing a point-to-point network, and providing a choice of regional and last-mile delivery options, AirTerra deploys carrier diversification simplified for an efficient, cost-effective, end-to-end supply chain solution.

The new year will bring anything but the same-old for the supply chain. Carrier diversification simplified is ringing out the old with something new and better.

 

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.