FedEx – UPS General Rate Increases 2018

It’s that time of year. Again. FedEx and UPS post their rate increases late every year, and you wonder how to pass that rate increase on without losing your shirt or your customer base. Ever wondered how that general rate increase compares to the consumer price increase? I think you know, but here it is in black and white, as it were:

Annual increases in the consumer price index pale by comparison. I suppose it helps to operate a duopoly. The customer, you, tends to be less price sensitive when your two primary service options, FedEx and UPS, match the other’s price increase. 2018 is no exception to that rule.

It you’re going into the new year wondering how best to make sense of the carrier rate increases and wonder how to absorb the shock, consider the Direct-Recovery rate analysis. We’ll deliver a full report showing how the change may impact your business, and how to offset the increase with a corresponding boost in hard and soft cost savings.

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FedEx GSR Waiver – worth it?

If you ship with FedEx or UPS, at some point you will be approached with an offer to waive your right to claim refunds for service failures. The actual wording may be something like this:

In this particular example the FedEx customer agreed to a 0.75% discount in exchange for the waiver. The customer agreed to the waiver, figuring it’s essentially free money because claims are a hassle. Question is – what are you leaving on the table? Is it worth it?

We can answer that. Part of our 30 day trial is a shipping analysis in which we identify exactly what you’re missing out on. That will show you if the net winner is you, or the carrier.

In our experience, FedEx and UPS benefit more. Run a 30 day trial and discover the truth Chances are quite good that the net savings of our parcel audit will greatly exceed the pittance offered in exchange for your refund rights.

Drop the GSR waiver at your next contract renewal and audit through Direct-Recovery.


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UPS sued for overcharging (update)

In the interest of a fair and balanced carrier discussion, I’d be remiss if I didn’t follow up last week’s old FedEx news with some old news of a similar nature regarding UPS. In early 2014 I blogged about UPS being sued for overcharging. I never updated that blog entry with the results of the lawsuit.

On July 1, 2014, the lawsuit against United Parcel Service was dismissed:

“IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss Plaintiffs’ First Amended Complaint in its Entirety or, in the alternative, for Judgment on the Pleadings [Dkt. # 14] is GRANTED;”

UPS chose to fight and win rather than have some ugly settlement precedent looming for future years. Makes sense. They have the resources.

Of course, in our litigious world, deep pockets can be a suit magnet. Just the previous year UPS was sued for crashing a cargo plane. Well, that’s my interpretation. The claim was that UPS had outdated flight systems which led to a crash.

Regrettably the pilots died in this crash.

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FedEx residential surcharge overcharge lawsuit

Today, a needed reminder of old but highly relevant news.

In 2011 FedEx was accused of systematically overcharging clients with bogus residential surcharges for packages going to commercial addresses.

The ‘smoking gun’ in the case was an email from a FedEx executive, one Alan Elam, in an email made public in the lawsuit:
“I have brought this to attention of many people over the past five or six years, including more than one managing director, and no action has been taken to address it,” and later, “My belief is that we are choosing not to fix this issue because it is worth so much money to FedEx”.

This is exactly what Direct-Recovery has claimed for years. There’s good money to be made in residential surcharges – over $3 a pop. That’s why we cross-check every airbill dinged with a residential surcharge to make sure it was actually going to a residential address. If not, and there’s way too many in our experience, we secure a refund on our customer’s behalf.

That’s what we call our low hanging audit fruit. Too many shippers pay these surcharges when they don’t have to. We also go after the harder to find audit fruit with our 40 point audit.

You can, in faith, believe every carrier charge is accurate. Or, you can put your faith in something bigger, and let Direct-Recovery hold FedEx and UPS accountable for any and all bogus charges – intentional or otherwise.

And the class action lawsuit? Settled in November 2013. FedEx paid out $16,500,000 to some 475,000 customers. By my cynical math, that works out to about $10M in legal fees, and $13.50 in refunds to each of those 475,000 customers.

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Contract optimization and the status quo.

We speak often of our contract optimization services, but we stop short of providing details on the mechanics thereof. It’s both a trade secret and a “who you know” strategy that enables us to generate very substantial savings from our rate analysis and negotiation services, otherwise known as contract optimization.

We’ll have to speak generally in public, saving the intricacies of the process for a more private setting. We have developed cost modeling technologies to identify targeted and highly relevant savings opportunities. Our team includes retired high level carrier professionals who know what UPS, FedEx, and DHL can and cannot do, and we structure our negotiation tactics around that intelligence. As a result, clients see an average savings of 20%. Hard to believe, but very real.

Contract optimization is neither quick nor simple and is as much art as science. It behooves the carrier to keep the status quo, assuming they can keep the customer coming back for more. So carriers drag their feet to maximize their short-term gains while shuffling busily as if they’re bending over backwards for the shipper.

There’s certainly an element of posturing that encourages carriers to dig deeper as they negotiate with their (and our) customers. If you’re one who would prefer not to rock the boat, be assured that in the end, about 80% of FedEx and UPS customers remain with their incumbent provider. We have no interest in disrupting a system that works for you, but we do want to extract every reasonable concession to help your business grow. It takes months, but contract optimization, like good wine, takes time (Did I really just say that?)

If you ship over $1M/year with your primary carrier, or with a mix of carriers, please call us for a confidential, no-risk consult to evaluate what our contract optimization services might contribute to your bottom line. Worst case is we validate your current contract. Best case is we establish a new baseline for your carrier contract that reaps rewards for many years to come. Either way, it’s a no risk conversation, and any compensation to us is, as always, just a fraction of the money that we save you.

Once the new contract is in place, the rate compliance element of our parcel audit assures that the contract remains in place and the hard-won concessions are honored. Give us a call.

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Amazon’s Prime Air

We knew it would happen. Just not how and when.

On Prime Day Amazon formally launched their air cargo service with a network of about 40 Boeing 767-300s. They offer supplemental shipping capacity to boost the services provided by UPS, FedEx, USPS, and some 20 others. Supplemental? For now, at least.

With Amazon’s shipping costs increasing over 40% in 2016, it was just a matter of time. You’ll see Amazon continue to rework, renegotiate, restructure, redefine logistics as they have since their launch.

You may not have a fleet of 40 767’s to supplement your carriers, but there are other ways to trim expenses. Consider a 30-day trial, or a no-cost consult to learn how Direct-Recovery can help reduce your transport spend.

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FedEx damage claims

FedEx truck on fire.

Were your parcels on this FedEx truck? If so, we regret to inform you that all packages on board were destroyed in this St Louis incident. Thankfully the driver was fine, so back to the packages.

If you’re a client of Direct-Recovery, using our FedEx loss and damage claims processing service, you barely give this news the time of day. We make sure every package is delivered on time and intact. If not, we deal with it so you don’t have to.

Loss and damage claims processing is a losing venture for most shippers. Unless you’re shipping high value merchandise, it’s rarely worth filing the claim. That’s where Direct-Recovery comes in. We streamline the claims process to a few minutes per week. Simple. Straightforward.

Before your package becomes the next casualty, inquire about our claims processing. There’s too much going on in this world to sweat over a FedEx claim.

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Amazon’s unmarked cargo vans

It’s old news that ecommerce continues to shake up the shipping world. Sunday afternoon an unmarked white van with a non-uniformed driver dropped an Amazon box at my door. Maybe the driver was following protocol, maybe not, but it confirmed what I already knew – Amazon uses just about any means possible to get packages to the doors of consumers.

Amazon now uses over 20 different shipping partners to deliver over 600 million packages per year. FedEx, UPS and USPS carry the lion’s share, but that doesn’t preclude that unnamed driver of the unmarked van from getting a piece of the action.

Fortunes are being won and lost speculating exactly how Amazon will morph their package delivery systems in years to come. They already have a huge fleet of Amazon-owned carriers, cutting out third-party shippers, and they’ve established new shipping routes between China and the US.
And of course, there’s the long promised Amazon drone delivery service. I’ll remain a staunch skeptic on that one. It’s not going to happen.

Most of our customers use UPS, FedEx, and DHL to deliver. Few have the luxury of owning their own transport company. The role of parcel auditor has never been more important helping to optimize parcel spend in an increasingly competitive world. Our recommendation?
Compete around, not against, Amazon. And let Direct-Recovery audit every package that leaves your door.

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Autonomous shipping

Driverless cars may carry the media, but other driverless models may be just as transformational.

There’s a Norwegian company testing a fully autonomous cargo ship. Sounds scary right? Here’s something scarier – a fully manned cargo ship collided with a fully manned naval destroyer just a few weeks ago, killing 9 sailors. How, exactly, does that happen? Maybe an autonomous cargo ship isn’t such a bad idea.

Marine staffing is expensive, and the lure of a ‘life at sea’ has definitely lost it’s mystique. Anyone who’s been there knows there’s little glamour to the profession. And the cost of designing and building to support that staffing isn’t cheap. Nor is the cost of moving a manned vessel. Rolls Royce Holdings Plc expects their autonomous ships to burn 15% less fuel than one comparably equipped and staffed with humans.

Early autonomous cargo ships will likely be smaller and closer to shore, but with success, comes size. Watch for large ocean-crossing autonomous ships in the not too distant future.

On the more impressive front, Natilus Inc. is a California startup with the goal of having a network of 140 foot unmanned aerial vehicles carrying 200,000 pounds of cargo, by air, within the next five years. The drones fly over water only, removing one of the huge obstacles to drone transport. No need for airports. They take off from and land in water. No landing gear, no landing strip, cruising at 20,000 feet. By Natilus’ estimates, these drones could cut air cargo transport costs by 50%. Ambitious dreams for a little start-up, but what a shakeup that would be.

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