A scary future

Remember the straw man from your high school debate club? No debate club? Ok, a straw man is that misrepresented point that you put up because it’s easier to defeat than your opponents real argument. It’s bad practice, but common political theatre.

A debater’s dream is a real opposition argument that is so utterly bizarre, it defies all reason with less coherence than the weakest straw man. Make sense? Ok, now read the full 14 page document posted here. Crazy eh? Now consider that the majority of the Democratic candidates for President in 2020 stand in support of this very crazy Green Thing. Scary.

It reads like a high school sophomore’s utopic vision to rescue civilization from a contrived doomsday scenario. Nothing against HS Sophomores. I have one and she’s awesome in every possible way. She’ll do great things with her life, but right now she’s 15 and I don’t trust her to make public policy to direct a multi-trillion dollar economy. Fortunately she’s not in the position to do so. Unfortunately, many of the people who Are in a position to do so now make my lovely daughter look like Winston Churchill. I’m speechless. The New Green Deal is the most preposterous political “compact” since, well, forever. I’d find in wholly comical. But I’m told by the likes of Cory Booker, Cortez, Bernie Sanders and others, that it’s actually real. Our intrepid media are now giving straight faced hard-hitting interviews about the mechanics thereof as if they’re asking how to fund a proposed school bond issue.

I’m reminded of the clairvoyant words of my son, “you know Dad, when you’re young, you think adults are smart. Then you become one, you look around and realize – no, they’re just older, that’s all”. True wisdom, that!

What does this have to do with shipping rate negotiations, or anything related to logistics? Uh, how about, if this Green New Deal goes through, you’ll want to ship yourself to the most distant shangrila country you can find, because ours will cease to exist.

Or, implement our parcel audit today and send the savings to your offshore account which you’ll need when the Green New Deal collapses our domestic economy and that offshore haven becomes the place to do business. Am I getting closer?

I know I’m stepping deep into political waters in a forum reserved for moving packages. Just can’t help it.

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On Parcel Audits and Bureaucratic Overreach

In my last post I whined about the pathetic lack of national interest in all things parcel audit. Tragically, ‘Parcel audit’ ranks just above ‘crustacean ACL repair’, googled only by that narrow audience of supply chain professionals who eat, sleep, and breathe efficient logistics.

As one such supply chain professional, I see most things in life as related to and improved by supply chains. That’s not perky party talk, but it’s true. “Life is better when stuff moves as it should” ™. But that’s a matter for another day. Today, I want to draw in those distant from transportation spend management theory.

Maybe I’ll do an end run. I’ll find a trending topic, and tie it back in. Let’s see… pulling up the daily paper (remember those?) it looks like we’ve got Trump, Grammy’s, Trump, Kardashians, crazy Maduro, Trump, FC Barcelona, Alexandria Ocasio Cortez, and virility.

“I’ll take ‘AOC’ for $200 please!”

Alexandria Ocasio Cortez. You know her, right? She’s the 29 y/o bartender/marxist (I think she uses “socialist”) who won 15,000 votes in NY House District 14 primary and was ushered into congress by the 85% Democrat district. Professor Anthony Pappas, her Republican opponent, didn’t stand a chance. Did the voters notice that he had a Yale PhD in economics, a BS from MIT, and is a professor of finance and economics? Or mostly that she was a young, cute Hispanic chick making big promises and he was an old crotchety white guy?

Is it just me or do we apply the same standards to our political candidates as we do for our Bachelor contestants? Old news there. Nice abs Justin Trudeau. Is my cynicism showing?

So now we’ve got AOC in congress and she’s covered 24/7 on cable. Watch for a week and you’ll think our government is run by a dozen or so celebrity politicians. Blame yourself, because media pushes what sells.

Alas, I confess that I could be the primary instigator on this one. I’m a total AOC groupie. I can’t get enough of her. Seriously. No, it’s not some celebrity crush thing. It’s not an Instagram obsession, and I’m certainly not enamoured with the fixes for what she thinks ails our country. For me it goes back to a former career as a mental health professional. When I look at people, I wonder what makes them tick. I suppose I’m an armchair psychologist. Not to boast, but I’m a proper expert in the field. Indeed, I’m as much of a mental health expert as AOC is an expert policy maker.

As a very relevant aside, an “Ex” is a has-been, and a “spurt” is a drip under pressure, if you get my point.

I digress.

Thinking of my former 29 year old self, I would not have the cojones to play the AOC game. That’s not a complement. It’s a diagnosis.

Is it narcissim? Naah, this is bigger. More extreme. What’s the name for that grandiose narcissism on steroids crossed with a savior complex, sprinkled with a fraudulent economic utopianism that inevitably fails, but not for lack of trying syndrome?

What 29 year old thinks that her glorious 250 year old nation needs to be totally revamped, by her?
What 29 year old thinks she can improve the free-market system that has brought more people out of poverty, freed more, saved more, than any economic system in the history of mankind?
What 29 y/o thinks that socialism, properly done this time because it has never been ‘propery done’ before, can fix whatever ails us? (actually too many, it turns out)

“The scariest words in the English language – I’m from the government and I’m here to help.” Reagan (as remembered).

Politicians grab for power. Nothing’s new there. What’s a bit new, is that there appear to be millions of Americans who believe that life will be better with unprecedented government overreach. That’s the scarry part. Socialism, leftism, marxism, Green New Deal – call it what you will. It’s the idea that government knows best, does best, and is out for your best interest, so just give it the power and resources to make everything right. But who in their right mind thinks the challenges facing our country can be fixed with bureacrats controlling, essentially, everything?

It always starts with ‘free’ because free is awesome. Free healthcare. Free education. Free food. Free energy. What’s not to like? But ‘Free’ panders to our baser instinct. You know the one. It’s the idea that if we can just tax the other guy more, life will be awesome for us. Alas, that’s a lie.

Problem is, that marxist or socialist ideal, or Green New Deal, has never worked. Ever. And will never work. Ever.

Anytime you strip out the free market, you end up with a politician deciding how many boxes of Captain Crunch Jenny O’Shea from Dubuque, Iowa will purchase in 2019. I read the 14 page ‘Green New Deal’. It’s linked here. The comparison fits.

Red scare? No. Just rationlism.

I’m actually all for green energy until it becomes religious zealotry or a government takeover. I’m sure I’ll be driving an electric car soon, but not because the government incentivizes or demands it. There are some amazing improvements coming down the pike such as the increased power density in axial flux motor designs, and ongoing battery developments that offer huge performance improvements at a much reduced price. That’s not a Green New Deal, it’s innovation spawned by the competitive marketplace. It’ll happen, gradually, and faster if government just stays out of the way.

This “Green New Deal” is fundamentally impossible. It defies the laws of physics, economics, and sheer rationality. But we can still promise it, right?

to be continued…

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Boring…

OK, let’s just say it. Parcel audits are boring. Nobody’s tweeting about GSR waivers. Nobody’s donning yellow vests and marching in the streets to protest the application of an incorrect dimensional weight factor. Celebrity politicians advocate a 70% marginal tax rate and that makes news but nobody retweets a FedEx post about a fuel surcharge boost.

As the resident blogger for Direct-Recovery, I’m whining, but I get it. Our parcel audit is consistent, effective, and boring. Cory Booker is inconsistent, ineffective, more than a bit whacky, and therefore newsworthy. But consider this. Amazon grew to be the biggest company in the world by moving things about more efficiently than the next guy. Is that boring? I think not.

We can’t promise we’ll help you move things about more efficiently than Amazon does. But we’ll give you the tools to help you move things about a whole lot more efficiently than you do now, and that could mean the difference between success and failure. Heck, maybe you’ll join the ranks of those in the forthcoming 85% tax bracket. Now there’s success!

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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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