Date post: | 23-Jun-2015 |
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Business |
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Can you afford todo nothing?
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Your Presenter – John Kruzan
Senior DirectorGlobal Alliances, Distribution Solutions
Pitney Bowes
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The Perfect Storm is Coming
Historic rate changes from the big three carriers – USPS, FedEx, & UPS are only 48 days away – and are going to greatly impact your shipping operation and bottom line
Industry experts are saying these
changes could result in double-digit
cost increases for shippers
Arm yourself with all the information and learn how your organization can address these changes – it’s not too late
Because, doing nothing today will cost you something tomorrow
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What’s Happening & When
Expanding
dimensional (DIM)
weight pricing to
ALL packages
4.9% General
Rate Increase
(for UPS® Ground, Air,
International, UPS Freight®,
and UPS air freight services)
Expanding
dimensional (DIM)
weight pricing to
ALL packages
4.9% General
Rate Increase (for FedEx Ground®, FedEx
Express®, FedEx Freight®, U.S.
import and export services)
Intelligent Mail®
package barcode
(IMpb) Requirement
on ALL packages
DECEMBER 29, 2014 JANUARY 5, 2015 JANUARY 26, 2015
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What is Dimensional (DIM) Rating?
Dimensional
Weight = L x W x H
DIM FactorL = length in inches
W = width in inches
H = height in inches
DIM Factor = represents the
volume of a package allowed
per unit of weight
DIM weight pricing takes into account the dimensions—the space a package takes up—to determine the pricing
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Which costs less to ship? With DIM rating – it’s not what you think
Actual Weight
3 LB
Dimensional Weight
3 LB
Billable Weight
3 LB
Actual Weight
1 LB
Dimensional Weight
7 LB
Billable Weight
7 LB
1 LB teddy bear3 LB laptop
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FedEx & UPS—Dimensional Rating
FedEx and UPS will be expanding
dimensional rating to small packages in 2015:
UPS: December 29, 2014
FedEx: January 1, 2015
Previously, UPS and FedEx Ground service packages
were only subject to dimensional weight rating if they
were 3 cubic feet or larger
18” x 18” x 16”5,184 cubic
inches(3 cubic feet)
or larger
NOW TOMORROW
All
packages
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Remember the Teddy Bear?
Tomorrow
Actual Weight
1 LB
Dimensional Weight
7 LB
Billable Weight
7 LB
Cost
$10.52
Let’s compare shipping this Teddy Bear with UPS from New York City
to Chicago now and in 2015 when dimensional rating does into effect
(Zone 5 ground shipment)
Today
Actual Weight
1 LB
Dimensional Weight
No dim rating
Billable Weight
1 LB
Cost
$7.17That’s a 47% Increase!
($3.35 more per teddy bear)
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What if you ship 50 Teddy Bears to Chicago each week?
Tomorrow
Cost per Teddy Bear
$10.52
Cost per week
$526
Cost per month
$2,279.33
Cost per year
$27,352
Today
Cost per Teddy Bear
$7.17
Cost per week
$358.50
Cost per month
$1,553.50
Cost per year
$18,642
Can your budget afford a $8,710 increase in shipping spend in 2015?
x50
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What does this all mean for you?
It’s estimated that
85% of all ground shipments*will be subject to this new pricing structure, and in
many cases, it will result in a large price increase
Some experts are estimating
double-digit cost hikes**for shippers when annual rate
increases are factored in
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Your Shipping Costs with UPS & FedEx Could Skyrocket
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Software generated Label
Commercial Base (CBP) or Commercial
Plus (CPP) rates (discounted rates)
Free Insurance: $50 CBP
and $100 CPP
Intelligent Mail® package barcode (IMpb)
Starting January 25, 2015, all USPS packages
must be shipped with an IMpb tracking label
There are two options available:
Pre-printed Label
Retail rates (no discount)
Insurance if it is scanned at Post Office
Retail Counter
+
OR
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What if you ship the Teddy Bear with USPS?
Tomorrow
Billable Weight
1 LB
Rate
Retail
Cost
$6.15
Today
Billable Weight
1 LB
Rate
CBP
Cost
$5.54
Let’s compare shipping this Teddy Bear (without a software solution)
with the post office from New York City to Chicago now and in 2015
when IMpb goes into effect (zone 5, priority mail)
That’s a 11% Increase! ($0.61 more per teddy bear)
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Tomorrow
Cost per Teddy Bear
$6.15
Cost per week
$307.5
Cost per month
$1,332.5
Cost per year
$15,990
Today
Cost per Teddy Bear
$5.54
Cost per week
$277
Cost per month
$1,200.33
Cost per year
$14,404
What if you ship 50 Teddy Bears to Chicago each week with USPS?
Can your budget afford a $1,586 increase in shipping spend in 2015?
x50
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What is IMpb Exactly?
USPS® “next generation” tracking barcode
Improved Visibility • “Built in” tracking
• Better delivery prediction
End-to-end tracking • Competitive tracking
capabilities
Required for discounts (Commercial Base Pricing—CBP)
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Benefits of IMpb
Access to best prices
End-to-end tracking information
Better predictive delivery
Faster, more efficient service
Automatic Insurance (Priority Mail®), up to:
• $50 (for Retail and Commercial Base Pricing)
• $100 for Commercial Plus Pricing
Combines Tracking with Extra Services barcodes
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What is the total impact? What if you ship 50 Teddy Bears per week with UPS and 50 with the post office:
Tomorrow
UPS Cost per Year
$27,352
USPS Cost per Year
$15,990
Total Cost per Year
$43,342
Today
UPS Cost per Year
$18,642
USPS Cost per Year
$14,404
Total Cost per Year
$33,046
doing nothing to in 2015 is going to cost you a whole lot more
That’s $10,296 More! (A 31% increase)
x50
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It really is a perfect storm!
IMpbRequirements
So, what can you do,
so you don’t get invoice
shock in January?
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1. Audit Your Shipping Operation
Which carriers do you use?
How often do you use them?
What types of packages do you ship?
How much are you spending?
Doing nothing, will cost you something
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2. Standardize Boxes
Look at the boxes that you use to ship
• How many different types of boxes do you use?
• Reducing box sizes can help you reduce the
negative workflow impacts of dimensional
rating—measuring each box
Are you shipping boxes with lots of empty space?
• This is going to cost you more in 2015
• Implement strategies to maximize the
space used when shipping – ship two
items in one box, for example
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3. Negotiate
Reach out to your carriers to re-negotiate
your contracts
Identify areas where you can save money
Doing nothing, will cost you something
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Shift demand from UPS & FedEx
• USPS is a great choice now
– Tracking with IMpb
– New discounted priority mail rates
(announced Sept. 7th)
– UPS and FedEx already use
USPS for last-mile delivery
(they are their biggest customers),
you can trust them for the full journey
• Regional carriers
This will not only save you money, but will
help mitigate the risk of shipping with just one carrier
Shipping those 50 teddy bears
with USPS instead of UPS in
2015 will save you:
USPS: vs. UPS:
$5.54 $10.52
That’s almost $5 in savings per
package and nearly $13,000 in
savings per year
USPS vs. UPS
$5.54 $10.52
4. Shift Demand
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5. Implement a Multi-Carrier Software
A multi-carrier software solution can help you
make the smartest choice when shipping
Bring all your carriers, including USPS and
regional carriers, onto one platform
Choose the best rates easily
Reduce manual workflows for a more efficient
shipping operation
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Pitney Bowes Can Help
SendSuite Live: Multi-carrier shipping software that is IMpb compliant and can help you ship
smarter, helping you improve your workflows and reduce shipping spend
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You Can’t Afford do to Nothing
Take a look at your shipping
operation today, so you can save tomorrow
Don’t put your organization’s operating budget at risk
These are historical rate and carrier changes,
prepare yourself for 2015
Doing nothing, will cost you something