Parcel - June 2008 - (Page 21)

UPS and FedEx see individual shippers as a single market, and they want to penetrate that market from as many angles as possible: managing inbound and importing freight; assisting with international freight and customs services; and offering a wide variety of assetbased freight services to complement their asset-based parcel and third party services. As “parcel” carriers increase their presence within the customer, it creates a growing challenge for the traditional freight providers to compete. Parcel carriers now blend freight and 3PL services with parcel incentives to gain a foothold in key market shares not currently replacing their parcel revenue. Their cross-selling will effectively offer new services that you currently purchase from a different freight carrier. The parcel carriers’ strategy to “bundle” or “bake in” expanded freight contracts will bind your parcel and freight spend into one agreement. For example, you may need to ﬁgure out if giving them freight to reduce your parcel discount by two percent is a good decision. Compound those numbers with variables like gross revenue tiers with 52week rolling averages and quarterly rebates based off gross freight, or maybe net freight, or just a ﬂat amount. Makes your head spin, but their information systems are catching up to meet these pricing programs. So let’s say you have freight proposals from the traditional freight carriers and the morphing parcel carriers as well. How do you make your decision? You’ll need to determine what your key performance areas are, be it cost, service time or customer service. Then you’ll need to develop a system to measure the offerings against each other. The ﬁrst step is to merge your freight and parcel data to a single database. The ﬁgures captured in this database should be directly tied to what you paid the carrier, not what you expected to pay the carrier. To get this information, use the invoice data instead of the manifest data or merging of carrier reports. Note that monthly carrier reports or shipping data extracts do not illustrate the full story. For example, while rates may have hypothetically increased for you 4.9% (actually 6.9% with a temporary fuel surcharge discount that will rise again quickly) your non-transportation based fees may have increased as much as 10 or 20% with the rate change. Invoice analysis allows you to count every penny. Once you have consolidated your data in one place, you’ll need to analyze your spend — and do so at the same speciﬁc level and competence as your carriers. Look at your numbers in comparison to the key performance issues you laid out at the start. You should also look at the broader data set to determine what areas a carrier may seek from you in expanding their presence. Developing or partnering to obtain a core competency in statistics is critical to crunching the numbers. Where Do We Go from Here? UPS and FedEx are proving that their ability to build out non-traditional freight services by leveraging their foothold with each customer will be successful. Only the most prepared shippers — armed with an intimate knowledge of their own transportation data — will come out on top. Jonathan Shaver is the President and Founder of IntraVex, a premium provider of multimodal freight invoice processing and data analysis services. He has been a leader in the parcel and transportation ﬁeld for 17 years, working for Pitney Bowes prior to launching IntraVex in 2000. Contact him at www.intravex.com ■ How Can I Analyze Transportation? Parcel carriers’ broadening scope ampliﬁes your need for data to strategically determine your best carrier portfolio and then manage that transportation spend. That’s the primary issue. The immediate second is that no one repository exists to extract all that data. Finally, once you have all the numbers, you need the tools to transform that data into intelligence. www.PARCELindustry.com May 2008 21 http://www.intravex.com http://ww.speedeedelivery.com http://www.speedeedelivery.com http://www.PARCELindustry.com

Table of Contents Feed for the Digital Edition of Parcel - June 2008

Parcel - June 2008 Contents Editor's Note What Would Augello Say? Success Means Never Being Satisfied Moving from Manual to Automated Fulfillment Regional Carriers Move to the Forefront Understanding Warehouse Management Systems Negotiating Carrier Contracts It’s All About the Data! How Long Will The East-West Trade Imbalance Last? Educate the Shipper, or Fix the Software? Product Profile On the Mark New Products & Services Advertiser Index Wrap Up

Parcel - June 2008

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