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January 2019

state-of-shipping-2019_shipware

The State of Shipping in 2019

By | News, Parcel Market Trends, Shipping Knowledge

A Look Back: 2018 in Review for UPS & FedEx

Last year was busy for the national parcel carriers, not only in terms of packages delivered, but in terms of changes to pricing and their respective service guides as well.

After warning shippers with the announcement of their 2018 General Rate Increase (GRI), UPS instituted mid-year increases to select surcharges related to size and weight.  However, if shippers expected the annual announcement to cover the scope of the carrier’s pricing plans for the year, they’d have been surprised by the multiple, additional rate changes throughout the year, outside of the GRI:

  • In April, UPS changed their fuel surcharge tables, separating the international export table from the domestic air table and effectively raising the fuel surcharge for export.
  • In June, UPS introduced a Shipping Charge Correction Audit fee and increased the Over Max Limits charge by $150.
  • In July, UPS implemented the Additional Handling fee and the Large Package Surcharge increases they had forewarned shippers about in their GRI announcement.

Of course, with the national carriers often moving in lockstep, it wasn’t long before FedEx joined UPS in changing rates midyear. In September, FedEx increased their Additional Handling fee for heavy packages, increased the Unauthorized Charge and, like UPS, changed the construct of their fuel tables by separating the import and export tables from the domestic express table and updating both the domestic ground and express tables.

As in 2017, when the busy-season pricing was first introduced to customers, both carriers instituted “peak” surcharges related to size, additional handling requirements, and other incremental increases during the peak shipping season between Thanksgiving and Christmas.  Also mirroring 2017, UPS instituted a peak surcharge for residential shipping while FedEx did not. However, shippers can expect this disparity come to an end in 2019 and for FedEx to follow suit and implement the peak residential surcharge.

Both national carriers continued to place a premium on efficiency in 2018, in terms of space utilization and network efficiency, a that trend will continue going forward.  While neither made changes to their dimensional weight pricing criteria, UPS did institute a shipping charge correction audit fee which penalizes shippers for incurring what UPS believes is an unacceptable number of shipping charge corrections in a given week, most of which are triggered by dimensional weight. In fact, UPS doubled down on the fee late in the year, making it easier for much shippers to incur the penalty.  The audit fee is now assessed when the average shipping correction during an invoice week is more than $2.00.  When they first introduced the fee, the trigger amount was $5.00.

Regarding the sheer number of total packages delivered, 2018 was a huge year for the national carriers.  There’s little doubt that volumes were at a record high.  Heading into Q4 2018, UPS indicated their expectation to deliver more than 800 million packages during the peak holiday season compared to roughly 762 million in 2017.  Likewise, FedEx expected their peak volume to surpass their previous record number of packages, 400 million, also set in 2017.  Not to be outdone, USPS predicted delivery of 900 million packages during 2018’s peak season.

season, internal Shipware data indicates that both carriers, as they have in past years, experienced delays during the critical peak holiday shipping weeks.  A more thorough evaluation will be necessary once all of the data is in.

The 2019 FedEx & UPS General Rate Increases:

An exercise in elevating complexity to drive revenue

The close of each year is marked by both national carriers announcing their general rate increases for the new year. In November, FedEx Express and FedEx Ground announced a 4.9% average general rate increase while FedEx Freight announced a 5.9% average increase, both of which went into effect January 7, 2019. UPS’s announcement came almost a month later, on December 5th. Not only was the announcement atypically late in the year, but with a declared effective date of December 26, 2018, UPS gave shippers only three weeks’ notice of their average4.9% increase to UPS Ground, Air, International services, and Air Freight rates.

Outside of the actual percentage increases, the most important takeaway from each carriers’ announcement might be use of the word, “average.” Historically, there has been very little correlation between the carriers’ announced average increase and the actual increases by service level, zone, and weight. This year’s announcements are no different.The impact to each shipper’s parcel budget will deviate significantly from the announced average increase depending on their shipper profile. The majority of small shippers are taking the full increase, while large shippers typically negotiate terms that mitigate the general rate increase year over year.

Consistent with more recent rate increases, the days of FedEx and UPS mirroring each other are fading. Reviewing the increase by service and weight shows that the biggest impact to FedEx customers will be the 6% to 8% increases to 31+ pound Express services. Similarly, UPS customers are facing increases between 7.5% and 8% to 31+ pound 2-day rates. However, the largest impact, and disparity from the 4.9% average, is seen in SurePost, with rate increases of 5% to 9.3%.

rate increases

Dissecting the data reveals that the announced increases are indeed an average and will vary, along with their impact on shippers, by service and zone.  With FedEx, we are seeing hikes across the board, above the average 4.9%, for all Express services while Ground Commercial, Home Delivery, and SmartPost hover between 4.7 and 5.2%. Conversely, UPS is mainly increasing its SurePost <1 lb. service by 8.9% to 9.8% while keeping SurePost 1+ lb., Ground Commercial, Residential, and 3-day shipments closer to the 4.9% marker. Like FedEx, 2-day and 3-day shipment increases vary by zone, from 5.4% to 8.1%.

service rate increases

In addition to transportation rate increases, FedEx will increase surcharges and minimums in 2019. Notable changes are seen in the following two tables which show the zone 2, 1 lb. rate for each service:

fedex minimum net charge

This list rate is reduced by a specified dollar amount predetermined by the carrier to arrive at the minimum net charge. FedEx minimums increases range from 3.56% on Ground/Home Delivery and SmartPost to 5.4% on Priority Overnight Letters while UPS increases move anywhere between the 3.7% on Ground to the 10.08% on SurePost greater than 1lb.

ups minimum net charge

The table below highlights dollar and percentage increases to some of the more common surcharges. Note the outright number of surcharge increases, the variance in their amounts and, as noted before, the continuing trends of UPS and FedEx pricing moving farther apart, year after year, and the largest increases being reserved for those surcharges related to package size and dimensions.

fedex surcharge

If you examined last year’s GRIs, you’ll recognize that many of the same surcharges increased last year are once again being increased in 2019, such as FedEx’s Print Return Label Fee which has doubled, and UPS’s Third-Party Billing Fee, up 80% from last year. Take a closer look at the Additional Handling, Large Package, and Over Maximum Limits surcharges. Both carriers increased these accessorials in their 2018 general rate increases, again between June and September, and all three are receiving further increases in 2019. Additional Handling Weight has increased over 91% in 12 months!

ups surcharge

This information not only illustrates the many facets of the 2019 general rate increase but, on the broader level, the continuing efforts of UPS and FedEx to create an increasingly complex pricing environment year after year with varying increases.

When Shipware surveyed shippers, from small to large, at the 2018 PARCEL Forum, 63% of respondents felt that it’s harder to negotiate with the carriers today than it was a few years ago.Among those, 73% felt the difficulty is owed to increased pricing and agreement complexity. It’s also not lost on shippers that the carriers are focused on revenue: keeping margins high and capturing added costs to serve. Of those who believe today’s negotiating landscape is tougher, 82% also feel it’s partly due to this revenue-focused approach that we find in reoccurrences like large packages being assessed multiple increases. With many moving parts to every rate increase; with rates, minimums, and surcharges that no longer match, today’s environment is very confusing for many shippers. It is essential they stay informed and educated if they want to remain in control of their transportation costs.

Expectations for 2019 Mid-Year Increases:

Are Once-Per-Year Increases a Thing of the Past?

If 2018 introduced the new norm, shippers could see mid-year surcharge increases being assessed by both UPS and FedEx once again. Shipware expects increases in the same areas: Large/Oversize packages and Additional Handling. Essentially, the carriers are increasing these fees as a deterrent, forcing shippers to either optimize packaging or move large packages out of the small package network.

Last year, we saw the following UPS surcharges impacted: FuelShipping Charge Corrections, Additional Handling (>70lbs),Large Package Surcharge, andOver Maximum Limits. Regarding fuel, UPS split the fuel surcharge for domestic and international air so that we currently different fuel surcharges for export, import and domestic air. In June, they introduced an audit fee for shipping charge corrections which is the greater of $1 per adjusted package or 6% of the adjusted revenue for an invoice week. As mentioned before, this is now applied when the average shipping charge correction in an invoice week is more than $5, increased from $2 within the same calendar year. Again, the key word here is, “average.” We expect this audit fee to be fair game for an annual increase, similar to the Third-Party Billing Fee which has seen a YOY increases.

In addition, UPS changes for 2019 include applying fuel surcharges to more surcharges than ever before, including: Additional Handling, Over Maximum Limits, Signature, and Adult Signature Required. They are also instituting new fees. They will also charge a processing fee when Package Level Detail (PLD) is not provided to them prior to delivery.

FedEx followed suit with their own mid-year hikes to larger packages, increasing their Additional Handling Charge Weight, Oversize Fee, and Unauthorized Package surcharges. Furthermore, the FedEx Express and FedEx Ground fuel surcharge tables were updated in September, translating into increases for most shippers and effectively eliminating the fuel cost advantage that they’ve held over UPS for years in what was a 75% addition to the Express fuel surcharge table and 1% to the Ground fuel surcharge table.  Like UPS, FedEx now has separate tables for export, import and domestic express.

The tables below illustrate the mid-year surcharge increases, ranging from 12.5% to 125%, and overall impact to shippers:

UPS

ups mid-year increase

FedEx

fedex mid-year increases

Going forward, it will be harder to pinpoint when increases will occur and how much they will demand of shippers. The days of surcharges increasing once a year as part of the general rate increase may be a thing of the past. Shippers need to be diligent and keep abreast of carrier updates regularly. Transportation spend will continue to increase year over year. The question now is: how many times per year?

When and How to Use SurePost and SmartPost in 2019:

aka Everybody Wants Free Shipping

With free shipping becoming more and more of a required checkout option for internet shoppers, companies are constantly looking to cut their transportation costs and minimize the loss incurred by making it available.  FedEx and UPS have adapted by partnering with the US Postal Service (USPS) to handle last mile deliveries on their behalf, thereby reducing their costs and allowing them to offer a less expensive service to their customers.  These services are called SmartPost and SurePost, respectively.

What are SurePost and SmartPost?

UPS defines SurePost as an economical ground service that delivers primarily to residences while FedEx defines SmartPost as efficient residential shipping for low-weight packages for both delivery and returns.

Getting a package to its final destination is the most expensive part of its journey and both services were created to help drive down the costs of this “last mile” of delivery.The USPS visits nearly every address in the United States on a daily basis. SurePost and SmartPost leverage this fact by using them for them for the final delivery, allowing UPS and FedEx to avoid delivering a package to a place already visited by the USPS.  One thing to note is that SurePost and SmartPost are contracted services, meaning they’re not available to shippers who have not addressed them in their UPS and FedEx agreements.

Services, Surcharges and Shipment Flows

With both SurePost and SmartPost calling on the USPS to execute final deliveries, both offer similar services with matching dimensional, weight and material restrictions, with SmartPost Returns being the differentiator, having no SurePost counterpart.

SurePost is broken down into four services:

  • SurePost 1 lb. or Greater (Might be referred to as Parcel Select, the USPS term)
  • SurePost less than 1 lb. (Parcel Select Lightweight)
  • SurePost Bound Printed Matter
  • SurePost Media

While SmartPost is broken down into five services:

  • SmartPost 1 lb. or Greater (Might be referred to as Parcel Select)
  • SmartPost less than 1 lb. (Parcel Select Lightweight)
  • SmartPost Bound Printed Matter
  • SmartPost Media
  • SmartPost Returns

SurePost 1 lb. or Greaterand SmartPost 1lb. or Greater are the most common services, respectively, for both UPS and FedEx. They allow packages as heavy as 70 pounds with combined length + girth (2*height + 2*width) of 130” or less as long as no dimension is longer than 60”.  SurePost less than 1 lb.and SmartPost less than 1lb. both have the same dimensional restriction as their analogous 1 lb. or Greater services, but the shipment must weigh less than 16 ounces.

SurePost Bound Printed Matter (BPM) and SmartPost BPM apply to books and other permanently-bound materials that weigh up to 15 pounds.  Both services have a 108” length + girth limit and a 60” maximum for any single dimension.  In order to use a BPM service, it must be specifically included in a SurePost or SmartPost agreement.

SurePost Mediaand SmartPost Media are for most forms of media (CDs, DVDs, etc.) and have a 70 pound maximum and a 108” length + girth limit.  Like BPM, Media is only available to shippers who specifically include it in their respective SurePost or SmartPost agreement.

As mentioned before, and noted in their definition of SmartPost, FedEx offers one additional service, SmartPost Returns. This is a solution that offers consumers a way to return packages through the USPS using the same restrictions as 1lb or Greater.  The caveat is that a shipper must have at least 20 returns per day in order to qualify for this service and it must be specifically included on an agreement. Returns packages may also be dropped off at any FedEx retail location.

When it comes to surcharges:

SurePost has a smaller set of surcharges than UPS Ground that can be added to a shipment:

  • Non-Machinable: A package with a dimension between 34” and 48”, any two dimensions between 17” and 30”, or weighing over 35 lbs.
  • Delivery Area Surcharge
  • Additional Handling: Package with its longest side greater than 48”, second-longest side greater than 30”, encased in metal or wood, or a cylindrical item not fully encased in corrugated
  • Peak Surcharge: An extra fee added to Additional Handling during UPS’s busiest time (between mid-November and Christmas)

SmartPost has a smaller set of surcharges than FedEx Home Delivery:

  • Non-Machinable: Package with a dimension between greater than 27”, any two dimensions greater than 17”, weighing over 35 lbs., or packaged in a cylindrical tube
  • Delivery Area Surcharge
  • Balloon: Item that weighs less than 20 lbs. but measures between 84” and 108” in length + girth
  • Oversize: Item measuring between 108” and 130” in length + girth
  • Package Relabel: Packages that require overlabel or hand keying will be assessed this fee
  • Third Party Billing Surcharge: Shipments billed to an account unrelated to the shipper

We know what SurePost and SmartPost are, their similar offerings, why they were created, and what surcharges can be applied. But, what does the flow of a shipment look like in practice?

A SurePost shipment typically goes as follows:

  1. UPS picks up the shipment as part of their regular pickup.
  2. UPS consolidates the SurePost shipments and delivers them via their ground network to a USPS Destination Delivery Unit (DDU).
  3. USPS then sorts the packages to their carrier routes and handle the delivery to the customer.

A SmartPost shipment typically goes as follows:

  1. FedEx picks up the shipment as part of their regular ground pickup.
  2. FedEx consolidates the SmartPost shipments and delivers them to one of their 25 SmartPost Hubs.
  3. The hubs sort the packages to the USPS destination close to the delivery point, not necessarily a DDU.
  4. USPS then sorts the packages to their carrier routes and handle the delivery to the customer.

Both SurePost and SmartPost use dimensional rating for their packages just like they do for their other services. This takes the volume of the package (L * W * H) and divides it by a DIM divisor (the standard is 139).  This dimensional weight is compared to the actual weight and the greater value is used for rating purposes.

As you can see, SurePost and SmartPost are very similar.  The package requirements are the same and the service offerings are almost identical, the distinction there being that FedEx offers a SmartPost Returns product that UPS does not.  There are a few more differences though.   FedEx uses separate SmartPost hubs instead of the regular ground network that UPS uses and, while every SmartPost package will be delivered by the USPS, UPS will deliver SurePost packages if it they are already delivering a regular ground package in the customer’s immediate area. As a result of these differences, the transit time for a SurePost shipment is generally about a day faster than SmartPost.

Additionally, the list rates are different between FedEx and UPS.  The 2019 list rates for SurePost and SmartPost are shown below.  FedEx’s rates match their ground rates for 1 to 9 pounds in most zones (with a slight difference in the 4 thru 9 pounds rates on zone 4, and 9 pounds rate on zone 3) whereas UPS’s rates are an average of 5.9% higher than their ground rates.  Both carriers’ rates increase by almost 30% at the 10 pound mark.  Shippers of heavier packages need to calculate if these rates are still beneficial.  With the lack of a residential surcharge, they typically will be despite the rate jump, but the savings opportunity is greatly reduced.

surepost smartpost rates

Just like all other services, SurePost and SmartPost have a minimum charge.  For UPS, it is the zone 2, 1 lb. rate or the zone 2, 1 lb. ounce rate. For FedEx, it is the zone 2, 1 lb. rate less $2.00 (less $3.00 for ounces).  Shippers should factor these minimum charges into their SurePost and SmartPost rate negotiations.  UPS is at a much higher starting point than FedEx, so an aggressive concession will be needed.

Now that we’ve defined what SurePost and SmartPost are, let’s look at why shippers should use these services and what to be aware of when considering SurePost or SmartPost.

For both carriers, the advantages include:

  • No residential surcharges. This saves $3.95 with both UPS and FedEx, assuming no reductions have been negotiated.
  • Lower delivery area surcharges that save up to $2.50 with UPS and $2.75 with FedEx (see the chart below).

surcharges

  • The ability to deliver to PO Boxes, which neither UPS nor FedEx can.
  • The ability to deliver to Military APO/FPO/DPO destinations.
  • The ability to deliver to US territories.
  • Full tracking and visibility just like regular UPS and FedEx shipments.
  • Delivery Monday through Saturday everywhere. Currently, FedEx Home Delivery is Tuesday through Saturday and UPS only delivers on Saturday to some locations.

Disadvantages include:

  • Slower transit time compared to the carriers’ ground service
  • Tracking confusion owed to the package switches carriers (sometimes UPS or FedEx will show the package as “delivered” when it has been handed off to the USPS)
  • Collect on delivery is not available
  • Package value is capped at $100 and no additional declared value is possible
  • Money-back guarantee does not apply because transit times are not defined
  • Hazardous materials cannot be shipped
  • Signature proof of delivery is not available
  • Appointment deliveries are not available

Having said all of that, shippers use SurePost and SmartPost as their “Free Shipping” option most of the time. The lack of residential surcharges, the lower delivery area surcharges and the ability to deliver to just about every location in the country allow them to minimize their losses on transportation. The trade-off of a slower transit time is acceptable for most customers.

Shippers that are interested in using these services need to ensure that their UPS and/or FedEx agreements have SurePost and/or SmartPost pricing on them. Discounts can and should be negotiated as well.  Once the services are included, the packages will be picked up as part of the normal process.

The USPS Announces Significant Changes:

A Brief Overview of the 2019 GRI

The 2019 USPS General Rate increase will take effect on January 27, 2019. The reported 5.9% average increase for Priority Mailis understated, as most shippers are using “Commercial Plus” pricing (which is being effectively eliminated) and will take an additional 3% increase.  Some lanes, including flat rate envelopes will see a 9% increase.

New Priority Mail dimensional policies will be implemented on June 23rdwherein the Post is dropping the balloon surcharge and decreasing the Dim divisor to 166 from 194.

The First Class Package Service (FCPS)will no longer be a flat rate and is instead switching to zone-based pricing. Inner zones will see a smaller 6.7% increase while outer zone shippers will see a 15% increase.  Where pricing used to have just 16 levels based upon the ounce, it will now rise incrementally every 4 ounces.

Parcel Selectis the core USPS class used by consolidators like UPS SurePost and FedEx SmartPost examined in the previous section.  There are many ways consolidators use the USPS for final mile delivery, with most using the DDU entry discount.  Rates for > 1 LB are going up 10% with the new 166 Dim, while the under-a-pound is increasing an average of 11.5% and willnotbe switching to zone-based pricing like the FCPS.

This is a major rate increase that was carefully planned by the USPS to minimize loss of volume, with the greatest increases being applied to shipping lanes with the least competition.  Zone 8 lightweight shippers would be well served to consider fulfilment or adding asecond distribution center to mitigate costs, as will > 1 lb. shippers with higher cubic volume (> 1728 cubic inches) since the Post will grandfather in the Dim exemption for zones 1-4.

How to Compete with Amazon:

Contending with Free Shipping, Shopping Cart Abandonment

Regardless of how we define the “Amazon Effect,” one thing is clear: there’s no denying the digitization of the marketplace has disrupted traditional business models and consumer expectations.  Consumers expect an almost entirely frictionless buying experience with near immediate results, including delivery.  With immediate access to virtually any product or service via their smart phone, tablet or computer, consumers no longer need to set aside time to run errands at brick and mortar stores.

How can the average shipper compete in this environment?  It’s difficult but they should begin by pursuing means to lower their parcel shipping costs(which allows them, theoretically, to charge less for shipping) or decrease transit times. Ideally, both.  There are many ways for shippers to accomplish these goals, some dependent on volume and spend and therefore within reach of only the largest shippers, and some not.

Two great ways to reduce cost and shorten delivery time are to increase the number of origin points or to move the origin point as close to the end user as possible.  A shorter delivery distance carries a lower rate (usually) and enables faster transit.  The largest shippers can open new, strategically placed distribution centers while smaller shippers can consider a direct-to-consumer strategy by having the manufacturer or wholesaler handle shipping or by fulfilling from stores rather than from a primary DC.  An omnichannel strategy, which includes shipping from all of the above, can be a great option for many shippers.

Carrier diversification is another strategy that can both reduce cost and decrease transit time. Shippers should consider using multiple carriers where it makes sense.  Understanding which carriers are a good fit and which are not is critical to this strategy. Many shippers can benefit from increased usage of USPS as Priority Mail can offer lower costs and faster transit times with 2-day delivery to most of the country. It’s also very important for shippers to understand the impact this strategy will have on the pricing they receive from their primary national carrier as a result of moving volume away from them.

Regional carriers should not be overlooked when trying to hit this lower cost/shorter transit goal. They can be a great option for certain shippers. Regional carriers such as OnTrac on the west coast, LaserShip in the east, UDS in the Midwest and LSO in the southwest can help large shippers offer one- and two-day transit to most population centers in these geographic regions.  The ROI on introducing regional carriers will vary, however, from shipper to shipper.  The largest shippers, who have favorable delivery density within the footprint of a certain regional carrier, should absolutely be exploring this option.

Packaging optimization can be a key cost-reduction strategy and can help shippers avoid significant, and often unexpected, dimensional weight fees.  A shipper’s ability to “right-size” their packaging is critical to reduce the amount of air they’re shipping.

All of the above should include an aggressive rate negotiation strategy with the national carriers. Every aspect of their pricing agreements are negotiable. Discounts, minimum charges, accessorial charges, dimensional weight pricing, etc. can all be negotiated in order to help lower costs.  Even the degree of impact the carriers’ annual GRIs have on a given shipper can be mitigated through contract negotiation.  Education and data are key here.  Shippers must be intimately familiar with their own shipping and package characteristics and should know how to use that information to their advantage during carrier negotiations. Shippers who have taken action to lower the carrier’s cost to serve them, such as adding additional origin points or optimizing their packaging, shouldn’t be afraid to ask for concessions in exchange.

Some shippers have decided that, if you can’t beat them you may as well join them.  These shippers, in order to get their product in front of more consumers and offer faster delivery (and, therefore, to compete with Amazon) believe that Fulfillment by Amazon (FBA) is worth the extra cost. How does FBA work?  Retailers send their product to Amazon to store it. Orders are placed either through Amazon, directly with the retailer, or through some other eCommerce platform.  Amazon picks, packs and ships the item then provides tracking, customer service and returns management.  But, all of this comes at a cost to the shipper.

In the coming years, what we think of as the “Amazon Effect” will likely include the impact of Amazon rolling out their own national delivery network, Amazon Shipping, in effort to compete directly with the national carriers.  At the time of writing of this article, Amazon had announced a plan to eliminate many of the fees associated with residential deliveries carried out by UPS and FedEx.  Although conventional wisdom says that Amazon Shipping is, at minimum, 5 to 7 years away from competing on a large scale, the national carriers stand up and take notice when announcements like this are made, and so should shippers.  Stay tuned for more on this topic.

Shipping in 2019: The Big Picture

2018 was another huge year for UPS, FedEx and the USPS.  Package volumes continue to rise, and the carriers are racing to keep up with the increased demand. Both UPS and FedEx instituted mid-year increases to surcharges related to size and weight, making it clear that large packages are not welcome in their network without collecting significant fees in turn. Both also changed their fuel surcharge tables, separating domestic express, import, export and ground into separate tables while increasing the surcharge percentage.  Peak surcharges were once again implemented in 2018 and we expect to see them in 2019 as well. FedEx and UPS differ in their peak surcharge strategies, so any changes for 2019’s peak season merit attention.

The 2019 rate increases were announced at 4.9% by both carriers.  Further analysis reveals that FedEx stayed close to 4.9% on their ground, home delivery and SmartPost rates whereas Express saw significantly higher increases, particularly in the higher zones.  UPS’s increase was a little higher for their ground residential and SurePost services while, like FedEx, Express saw significant increases in the higher zones. Remember, that 4.9% does not include accessorials! Both carriers increased their most assessed accessorials, ranging from 5% to 12%, so that needs to be considered in any rate increase calculation.

As we move into 2019, the specter of Amazon looms over everyone. Shippers are looking for ways to lower their transportation costs as customers expect free shipping with every online order.  Carrier diversification, regional carriers, package optimization and minimizing delivery distance are different ways shippers can lower their costs to appease expectations. Amazon is building out a delivery network and has already announced a plan to eliminate many of the fees associated with residential deliveries.  It remains to be seen how long their plan will take to scale but shippers and carriers will be closely following any developments.

shipware

Imagine if we framed all our decisions in the context of ‘how will this impact those around me?’

By | Canonical

“Focus on your sphere of influence. Whether you like it or not, who you are and what you do impacts those around you. Imagine if we framed all our decisions in the context of “how will this impact those around me” and everyone you’re connected with did the same. I’d venture to say that the world would be a much different place. No one would disagree with this statement or concept. However, the challenge is that it goes against the grain of our inherently selfish nature. So, let me boil it down to one simple statement: In All Things, Consider Others First.”

trevorI had the pleasure of interviewing Trevor Outman, the President and Co-Founder of Shipware, a San Diego based consulting and technology firm that provides expertise aimed at helping shippers negotiate improvements to their carrier contract terms & pricing. Prior to graduating business school with his MBA, Mr. Outman proudly served his country in the US Army as a forward observation and reconnaissance specialist.

Thank you so much for doing this with us! What is your “backstory”?

I’ll never forget the humble beginnings of Shipware. Our first office location was a bachelor pad garage. I was living with four of my close college friends and, without asking for permission, commandeered a corner of the garage and set up a makeshift office using folding card tables.

One of my roommates was responsible for coding v1 of Shipware’s software technology. We built a SaaS based solution that would audit carrier invoices for high volume shippers. The technology identified and recovered refunds from billing errors and service failures, resulting in 1–7% savings. The quick pitch was: if we can’t reduce your weekly invoice then don’t pay us; otherwise, we simply ask for a percentage of the found money we recover. I lived in the dusty corner of that garage grinding through call lists and sending out hundreds of emails every day.

We were one of the first to market with this technology-based solution, and the market responded in kind. We grew a healthy book of business and quickly moved into an office space. Soon, clients started asking for help negotiating competitive discounts, rates, and terms with the carriers. I leveraged my experience, from auditing and analyzing hundreds of carrier pricing programs, to deliver 10–30% savings to them.

I became passionate about helping shippers reduce their shipping costs because most are unknowingly and unnecessarily overpaying. We became advocates for shippers and developed non-intrusive solutions that ultimately leveled the playing field between them and their carriers.

Can you share the most interesting story that happened to you since you started your career?

We’re all at the Del Mar horse races for a team event. I didn’t see any security around the track — the type of personnel you’d see at a baseball or football game to prevent people from stepping onto the field (or racetrack in this case). Apparently, they were non-existent at the Del Mar horse races.

shipware team

I pointed out this interesting observation to some of my teammates. A few minutes pass and, the next thing I know, one of my sales reps is walking down the stairs towards the track. I thought he was bluffing. There’s no way he would hop the railing. It’s way too risky!

Sure enough, he gets to the railing, looks around, quickly hops it and is on the Del Mar racetrack! He runs to the middle, lays down on his back, and begins to do a perfect snow-angel in the dirt. No one could believe what they were witnessing, including myself. Everyone’s jaws dropped and was either belly laughing or nervously laughing, wondering what would happen next. Once the crowd finished cheering and his moment of fame was realized, he ran off and later reunited with our crew. Note: security does exist there. Do not attempt! He had to explain himself to security and, fortunately, that was all. He was lucky though. True story. We are going back this year . . . if they let us in. 

How do you synchronize large teams to effectively work together?

Everything rises and falls on leadership. Effective leaders demonstrate ownership and operate with influence. Starting with ownership, when a team member makes a mistake, the leader assumes responsibility as if it’s his/her own misstep. Secondly, effective leaders earn the trust and respect of their team members to influence direction and motivate accordingly.

I’ve noticed great leaders shed their title and focus on the hearts and minds of the team. I have yet to see a leader do this well with more than 10 team members. Building trust and earning the right to continually influence others takes a significant time investment. In my opinion, leaders see diminishing returns with teams over 10. Therefore, for a large team to effectively work together, multiple leaders should be placed throughout the organization, ensuring every individual has a direct and close connection with their manager/leader. The team of leaders should align, meaning wholehearted belief in and commitment to the same vision and direction. In this environment, momentum builds, a healthy culture and sub-culture develop, objectives are tackled, and results are achieved and celebrated collectively.

What advice would you give to other CEOs or founders to help their employees to thrive?

I’ve found that it’s human nature for people to assign greater importance to some roles. But, In a high functioning organization, no one should feel superior or inferior. Individuals that carry themselves with a sense of superiority are toxic and debilitating to an organization. The same is true of someone that feels inferior. Every team member needs to understand that their role, same as any other role, is mission-critical to the success of the organization’s goal(s).

It’s the leader’s responsibility to ensure this level of understanding is deeply ingrained within all team members. To encourage this, shift the paradigm of the oganizational chart. I’ve worked at inverting the organizational chart in my heart and mind, which changed my perspective and approach. Flipping the org chart upside down creates the most compelling form of leadership, servant leadership. I don’t believe the purpose of my employees is to serve me; rather, my top priority is to serve them. Even while I lead from the front the function of the position is to serve the organization by forging a clear path ahead for my teammates.

Serving team members can take on many forms. However, I would suggest it’s most critical for me to ensure they are empowered to perform at the highest level possible. Serving the employees generates a results-based culture which inherently creates very satisfied clients. Satisfied clients translate to more revenue and more revenue translates to more resources invested back in to the company. A rising tide raises all boats.

Most times when people quit their jobs they actually “quit their managers”. What are your thoughts on retaining talent today?

Effective leadership, at its core, is influence. True leadership cannot be awarded, appointed, or assigned by title; it comes from influence, and that cannot be mandated. It must be earned.

Employees will quit managers that don’t build trust and respect. Employees will quit managers that don’t take a genuine interest in their lives. Employees will quit managers that don’t earn their right to influence.

I believe employees who aren’t known and individually appreciated by their managers will not feel fulfilled by their jobs. Appreciation and recognition are easy to dispense when successful results are apparent. However, before success is achieved, effort needs to be applied and this effort can often result in failures and mistakes. Remembering to recognize and appreciate effort by making it the sole reason for the conversation will help motivate a team member to continue striving for positive results.

No one wants to do a bad job. Everyone wants to do well and win. No one just lands on success or in the winner’s circle; the path is littered with failures and mistakes. The key is to fail forward, learn, and get better from yesterday’s lesson. Therefore, if we as leaders can positively encourage effort, even amid mistakes, then we’re sending the right message. Encouraging effort will lead to the joy of rewarding results and eventually the celebration of a career.

Based on your personal experience, what are the “5 Things You Need To Know To Successfully Manage a Team”. (Please share a story or example for each, Ideally an example from your experience)

In my opinion, the 5 fundamentals every team leader should apply to develop a high functioning team are:

Trust & Respect. Commitment. Honest Communication. Accountability. Measure Results.

  1. Trust & Respect — This isn’t just the foundation to effective teams; I would suggest it’s the foundation to any healthy relationship. Take either trust or respect away from any relationship and it is no different than removing a wheel from race car. It may be able to awkwardly move down the track, but as soon as you try to build momentum, a wreck is certain.
  2. Commitment — It’s most important to understand each team member’s personal “WHY”to garner earnest commitment. In other words, what intrinsically motivates them to pursue mountain-top success? What motivates them to keep pushing when the path or job becomes arduous? As a leader, once you understand the individual’s WHY, you can motivate and earn commitment. At that point, it’s a matter of connecting the fulfillment of their WHY to the overarching team objective. Essentially, the individual is committing to themself, their vision, and their WHY with the understanding that, once the team’s mission is accomplished, they’ll be closer to fulfilling their own vision/WHY. Everyone on the team will have different reasons to commit, but once unique motivations are tapped, the team will naturally gel because they’re committed to the same objective or goal.
  3. Honest Communication — Honest communication is commitment to transparency and requires vulnerability. Leaders go first to promote this level of communication throughout the team. I firmly believe that when honest communication is coupled with #1 above, there is literally no interpersonal problem that can’t be resolved (which doesn’t always mean agreement). Communicating through a disagreement with trust and respect is almost a guaranteed path to conflict resolution. We’ve all been in situations where the tone or words used were disrespectful or when trust was absent. When was the outcome ever positive? Never. I would suggest a breakdown in any relationship can be traced back to either a lack of trust, respect, or honest communication.
  4. Accountability — Accountability acts as the guardrails to ensure the team’s mission is accomplished. Once the path to success is defined, team leaders should work with each team member to align on the necessary steps needed to be successful. Those steps are measures of success. Regular evaluations will determine whether the individual and team are on track to achieve their goal(s).
  5. Measure Results — Allow room to continually refine and improve by consistently measuring results. Fell short of the goal? Ask why, evaluate, and redefine the path ahead. Overshot the goal? Ask why, evaluate, and redefine the path ahead. There are many paths to the top of the mountain. Given the fact that each team member is persistent and committed, measuring results will notify you when a change of course is necessary.

shipwareYou are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

This may be a politician-type response, but I believe it’s a realistic response. Focus on your sphere of influence. Whether you like it or not, who you are and what you do impacts those around you. Imagine if we framed all our decisions in the context of “how will this impact those around me” and everyone you’re connected with did the same. I’d venture to say that the world would be a much different place. No one would disagree with this statement or concept. However, the challenge is that it goes against the grain of our inherently selfish nature. So, let me boil it down to one simple statement: In All Things, Consider Others First.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat. — Theodore Roosevelt

This was a foundational quote from a leadership program I participated in during my college years that I would go on to help lead and facilitate. The essence of this quote helped shape who I am and how I approach life and business.

In business, I love strategy and am fulfilled by the challenge of navigating uncharted waters. Strategy determines direction, so while critical, it doesn’t take you across the finish line. Ideas, like strategy, won’t come to life on their own. Almost everyone has a business idea; implementing strategy or executing an idea is where the rubber meets the road.

It’s the same as walking into the proverbial arena. It means you’re willing to come to terms with the possibility of defeat. Few take these bold and courageous steps. The grit and determination to be the “man in the arena” has motivated me my entire life. In business and in life the path of least resistance leads away from the arena. Life has a way of creating a current that pulls us on to this path, all we need to do is pick up our feet and it will wash us away. Instead, choose to swim upstream and then walk yourself into the arena. I’ll do my best to see you there.

shipping-glossary_shipware

Glossary of Shipping Terms

By | News, Shipping Knowledge

Accessorial

Additional service charges typically charged by the National Carriers during the billing process. Common examples are “Residential Surcharge”, “Delivery Area Surcharge”, “Fuel Surcharge”, and “Additional Handling Surcharges.”

Actual Weight

Carrier determined weight before rounding up to the nearest whole integer, once rounded up it is referred to as “Billed Weight” Also determined by the carrier calculating Dimensional Weight and rounding up to the nearest whole integer. The carrier will invoice at the greater of the rounded up actual weight and the Dimensional Weight.

Additional Handling

A common accessorial surcharge. UPS and FedEx have 3 different categories based upon Packaging, Dimensions or Weight. Common triggers are: 1) Packages with a single side longer than 48 inches, or a second side that measures greater than 30 inches; 2) Packages with an actual weight of greater than 70 lbs; 3) Packages not fully encased in an outer shipping container made of corrugated materials (cardboard), and/or the outer shipping container is covered in shrink wrap; 4) Packages encased in a soft-sided pack (courier packs, poly bags and bubble mailers) of certain dimensions; 5) Packages that are cylindrical; 6) Packages bound with metal, plastic, cloth bands or other strapping; 7) Packages that could become entangled in or cause damage to other packages or the carrier sortation system. For example, a 36″ x 36″ x 12″ will be charged this fee because of rule #2. Packages that meet more than one of the triggers are only charged one surcharge. For example, rolled carpet that’s 55″ long and wrapped in plastic would be charged because of rules 1, 3, 5 and 7.

Address Correction

An Accessorial Surcharge by the National Carriers. Charges vary depending on service chosen. With USPS, there is no charge for correcting the address of packages, but for letters and Flats there charges may be applied depending on how old the Address Change is and if there is any “Ancillary Endorsement” included.

Air Freight

Cargo that travels via Air.

Air Waybill

A document specific to Air Freight that identifies the consignee, the consignor, destination, estimated weight, Tariff and other ancillary services.

Airport to Airport

Service for Express only covering the transportation from one airport to another. It is the consignor’s responsibility to transport packages to the origin airport and the consignee’s to retrieve them from the destination airport.

Automation

The National Carriers generally include an “Automation” discount in their contract rates. Manually written labels are excluded from receiving this built in discount.

Billable Weight

Also known as “Billed Weight,” it is the actual weight rounded up to the next whole integer (number).

Bill of Lading (BOL)

A general weigh bill for ground freight that identifies who the consignee, the consignor, destination, estimated weight, Tariff and other ancillary services.

Bonded Warehouse

A distribution warehouse that includes insurance against theft and damage.

Box Truck

A smaller delivery truck sometimes required due to height or length restrictions. Very common in downtown destinations and high-rise buildings.

Break Bulk

Transporting cargo in separate pieces instead of a container.

Break Bulk Cargo (see break bulk)

Bulk Cargo

Commodity cargo – such as coal, grain, etc. – transported unpackaged in large quantities.

Cargo

Aka Freight, can be any form of boxes, large items or palletized shipments.

Cargo Insurance

Specific insurance that protects against loss while in transit.

Cash in Advance

An ancillary service whereby the consignor requires full payment “in cash” for goods prior to shipping.

Cash on Delivery

An ancillary service whereby the consignor requires full payment for goods “in cash” at time of final delivery.

Certificate of Insurance

Proof from an Insurance Carrier that indicates what insurance is in place, limits of coverage and the name of who is insured.

Certificate of Origin

International trade document that certifies goods in a shipment are obtained, produced, manufactured, or processed in a country.

Chargeback

Ancillary charges that are billed after the point of shipping. Examples of common charges include: dimensional charges, incorrect manifested weight, address correction, return fees, and additional handling surcharges.

Claim

Refers to the process of recovering costs of either the freight or insured cost of goods relating to a loss or damaged shipment.

Cold Chain

Special freight requirements for food transportation that dictates that all steps in the transportation process will include refrigeration.

Collect Shipment

Indicates the charge for shipping to be billed back to the consignee. Often used for inbound freight of goods where the merchant wishes to pay for the freight using their negotiated contract rates.

Commercial Invoice

A specific invoice used to document cost and type of goods for international shipments.

Common Carrier

Trucking company used for the transportation of Cargo

Consign

To send goods by public carrier; deliver something to a receiver’s custody.

Consignee

The receiver of goods; the entity who is financially responsible for the receipt of a shipment.

Container Yard

Carrier designated location at port areas for receiving, storing and delivering loaded containers as well as for empty container pick up.

Contract Carrier

A business that works with a select group of shippers to goods between locations serviced by the contract carriers.

Country of Origin

The country from which a shipment originates or is shipped.

Cross Docking or Cross Dock

The practice of unloading shipments from an inbound trailer or car and loading same shipments on outbound trailers with little or no storage in between.

Customs

Place where officials check goods entering a country

Customs Broker

Private entities that are licensed and empowered to help importers and exporters meet a country’s import and export requirements.

CWT (Hundredweight)

A pricing mechanism used by UPS for rating multi-piece shipments destined for the same address. Pricing is by weight rather than by piece. Ideal for multi-piece shipments weighing between 100 and 500 lbs.

Damage

Harm to a shipment – it can either be visible upon receipt or concealed (not realized until the item is out of its packaging).

Dangerous Goods

A substance or material which has been determined to be capable of posing a risk to health, safety and property when shipped and that may require special handling or shipping requirements.

Declared Value

The value of the shipment “declared” at the point of shipping that is in excess of the carrier’s limit of liability.

Dedicated Contract Carriage

Having a third party manage operational activities of trucks on your behalf.

Delivery Area Surcharge

An ancillary surcharge (aka “DAS”) for deliveries outside higher density areas (i.e. industrial park) and major metropolitan areas.

Demurrage

Fees paid for delays in loading or unloading cargo.

Density

General term to describe a package’s weight to volume characteristics.

Dimensional Weight

The actual “Billed Weight” determined by multiplying the length times the height times the depth and divided by the Dimensional (Dim) factor. The result is then rounded up to the next whole integer. For example, a box that measures 20 x 12 x 6 has a volume of 1440 cubic inches. The dimensional factor is 139 so the dimensional weight is 1440/139 = 11 lbs (10.35 is rounded up to 11). If the actual weight of the box is less than 11 pounds, this dimensional weight will be used for billing purposes.

Dimensions

Include the Length (L), Width (W), and Depth (D) that are used in determining dimensional based charges.

Distribution Center

Large warehouse equipped to distribute goods for one or many merchants.

Domestic Shipping

Is where the origination and destination country are the same.

Door to Door

Full service transportation from origination point to destination that may include many stops, transfers, customs etc.

Door to Airport

Service for Express that covers the transportation from the consignor to the destination Airport. It is the consignee’s responsibility to retrieve packages from the destination airport.

Drop Shipping

A service performed by one vendor for another, when the merchant does not have the item(s) in stock and has them shipped to the consignee, typically with the freight prepaid.

Duty

Is an item specific charge imposed by a country for goods during the Customs Brokerage process.

Early Termination

An event triggered by cancelling a contract prior to its negotiated term. It usually triggers a potential fee that can be imposed by the carrier. Early termination fees are one of the “Gotchas” to look out for in carrier negotiation.

Earned Discount

This is a discount percentage that the customer will earn at a specified gross revenue amount. The revenue amount is a rolling average of transportation charges exclusive of service fees and surcharges. Earned discounts apply to the base rate specified for each service in effect on the date of shipment.

Electronic Data Interchange (EDI)

A form of data transfer that has a detailed file format structure to facilitate communications between parties of a transaction.

Export License

Permission to conduct a certain type of export

Extended Area Surcharge

An ancillary surcharge (DAS Ext) for deliveries outside major metropolitan areas.

Exports

Goods that are prepared and transported outside the country of origin

Freight-All-Kinds

A specialized (tariff) class that is customized to accommodate the typical mix of freight and classes that exist within a single shipment. Aka “FAK”

Flat Rate

A pre-negotiated rate that includes all charges

Freight Class

A standardized classification system for commodities transported via LTL carrier. NMFC is the standardized, accepted classification system. Freight class is based on four characteristics: Stowability, Liability, Ease of handling and Density.

Freight Collect

Freight shiments that require the consignee to pay for the cost of transportation.

Freight Forwarder

A broker that arranges all legs of a shipment between multiple carriers.

Fuel Surcharge

An ancillary charge to compensate the carrier for the fluctuations in the cost of fuel.

Girth

A dimensional measurement around the middle of a package. The shortest measurement possible is used. It is commonly added to the “Length” to determine L+G (length plus girth) to determine if a shipment is oversized.

Gross Weight

The total rounded up weight of all items in a shipment

Guaranteed Service Refund

Contractual guarantee of service performance based upon the specific class of service and the Carrier’s stated delivery day and time threshold. Aka “GSR”.

Grace Period

New contracts that have volume based discounts often include a “Grace Period” whereby the volume used to determine the bonus discount portion is waived for a stated period of time.

Hazardous Materials

Goods that are restricted from normal transportation. Aka “Hazmat”, these goods must be specially documented prior to shipment and identified with special labels that indicate what type of hazardous materials are included.

Height

The height of a shipment is determined by measuring the vertical distance with the largest side of the package on the bottom.

Hub and Spoke

The type of carrier distribution model where freight does not move point to point but rather to a “hub” whereby the freight is sorted prior to the next leg of its journey.

Import

Goods that are prepared and shipped from a country that is different from the country of origin.

Interline

Using more than one carrier on a shipment

Intermodal

Using more than one type of transportation on a shipment, like loading trailers onto a railroad car.

Kitting

Grouping separate but related items into a single shipment.

Label

Documentation on a package that has shipper and consignee information along with a tracking number and delivery instructions.

Lading

Loading a trailer or container (or other shippign vessel) with cargo.

Large Package Surcharge (Oversize)

Surcharge assessed for packages that exceed 96 inches in length or 130 inches in length plus girth. FedEx calls this an Oversize charge.

Last Mile

Another name for delivery to the end user.

Length

The largest dimension of a package is the length.

Less Than Truckload (LTL)

Common Carrier where the Consignee can ship a single large box or pallet without contracting the entire volume of the Truck (Truckload – aka TL.)

Loading Dock

Allows for the easy loading and unloading of freight. A surcharge is commonly added to shipments that do not include a dock at both origin and destination.

Manifest

List of all goods, typically ordered by Bill of Lading, that are loaded into a container.

Minimum Charge

The lowest amount one can be charged on a shipment. This varies by service.

Minimum Commitment

Language inserted into an agreement that states an acceptable amount of shipments. Falling below that number can give the carrier the right to fine you.

Money Back Guarantee

Contractual guarantee that states that a shipper may file for refunds in the event of a service failure. A service failure occurs when a package is delivered 60 seconds or more after the published delivery commitment time for the selected service and destination.

MWT (Multiweight)

A program that groups shipments going to the same destination together to get a better rate for the shipper.

Net Weight

Actual weight of a product without its packaging and or container.

Overage, Short and Damaged (O, S & D)

A report listing items that were over delivered (too many items delivered,) short delivered (not enough of an item delivered) and damaged on a shipment.

Oversize (Large Package Surcharge)

Surcharge assessed for packages that exceed 96 inches in length or 130 inches in length plus girth. UPS calls this a Large Package Surcharge.

Packaging

The materials that surround the item being shipped.

Packing List

Documentation of the contents of a shipment.

Pallet

Flat structure with top and bottom decks used to support goods that can be lifted by a forklift, pallet jack or other lifting devices.

Parcel (small package)

Another name for a package shipped via UPS, USPS, FedEx or other similar carriers.

Payment Terms

Most common are Prepaid, Collect, or Third Party. They determine who is paying for a given shipment.

Peak Season

Period of time typically starting on Black Friday and continuing through Christmas where carriers are at their busiest.

Peak Surcharges

Fees applied to shipments that occur during peak season. These are in addition to the regular accessorials that the shipment receives and include the following: Additional Handling, Unauthorized Package (Over Maximum Limits), and Oversize (Large Package) surcharges (FedEx and UPS). UPS has a peak residential surcharge as well.

Pickup Fee

Surcharge assessed for regularly scheduled pickup services – typically reduced if a certain weekly revenue threshold is met.

Portfolio Tier Incentive

This is a discount percentage that the customer will earn at a specified gross revenue amount to be applied to the base transportation rate specified for each service in effect on the date of shipment. The revenue amount is a rolling average of transportation charges exclusive of service fees and surcharges.

Prepaid Shipping

The shipper pays for the transportation of a shipment.

Proof of Delivery

Documentation that a shipment arrived at its destination.

Residential Surcharge

A fee applied to any shipments that are delivered to a residence, including a business operating out of a home that does not have a public entrance.

Returns (See reverse logistics)

Reverse Logistics

Process of moving goods from their final point to the point of origin either for reuse or disposal.

Service Guide

A book that contains an overview of services along with list rates plus descriptions and details on accessorials. It can also have terms and conditions.

Signature Options

FedEx has three types of signatures: Indirect – anyone near the address can sign (neighbors, building managers, etc.) Direct – Someone at the delivery address must sign. Adult – Someone over 21 at the delivery address must sign. UPS only has Direct and Adult.

Shipper

The entity where a shipment starts its path.

Shipping Charge Correction

Billing adjustments made by UPS after a shipment’s original bill. It corrects any errors found – in the shipper’s or the carrier’s favor.

Shipment Types

Ways to transport your freight.

Skid

A subset of pallets that is cheaper and easier to drag and does not have a bottom deck. Often used as foundation for heavy machinery.

SmartPost

FedEx-branded service where FedEx picks up a package and injects it into the postal system. The USPS handles the final mile of delivery. Slower and less expensive than ground.

Supply Chain

All processes and resources that are needed to make and deliver a product to the end user.

Surcharge (in shipping)

Any fee added beyond the base transportation costs. Most common types are for fuel and for delivery to a residence.

SurePost

UPS-branded service where UPS picks up the package and injects it into the postal system. The USPS handles the final mile of delivery. Slower and less expensive than ground.

Tariff

Tax applied to import or export shipments.

Terminal

Processing point for carriers. Shipments are sorted and prepared for delivery or transferred to another carrier location.

Term

A length of time, usually 12 months, that all or part of any contract is valid.

Termination

Formally ending an agreement

Third Party Billing

The company responsible for paying is neither the shipper nor the consignee.

Third Party Billing Surcharge

A surcharge applied to shipments where the bill-to account is neither the shipper nor the consignee. It is typically a percentage of the shipment cost (excluding duties/taxes/clearance costs).

Third Party Logistics Provider (3PL)

An outside party that companies hire to outsource distribution and fulfillment operations.

Tracking Number

Unique number assigned to a shipment and used primarily to follow its location between origin and destination.

Transportation Charge 

The cost of a shipment from point A to point B after discounts. It does not include a fuel surcharge or any other accessorials.

Truckload

A shipment where the entire load is contracted to a single customer. The truck does not have to be filled to capacity.

Value Added Services

Extra services offered by the carriers outside of their normal transportation work. Some examples include packaging, kitting, and order fulfillment.

Value Added Tax (VAT)

Consumption tax levied as value is added in each stage of the supply chain.

Waybill

Document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods.

Weight

Weight (either in lbs. or kgs depending on country.)

Width

Side-to-side measurement.

Zone

For domestic – a distance-based way to determine the base rate for shipment. They are zip code specific and the lower the zone, the closer the zip codes are and the lower the base rate. For international, countries are grouped into zones, typically by region. It allows the carriers to offer the same base rate instead of creating different rates for each country. Domestic zone differences can vary by service but, generally speaking, the distance in miles from origin to destination for each zone is as follows: Zone 2: 0-150 miles; Zone 3: 151-300 miles; Zone 4: 301-600 miles; Zone 5: 601-1000 miles; Zone 6: 1,001-1,400 miles; Zone 7: 1,401-1,800 miles; Zone 8: 1,801 and above.