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What is a FedEx Shipping Exception?

By | FedEx, News, Shipping Knowledge | No Comments

A customer checks the status of a package via FedEx tracking, but instead of viewing the expected shipping details, the customer sees an “exception.” As a result, they get worried, especially if that shipment is time-sensitive, and reaches out to the retailer to ask about the exception code and how it affects the package.

Retailers that ship frequently may experience the occasional exception message. If you haven’t yet experienced this, you might have questions. For example, will the package be late, and if so, can you expect a refund from FedEx?

The good news is that shipping exceptions don’t always translate to late packages. There are many situations that trigger this code, and understanding each potential situation assists with explaining the details to customers and communicating what to expect.

Shipping exceptions: understanding the basics

The majority of FedEx customers receive packages on time. In fact, packages are delivered when promised over 98 percent of the time. As a result, receiving an exception message is rare. Regardless, this message triggers worries about the package and its potential delivery date. The following FedEx explanation provides details about the exception code.

An exception occurs when a package is temporarily delayed while in transit. Every effort is made to deliver every package as soon as possible, so an exception does not necessarily denote a late shipment. The status exception explains the most recent exception in the scan activity section.

The term “PMX” refers to a p.m. exception, when a shipment is returned to a delivery station for the night because it was undeliverable during the courier’s route. Such a delivery exception may occur because the package was incorrectly addressed, a recipient was unavailable, etc. In many cases, delivery is re-attempted the next day.

Exception codes can also be triggered by other situations, some of which are beyond the control of FedEx; for example, a hurricane strikes an area in the path of delivery, temporarily stopping or delaying shipment of a package; a wildfire closes down a major highway, disrupting normal delivery routes and slowing the movement of packages; or a flood occurs in the delivery zone, making it impossible to deliver a package on the date promised.

One person checking the status of a package was surprised to view the exception code online, so the customer checked his email and had received the following message explaining the situation:

Heavy rainfall and flooding are causing hazardous conditions in the areas of Louisiana, Oklahoma and Texas. Our top priority is the safety and well-being of our team members, as well as providing the highest level of service to our customers. Although contingency plans are in place, some service delays and disruptions can be anticipated for inbound and outbound shipments in these areas. FedEx is committed to providing service to the best of our ability in areas that can be safely accessed.

In this instance, the package arrived as soon as delivery could safely resume in the area.

Another possible exception is when the barcode becomes unreadable. For example, one customer dropped off the package as usual, and the bar code and important details were attached to the package. However, somewhere along the route, that barcode became damaged, generating an exception code. When checking the status online, the customer noted the following exception.

Dec 10, 2014 7:31 PM Shipment exception FORT WORTH, TX Barcode label unreadable and replaced.

This type of exception sometimes results in a small delay, depending on the shipping service and details. It’s also possible that the label was quickly replaced, and the package was routed back into the normal delivery route with minimal delay. Regardless, when a customer receives an exception notice, the next question is typically “What do I do now?”

What to do if you notice an exception code

Whether it’s a natural disaster or another unforeseen circumstance that affects package delivery, you might wonder what to do when an exception occurs. After receiving an exception message, check the “shipment” or “package progress” section in Tracking to find specific details about changes in the delivery schedule. For example, if a weather event has occurred, you might find an adjusted delivery date.

You may also find more detailed information about the exception, such as the cause of the event. As mentioned previously, it’s not always something big that triggers an exception; it can be something relatively small. Here are a few additional scenarios that may trigger an exception.

The address is unknown. Sometimes customers make mistakes when entering address details. When this occurs, the carrier might contact the retailer to check the accuracy of the mailing address and make any needed corrections. If the information matches what you have on file, you might have to get in touch with the customer to confirm.

Damage to the shipment. In rare cases, FedEx may note damage to the shipment during transit. FedEx typically covers the first $100 in damages, and provides additional coverage that can be purchased when setting up shipping. Third-party companies also provide insurance options, some of which are less expensive than policies offered directly through the carriers. If you get an exception message that relates to damage, keep all original packing materials once the item is delivered.

If you make a claim for damages, FedEx may need to examine these materials to ensure the item was properly packed. FedEx provides full packing guidelines online, but a few suggestions include:

  • Use double-wall boxes for heavier items.
  • Place small packages inside a larger outer box.
  • Double-box fragile items with 3″ of cushioning in and around the smaller box.
  • Wrap items individually with cushioning material and center them in boxes away from other items and away from the sides, corners, top, and bottom of the box.
  • Place items that might be damaged by normal handling, such as soiling, marking, or application of adhesive labels, in a protective outer box.
  • Position bottles that contain liquids upright. Use an inner seal and perforated breakaway cap. The inner packaging must be able to contain leaks.
  • or odd- or irregular-shaped items, at a minimum you should wrap and tape all sharp edges or protrusions.

If FedEx determines the package wasn’t packed correctly, such as in a box that has flimsy integrity or inadequate packing materials, they might not pay the claim.

Signature was not received. FedEx offers various levels of service for shippers that require a signature. If you purchase the signature required service for $3.75, the person at the receiving address will be required to sign for the package. The carrier also offers a service for $4.75 that requires an adult to sign for the package. An exception is triggered if FedEx cannot obtain a signature.

If you receive an exception, get in touch with FedEx to learn more details. Beyond what is provided on the status tracking, FedEx may share other information, such as what is holding up the package and when you can expect its arrival.

Understanding the FedEx money-back guarantee

In most cases, FedEx packages are delivered on time without exception or delay. But at times, problems do occur, and FedEx has a money-back guarantee. According to FedEx:

We offer a money-back guarantee for every U.S. shipment. You may request a refund or credit of your shipping charges if we miss our published (or quoted, as in the case of FedEx SameDay®) delivery time by even 60 seconds.

However, exceptions might not be covered under the money-back guarantee, depending on the situation. If the exception is the result of the following, a refund may not be provided:

  • Illegible label
  • Improper address
  • Inclement weather
  • Air traffic control problems

Additionally, the refund is not available in several other situations, which are highlighted in the company’s terms of service, including:

  • An incorrect address is provided.
  • FedEx receives a request to redirect a shipment from a delivery address to hold at a FedEx location.
  • There was an unexpected large release of packages from your shipping location.

If you think you qualify for a refund, reach out to FedEx to start the process. Even if the package qualifies, refunds aren’t automatic: You must request the refund directly.

Shipping exceptions aren’t always a major problem

FedEx exceptions aren’t always a reason for concern. For example, let’s say that FedEx has trouble delivering a package. The address is incorrect, so the company issues an exception and gets in touch with the shipper. Once they reach out, you can contact the customer and verify shipping details. You quickly verify those details and get back to FedEx the same day. It’s possible the package will have very little delay.

In some situations, an exception is more like a notification, with no action required on your part. For example, if the label needs to be replaced due to damage, no action is required on your part. And in other cases, the exception can be an opportunity for you to reach out to customers. Maybe many shipments were delayed due to a snowstorm. As a result, you can send out an email to those affected, notifying them of the issue and thanking them for their patience.

An exception is simply information; as a shipper, it is up to you to take that information and figure out the best way to move forward and ensure a positive experience for the customer.  

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, the USPS or regional carriers, our invoice audit and contract optimization services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has over 200 years of combined carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts, and have saved our clients an average of 19 percent on shipping.

 

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What Are FedEx Shipping Rates?

By | FedEx, News, Shipping Knowledge | No Comments

Retailers have many concerns, and among the most pressing are shipping costs. How can you get packages to your customers quickly and more cost-effectively? FedEx is a large carrier moving nearly 14 million shipments each business day. The company has over 675 aircrafts and 175,000 motorized vehicles transporting items, and for the most part, they do so with nearly perfect accuracy, achieving 98 percent on-time delivery.

But as a retailer, when you’re managing costs, the first thing you need to know is how to determine what a package costs to ship, and equally important, whether it’s possible to reduce those costs. Let’s take a look at how to calculate FedEx shipping rates and more accurately forecast these expenses.

Understanding FedEx service options

Many variables play into the shipping costs equation, but one of the largest is speed. How quickly must your package arrive? In most situations, especially in cases of free shipping offers, slower delivery is fine. As a result, a service such as FedEx Ground is acceptable, delivering the package within several business days.

In special circumstances, faster services, such as overnight delivery, are required. For example, maybe there was a mistake internally and the package didn’t go out in time. As a result, the customer won’t have the item for an upcoming special event, and time is essential in ensuring customer satisfaction.

Understanding all available options, and the potential costs, is a good starting point for determining how these costs fit into your shipping strategy. Let’s take a look at FedEx shipping options, and then we’ll dive into exact costs.

FedEx SameDay. This service provides reliable door-to-door delivery within hours and is available seven days a week, 365 days a year. SameDay is available in all states for package weights up to 150 lbs. For packages that exceed 150 lbs., FedEx SameDay Freight can be used.

FedEx SameDay City. This service offers a door-to-door option for delivery within hours. Delivery time varies based on the distance traveled. For example, for 0-15 miles, packages typically arrive within two hours. Packages that must travel longer distances, such as more than 60 miles, can expect a delivery time closer to several hours.

FedEx First Overnight. This service is a good option when a package must be delivered early the next business day. Next-day business delivery is provided by 8:00 a.m., 8:30 a.m., 9:00 a.m. or 9:30 a.m. to most areas. For extended areas, delivery time might be by 10:00 a.m., 11:00 a.m. or 2:00 p.m., depending on the destination ZIP code. FedEx First Overnight is available throughout all 50 states and is available for packages up to 150 lbs.

FedEx Priority Overnight. This service is a good choice if your shipment needs to arrive by 10:30 a.m. the next day. Delivery might be later, however, depending on the delivery ZIP code. FedEx Priority Overnight is available in all 50 states, and for packages up to 150 lbs.

FedEx Standard Overnight. Perhaps you need a package delivered overnight, but you’re looking for a more affordable option. If so, this service provides next-business-day delivery by 3 p.m. to most U.S. addresses in all 50 states, but at a lower cost when compared with faster options.

FedEx 2Day. There are a couple of variations of this service. The first provides delivery by 10:30 a.m. to most U.S. addresses. The second service is standard 2Day but provides delivery by 4:30 p.m. to businesses and 8 p.m. to residences. Urgency will dictate which is right for your situation, but both services cover package weight up to 150 lbs.

FedEx Express Saver. Express Saver provides delivery in three business days, typically by 4:30 p.m. to businesses and 8 p.m. to residences on the third delivery day. This delivery option is available in all states with the exception of Alaska and Hawaii.

FedEx Ground. According to the FedEx website, “FedEx Ground is faster to more locations than UPS Ground.” This service level provides a more affordable option with delivery times of one to five business days within the contiguous United States and three to seven business days to and from Alaska and Hawaii. It’s also important to note that FedEx Ground cannot deliver to P.O. boxes.

FedEx Home Delivery. This service is for residential deliveries and provides arrival within one to seven business days, depending on the destination. Expectations are similar to FedEx Ground with one to five business days within the contiguous United States and three to seven business days to and from Hawaii. Delivery is typically Tuesday-Saturday between 9 a.m. and 8 p.m., and this service is available throughout all 50 states.

FedEx SmartPost. SmartPost is a contracted service that provides 100 percent coverage, including destinations beyond the U.S. border. Additionally, there are no residential or Saturday delivery surcharges. FedEx SmartPost provides an affordable option by leveraging a partnership with the USPS. FedEx transports the package until the “last mile” of delivery. At this point, the package is passed off to the local post office, and they finish the delivery process.

After looking at the service list, you might have a couple of options in mind. For example, perhaps you want to compare 2Day and FedEx Ground services costs. What should you do next? Fortunately, FedEx makes finding shipping costs easy. There are a couple of different options, both of which we’ll cover to get you started with calculating costs.

Determining shipping rates

There are two methods to find FedEx rates. The first is using the FedEx Service Guide, and the second is using a FedEx tool. We’ll cover both methods so you can select the one that is easiest for you, starting with using the Service Guide. Follow these steps to help you easily determine your shipping rate:

  1. Find the zone for your destination. The zone is critical information because it helps determine how far the package must travel. For U.S. shipments, visit the Rate Finder and select the “Rates Tools” table, then enter your origin ZIP code to see which zone your destination ZIP code corresponds to. You can also request zone information by calling FedEx directly at 800-463-3339.
  2. Determine the package weight. Once you have this information in hand, view the “Dimension Weight” section of the Service Guide. Your chargeable weight is the greater of the actual weight and the dimensional weight. View the exact instructions and formula for calculating dimensional weight on page 122 of the Service Guide.
  3. Find your rate. Use the pricing guide in the FedEx Service Guide to find the appropriate table.

For example, let’s say that you’re shipping a 5-lb. package in Zone 2, which is generally 0-150 miles from the origin to destination anywhere within the contiguous United States. Looking at page 30 of the service guide, you can see that if you selected FedEx Priority Overnight, the fee would be $34.58. However, if you selected FedEx 2Day, that cost would drop down to $19.22.

Let’s say that you’re shipping in Zone 3, which is typically 151-300 miles from origin to destination anywhere within the contiguous U.S. The cost to ship a 5-lb. package using FedEx Priority Overnight would be $48.13 for a 5-lb. package. Using FedEx 2Day service, that fee would drop to $20.55 for the same package.

In addition to the Service Guide, FedEx provides a rate and transit time tool that allows you to get customized details on rates. Enter your shipping details, including the ship from and ship to locations, the number of packages, and the weight of the package(s), and get a quote that provides pricing information. This is the easier method of the two to determine shipping costs, but it’s good to have a backup option, which is where the Service Guide is useful.

Understanding extra services

FedEx provides a variety of value-added services and surcharges. Depending on what type of package you’re sending and your individual needs, those charges may affect your total price. As a result, it’s important to understand which options are available and might apply to your shipment.

FedEx provides a complete list of options online, but one of the most common options is the delivery signature option. For example, you may use this if you’re shipping an item to an unhappy customer, and you want to ensure that it arrives. Let’s take a look at the different service levels.

No signature required. FedEx will attempt to get a signature at the delivery address, but if no one is available, FedEx will deliver the package to a safe place without obtaining a signature. This level of service is available upon request at no cost.

Indirect signature required. FedEx obtains a signature from somebody at the delivery address, whether it’s a neighbor or a building manager. If no one is available to sign, FedEx will attempt to redeliver the package. This service is available upon request on residential shipments to the United States and Canada with a declared value below $500.

Direct signature required. If you want a person to sign for the package at a specific address, you can purchase this service for $5.00 per package. FedEx obtains a signature from someone at the delivery address only. If no one is available, they will attempt to redeliver the package.

Adult signature required. FedEx obtains a signature from any person of legal age at the address, subject to their providing a valid ID. If no one qualified is available to sign, FedEx will attempt to redeliver the package. Bear in mind that the legal age varies, depending on the destination country. The cost for this service is $6.05 per package.

An additional service that is commonly purchased is declared value coverage. FedEx automatically covers liability up to $100 for damages or losses at no additional cost. But FedEx allows you to purchase extended coverage at an additional charge. Keep in mind, however, that third-party providers also provide this service. In some cases, it can be less expensive than purchasing directly through the carrier, so weigh the costs and benefits of all options.

Additionally, it’s important to note that FedEx charges a residential surcharge of $3.85 that is added to all FedEx home delivery shipments. Companies can bypass this charge by using FedEx SmartPost. Since SmartPost uses USPS for the last leg of delivery, this fee is waived, and the overall cost is much less. Additionally, Saturday delivery is available at no extra charge.

Moving forward with greater efficiency

The majority of consumers prefer to shop online. In fact, 95 percent of Americans shop online at least yearly, and 80 percent shop monthly. As a result, e-commerce is booming, and that growth isn’t expected to slow down anytime soon. But the challenge for retailers is balancing shipping costs with the pressure of providing additional services, such as faster delivery and free shipping. This leaves them asking: How can we figure out shipping costs and then work to reduce them?

Understanding costs is the first step, but after that you can play with comparing various options, such as FedEx Ground vs. FedEx SmartPost to determine which can provide the greatest savings. Striking the right balance will allow you to serve customers with greater experience and position your business to thrive in the future.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, the USPS or regional carriers, our invoice audit and contract optimization services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has over 200 years of combined carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts, and have saved our clients an average of 19 percent on shipping.

FedEx Shipping Insurance: A Comprehensive Guide

By | FedEx, News, Shipping Knowledge

When serving customers, companies have many considerations, including shipping and its impact on the customer experience. And when evaluating shipping options, there are a number of variables, including cost, value, and dependability that must be taken into account. But companies also must plan for what happens when something goes wrong.

A customer calls and complains that a package didn’t arrive on time, or equally as serious, the package arrives broken or in poor condition. The first priority is finding a resolution for that customer, but what amount, if any, can you recover for the loss?

FedEx is a popular carrier choice, shipping 14 million packages to 220 countries and territories daily. The company offers insurance to handle these types of situations, but how much does it cover, and what is the cost? Understanding the pros and cons of FedEx shipping insurance can help you decide what role, if any, this option should play in your business operations.

What is FedEx Shipping Insurance?

FedEx offers insurance to help offset the cost if a package is lost, stolen, or damaged. The first $100 of insurance doesn’t cost anything, but if the value of the package is higher, you can purchase additional insurance to cover potential losses.

There is a small risk of package loss during transit, but damage is more common. One study found that up to 11 percent of packages are damaged during transit. Damage results by carrier vary, but the study found the following percentage of damaged packages by carrier:

  • UPS: 11 percent
  • USPS: 10 percent
  • FedEx:7 percent

FedEx had the smallest percentage of damage in this study, but in these events, shipping insurance helps offset the cost. Purchasing the right amount of insurance is key and involves stating a “declared value.”

Understanding FedEx Declared Value

Purchasing insurance requires you to tell the carrier the value of the shipped items. Upfront proof or receipts are not required at this stage; however, if you make a claim, these will be required to confirm the value of the package.

The first $100 of insurance is free for most services; however, you can purchase insurance for more than this value (more on this shortly).

Adding more insurance to a package can be accomplished online or in person.

Also note that with FedEx insurance, the carrier will not automatically replace the item if it’s broken and can be repaired. Additionally, FedEx has a maximum declared value, which varies based on the service you select.

How Much Does FedEx Insurance Cost?

The cost of insurance varies based on the type of service that you select and the items you plan to ship. Here are a few samples of what to expect:

FedEx SameDay & SameDay City:Maximum declared value is $2,000, and the additional cost for declared value is $3 for shipments up to $300. One dollar per $100 is charged for declared values over $300.

U.S. Express package service, U.S. Ground service, and International Ground services.The additional cost is $3 for shipments valued up to $300. After this amount, it’s $1 per $100 of declared value over $300.

Direct Signature Confirmation service is available at no cost if you state the value is in excess of $500. As a result, FedEx will require a signature from the package recipient when delivering the package. If nobody is available to receive the package, the carrier will attempt delivery again. Shippers sending multiple items should also carefully consider whether shipping multiple items together makes sense. Insurance covers the entire package, regardless of the value of each item shipped.

For example, let’s say that you plan to use FedEx SameDay City, which has a maximum declared value of $2,000. You are shipping two items, each worth $1,500. In this case, it might make sense to ship the items separately to ensure you achieve full coverage.

Understanding Insurance Limitations

When using any carrier, including FedEx, it’s a good idea to verify which items are not covered or have limitations on coverage. For example, the Declared Value and Limits of Liability sections of the FedEx Service Guide explain that items of extraordinary value and those items with a value that is difficult to ascertain may not be declared. According to the FedEx site, limitations include the following:

For Shipments containing the following items of extraordinary value the Declared Value for Carriage is also limited and depends on the contents and destination of the Shipment:

  • Artwork, including any work created or developed by the application of skill, taste or creative talent for sale, display or collection. This includes without limitation, items such as paintings, drawings, vases, tapestries, limited-edition prints, fine art, statues, sculptures, collector’s items, customized or personalized musical instruments or similar items.
  • Antiques or collectable items, or any commodity that exhibits the style or fashion of a past era and whose history, age or rarity contributes to its value. These items include but are not limited to, furniture, tableware, porcelains, ceramics and glassware. Collectable items may be contemporaneous or relating to a past era.
  • Film, photographic images, including photographic negatives, photographic chromes and photographic slides.
  • Any commodity that by its inherent nature is particularly susceptible to damage, or the market value of which is particularly variable or difficult to ascertain.
  • Jewelry, including but not limited to, costume jewelry, watches and their parts, mount gems or stones (precious or semiprecious, cut or uncut), industrial diamonds and jewelry made of precious metal.
  • Precious metals, including but not limited to, gold and silver, silver bullion or dust, precipitates or platinum (except as an integral part of electronic machinery).
  • Furs, including, but not limited to, fur clothing, fur-trimmed clothing and fur pelts.

FedEx might not exclude insurance on the above items outright, but may limit the amount you can declare. For example, FedEx permits a maximum declared value up to $1,000 for the following items:

  • Artwork
  • Photos
  • Glassware
  • Jewelry
  • Furs
  • Precious metals
  • Plasma screens
  • Antiques
  • Stocks, bonds, and cash equivalents
  • Collectibles, such as coins or stamps
  • Some musical instruments
  • Models, such as dollhouses

If you state a value that exceeds the amount allowed, you simply won’t be able to recover more than what is set forth in the FedEx rules and regulations.

How to Insure Your FedEx Package

Taking advantage of FedEx insurance is easy. When you drop off the package to be packed and shipped, simply fill out the value section of the shipping form. If the package includes items worth less than $100, don’t worry about purchasing additional insurance; coverage is already provided.

Additionally, you can pack your own item and have it picked up at your location, which is ideal for businesses shipping large numbers of packages. Ensure that you follow FedEx packing requirements, which is important if you file a damage claim. Packages that exceed $100 in value require a declared value. And all you need to do is state the value, knowing that you’ll need to have documentation if a claim is required.

Packing Details and Considerations

FedEx has guidelines about packing items, and if you file an insurance claim, these guidelines become important. In the case of damage, FedEx wants to make sure that the package was packed properly so they can determine who was at fault for the damage. If the package was not packed according to their guidelines, they may deny the claim. The carrier makes a few suggestions for packaging, including the following:

  • You may use your own packaging if the boxes are sturdy and undamaged with all flaps intact.
  • Chipboard boxes, including gift or shoe boxes, must be packed into a corrugated outer box.
  • If items are heavy, use double-wall boxes.
  • Place small packages inside a larger outer box.
  • All fragile items should be double-boxed with 3 inches of cushioning in and around the smaller box.
  • Wrap items individually with cushioning material and center them in boxes away from other items and not near the sides, corners, top or bottom of the box.
  • Bottles that contain liquids should be upright. The inner packaging should be able to contain any potential leaks.

Full guidelines can be reviewed here, which include guidelines for unique items, such as those with insurance limitations, including artwork, photos, and musical instruments.

Understanding the FedEx Claims Process

Purchasing insurance is a safeguard that most hope they won’t need. But if a customer’s package goes missing or arrives with damage, you’ll need to cash in on that insurance you purchased. But how? FedEx provides a few different methods for filing a claim, including online or by email or fax to the FedEx claims department. Filing a claim online allows you to get updates on your claim easily via email. Fax or mail must be used when filing an international claim.

After submitting your claim, contact FedEx customer service to get a case number so you can reference it if you need to check on the claim in the future. If you’re making a claim for damage, ensure that all packing materials, including the box and packing contents, are kept handy as FedEx might ask to inspect the items.

Additionally, keep your eye on the calendar. FedEx Express requires that damaged or lost package claims be made within 60 days after the shipment is sent. For international packages, claims must be made within 21 days. FedEx Ground claims have a nine-month window from the delivery date; however, if the item is lost or missing, it must be reportedwithin 60 days. If you make the claim outside the designated time frame, FedEx won’t investigate the claim.

After you make a claim, resolution is fairly quick and usually completed within a week. Once a claim is approved, reimbursement for the declared value is sent.

Shipping with Greater Confidence

Most companies ship a large number of packages each year, and the majority of those packages will arrive on time and without damage. But in a small number of cases, something goes wrong during the shipping process — a package gets damaged or appears to simply vanish, leaving the customer unhappy and looking for resolution.

Taking care of the customer is the first goal, but afterward, a company needs to recover their financial loss. FedEx insurance is one tool that can help minimize these losses. Understanding what this type of insurance coverage offers and developing internal policies for handling these situations will create smoother experiences and minimize potential loss.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our contract negotiation and invoice audit services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption to current operations. Our team of experts has over 200 combined years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts – saving our clients an average of 19 percent of their annual shipping spend.

FedEx Holiday Shipping Schedule 2018

By | FedEx, News, Shipping Knowledge

Customers agonize over finding the perfect gift during the holiday season. And once it’s located, the pressure is on the retailer to deliver it as expected – and on time. Unlike other times of the year, where deadlines might be flexible, the holidays usually have hard deadlines that leave little room for error.

Part of meeting these expectations is understanding holiday shipping deadlines for every carrier that you use. Whether it’s FedEx, UPS, or USPS, having a list of deadlines ahead of time is the difference between delighting customers and losing future business. With customers shopping at record rates, the stakes have never been higher.

Consumers spent approximately $108 billion online during the months of November and December in 2017, which is up 14.7 percent from the prior year. What’s more, for the 2018 holiday season shoppers have an additional day between Thanksgiving and Christmas, which adds an additional revenue opportunity. So what can you do to get prepared? If you’re using FedEx, it’s important to mark important dates on your calendar and communicate those expectations to customers. Read on to find the FedEx holiday shipping schedule for 2018 and tips for maximizing results during this holiday season.

Important Dates for FedEx This Season

As the holidays get closer, knowing FedEx shipping deadlines is critical. If you miss an important date, you could pay more for shipping and – even worse – deliver packages late. Some retailers include a message on their website with ordering dates so that customers can plan and also to generate a sense of urgency. For example, you might say, “Purchase by December XX to get it by Christmas.”

Not sure which dates to include? Shipping deadlines vary based on what service level is selected, but typically the sooner you ship, the better. This is why having an efficient fulfillment process is so important. Sometimes shipping late is unavoidable, especially for those last-minute shoppers. Check out these FedEx deadlines for the 2018 holiday season.

  • Dec. 14 – Deadline for FedEx Ground® shipments.
  • Dec. 17 – Deadline for FedEx Home Delivery® shipments.
  • Dec. 19 – Deadline for FedEx Express Saver® shipments.
  • Dec. 20 – Deadline for FedEx 2Day® and 2Day® A.M. shipments.
  • Dec. 21 – Deadline for FedEx Standard Overnight®, Priority Overnight® and First Overnight® shipments.
  • Dec. 25 – Deadline for FedEx SameDay® shipments.

As you can see by the dates above, FedEx is unique in that it offers Christmas Day service. If retailers need to ship on Christmas Day, the company has SameDay service, which is available 24 hours a day, 365 days a year for urgent, last-minute shipments. If you need this service, visit www.fedexsameday.com or call 1.800.399.5999 to schedule a pickup. However, it’s important to note that even though FedEx offers this service, there is not a 100 percent guarantee that it will arrive on the 25th.

Retailers can access the full holiday service schedule and get information on when each service is open and available here.

Understanding Service Options

FedEx offers a variety of service options – everything from ground delivery to same-day service. Usually, the quicker you need a package delivered, the more expensive it is. But which option is right for your business and your customer? Explore the various shipping options to help you decide, and use the planning schedule above to set order-by dates.

FedEx Ground

According to the company’s website, FedEx Ground is faster and has more locations when compared with UPS Ground. This service delivers in one to seven business days, based on the distance to the destination: typically one to five business days within the contiguous United States and three to seven business days to and from Alaska and Hawaii. Check delivery times during the holiday season by checking transit times online.

Ground shipments can have a package size and weight up to 150 lbs., up to 108″ in length, 165″ in length plus girth (L+2W+2H).

FedEx Home Delivery

FedEx Home Delivery allows customers to select when they want packages to arrive, including evenings and Saturdays for most locations. Delivery time is typically one to five business days within the contiguous U.S. and three to seven business days to and from Alaska and Hawaii. Package size and weight restrictions extend up to 70 lbs., 108″ in length, 165″ in length plus girth (L+2W+2H).

FedEx Express Saver

FedEx Express Saver offers delivery in three business days by 4:30 p.m. to businesses and to residences by 8p.m. Service days are Monday through Friday, and Saturday pickup is available in some areas for an additional fee. FedEx Saver is available in all states, with the exception of Alaska and Hawaii.

Deadline for FedEx 2Day and 2Day A.M. Shipments

FedEx also offers two-day and two-day a.m. shipments. Delivery time is typically the second business day, with delivery by 10:30 a.m. to most U.S. addresses and by noon for rural areas. Find exact transit times here. This service is available in all states, with the exception of Hawaii, and package size restrictions extend up to 150 lbs. each, up to 119″ in length, 165″ in length plus girth (L+2W+2H).

In addition to understanding shipping options, it’s helpful to anticipate other fees. For example, some carriers may charge special surcharges during the holiday season. When calculating fees, it’s useful to understand these surcharges so you can price appropriately.

Account for Additional Holiday Surcharges

Many carriers, such as UPS, charge a holiday surcharge on shipping. It’s important to understand any potential surcharges because they add to the expense of sending packages to customers, especially when you’re footing the bill. Although some suspect that FedEx may implement residential holiday surcharges, similar to those of UPS, the carrier currently does not have these charges.

Retailers can take advantage of affordable, fast shipping with no additional residential surcharges on packages. However, other surcharges and fees may apply. For example, if additional handling is required on a package, there may be an additional fee, which increases from $20 to $23.20 during the holiday season. Another example is a surcharge to deliver to specific ZIP codes, such as those in Alaska and Hawaii. Find a full list of potential extra charges here.

Understand Guarantees and Limitations

Holiday shipping has little room for error and requires careful planning to avoid customer disappointment. When shipping during the holidays, it’s important to note that the normal money-back guarantee that FedEx offers is off the table. As a result, leaving a little extra buffer for shipping time is helpful. The full holiday money-back guarantee policy is included here, but see below for a quick summary of what to expect.

FedEx Ground. Packages tendered to FedEx Ground for delivery on the day after Thanksgiving will be scheduled for delivery on that day if the recipient business is open, but in any event, the delivery commitment will be extended to the next business day for application of the money-back guarantee. The money-back guarantee for FedEx Ground and FedEx Home Delivery will be suspended temporarily for packages picked up on Monday, Nov. 26, through Monday, Dec. 24, 2018. 

FedEx Express. The FedEx money-back guarantee will be suspended temporarily from Tuesday, Dec. 18, through Monday, Dec. 24, 2018, for shipments delivered by the end of the day on the published delivery commitment date for the selected service and destination. This will also be applied on Wednesday, November 21st for shipments that reach their destinations within 90 minutes of the scheduled commitment time.

 This includes most FedEx Express services, such as FedEx 2Day, FedEx Express Saver and more.

FedEx Freight. The FedEx Freight no-fee money-back guarantee is suspended for shipments with required delivery dates of Monday, Dec. 17, 2018, through Wednesday, Jan. 2, 2019. During this time, FedEx Freight will continue to provide normal pickup and delivery, except on Dec. 24 and 25, 2018, and Jan. 1, 2019, when FedEx Freight is closed, and on Dec. 31, 2018, when FedEx Freight will be open but with only pre-arranged pickup and delivery shipments being made.

In addition to ensuring that you understand what guarantees are available, it’s also critical to look at your existing processes and strategies and find ways to fine-tune them before the holiday season is in full swing.

Tips for Streamlining Shipping Processes

There are many moving parts during the holiday season, and retailers are charged with ensuring all processes are seamless. A process that doesn’t work well could throw everything out of balance and result in unhappy customers. Following are some ideas to consider.

Set proper expectations. Over-delivering on customer expectations is the best action that you can take during the holidays. Nothing delights customers more than having a Christmas gift they ordered for a family member delivered sooner than expected. Pay attention to ship-by dates, and add a little buffer to ensure that customers are happy.

Ship packages fast. The holiday season is all about reacting fast to orders. Aim to ship orders within 12 hours of receiving them for maximum results. The quicker an item is readied, the faster you can get it on a truck and onto the customer’s doorstep.

Schedule frequent package pickups with carriers. Since volume increases during the holiday season, it’s helpful to schedule more frequent package pickups. Doing so ensures that you have a consistent stream of packages going out and less delay between the time a customer places an order and receives the item.

Extend shipping cutoff dates as late as possible. It’s wise to create a small cushion in shipping estimates to plan for the unexpected. But this must also be balanced with meeting customers’ last-minute needs. It’s important to note that last year two of the top 10 buying days of the holiday season occurred within a week of Christmas. In fact, the final week before Christmas accounted for 12 percent of online visits and 14 percent of transactions during the holiday season. Extending shipping cutoff dates as late as possible ensures that you don’t leave that last-minute shopping revenue on the table.

Pay special attention to the packing of packages. A damaged package is a surprise that no customer wants during the holidays. Reduce the risk of damaged packages by ensuring that boxes are strong and plenty of packing material is used. There should be at least two inches of room between the product and the outer shell of the box to minimize the risk of damage.

Mark your calendar to look at your shipping process annually. Even a shipping process that appears to be in good condition can often benefit from a few tweaks. By continually evaluating your process, you can maximize efficiency to ensure a better experience for the customer.

Meeting FedEx Deadlines with Greater Success

Shoppers are rushing during the holiday season to meet deadlines and expectations as well as create a wonderful holiday experience for their family and loved ones. One piece of the puzzle is shopping for just the right gift. And when they find it, that’s only the beginning of the process. The customer then hands the reins over to the retailer so they can deliver the package in time for the customer to deliver the gift to the recipient. A critical piece of that puzzle is shipping.

When a package arrives later than expected, customers rarely blame the carrier; they are instead upset with the retailer. This shifts the responsibility to ensure that without a doubt, whether you use UPS or FedEx, the package is delivered on time..

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our invoice audit and negotiation services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has more than 200 years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts – saving our clients an average of 19 percent.

FedEx Announces Significant Rate Increases

By | FedEx, News, Rate Increases

On Monday, FedEx modified its Express and Ground fuel surcharge rates, and created new indexes for International Export and Imports. These changes mean significant rate increases for nearly all FedEx shippers.

Shippers shouldn’t confuse this rate change with the weekly, normal fluctuation in fuel surcharge percentages based on market prices (as published by the Department of Energy), described as follows: “The fuel surcharge percentage for FedEx Express services is subject to weekly adjustment based on the weekly published U.S. Gulf Coast (USGC) spot price for a gallon of kerosene-type jet fuel. The fuel surcharge percentage for FedEx Ground services is subject to weekly adjustment based on the weekly published national U.S. on-highway average price for a gallon of diesel fuel.”

What’s different about the Sept. 10 rate change is the fact that FedEx added .75 percent to previous Express fuel surcharge tables, and a full 1 percent to Ground fuel surcharge tables.

Moreover, for the first time ever, FedEx created separate, higher fuel surcharges for international products.

Measuring the impact from the previous week, FedEx shippers just took a 16 percent to as much as a 69 percent rate increase!

How do the new FedEx fuel surcharges compare to its rival UPS?

Well, since November 2012, FedEx customers have enjoyed lower fuel surcharges than UPS. Not anymore (see chart below).

Shipware is here to help you understand the financial implications to your business and, more importantly, give you tools to push back on these austere rate hikes. If you would like to investigate options with our expert team, please contact us at 858-879-2020 ext 111.

smartpost-vs.-surepost

SurePost vs. SmartPost: What’s the Difference?

By | FedEx, News, Shipping Knowledge, UPS

Selecting the best shipping option is not an easy task for retailers already facing intense pressure to ship faster, cheaper, and more efficiently. Yet retailers know that striking the right balance between speed and cost is key to meeting customer expectations and driving down shipping costs.

FedEx and UPS have created solutions, including SmartPost and SurePost, respectively, to address this challenge. The shipping options work similarly, which leave many shippers asking, “What is the difference between the two?” Most of the differences are minor – yet understanding them can assist with selecting the right option and have a serious impact on your bottom line. But how do the services work, and what are the differences to consider when selecting the right one for your business?

SurePost and SmartPost: Understanding the Basics

Cost is a major consideration when sending packages. FedEx and UPS created SmartPost and SurePost to focus on the most expensive part of the journey: the last mile. The last mile isn’t literally the last mile of a journey but can encompass several city blocks or hundreds of rural miles. Either way, it’s the most expensive leg of shipping. A driver might not have many packages going to a specific area, and if so, this drives up the overall cost of shipping.

SurePost and SmartPost were designed to make this last leg of shipping more cost-effective by joining forces with a major competitor. A package is dropped with the regular carrier, such as FedEx or UPS, but once that package gets to that last mile, it’s passed off to the United States Postal Service.

The United States Postal Service visits every address on a daily basis, which provides an opportunity to streamline last mile logistics. As a result, SmartPost and SurePost partner with the USPS to complete the final mile of delivery for the majority of deliveries.

These services are fairly similar in their cost-saving model, which involves partnering with the USPS to maximize efficiency and minimize cost. There are some differences, and we’ll highlight those shortly. But first, it’s helpful to understand the general benefits of these services, which include:

  • Cost Reduction: One of the most appealing benefits of SurePost and SmartPost is that using these services lowers shipping costs. Targeting the most expensive part of the shipping journey allows retailers to drive down the total cost of shipping.
  • Saturday Delivery: Since SurePost and SmartPost both use the USPS for the last leg of delivery, customers benefit from Saturday delivery.
  • No Residential Surcharge: UPS and FedEx charge a residential surcharge for regular delivery services; however, this surcharge is waived for SurePost and SmartPost deliveries. Since large UPS or FedEx trucks aren’t used to complete the final mile of shipping, there is no need to assess this fee.
  • Delivery to P.O. Boxes: FedEx and UPS do not typically deliver to P.O. boxes, but when partnering with the USPS, retailers can deliver to these addresses. Some recipients prefer to receive shipments at P.O. boxes, and partnering with the USPS provides additional flexibility for customers.
  • Drop-off is Easy: No special drop-off is required when using SurePost or SmartPost. Instead, retailers can simply mix these packages in with their normal shipments without the need for a special trip to the post office.
  • Tracking is Still Available: Having the ability to track packages is key to the customer experience. Most recipients want to know where their package is in the shipping process at all times. SurePost and SmartPost allow tracking throughout the entire delivery process. However, some users note that with UPS, there is a brief period of time when the package is marked as “delivered” during the transfer from UPS to USPS. The status is updated once the package is in the system, and the shipping process continues.

The largest drawback to using SurePost and SmartPost is slower delivery times. A slow delivery time, however, may be acceptable if customers expect it upfront. This is especially true in cases of free shipping. When considering these services, it’s also important to consider the differences.

Drop Locations Vary From SurePost to SmartPost

Retailers have a large opportunity to save by using SurePost and SmartPost and targeting that last mile of delivery. In fact, the last leg of delivery accounts for up to 28 percent of a shipment’s total cost, so allowing USPS to handle it offers decent savings. UPS and FedEx, however, handle the handoff from carrier to USPS slightly differently.

UPS SurePost packages are dropped at the USPS location closest to the package’s final destination. In most cases, this is the recipient’s local post office. As a result, the package is fairly close to its final destination, which may save time in the shipping process.

In contrast, FedEx SmartPost delivers the package to the nearest USPS regional hub, which is not the local post office. For example, the regional hub might be in a major city and the recipient’s address might be in a suburb 30 miles away. The reason why FedEx uses this strategy is that it creates efficiencies for package processing, yet some speculate that it may impact delivery times. Delivery times will be discussed in more detail shortly, but this is one key difference to note.

Determining the Last Mile of Delivery

UPS and FedEx use a similar strategy to drive down costs by targeting the last mile of delivery, but with UPS, the carrier does not always use USPS for that final leg of delivery. Why?

UPS workers are in the Teamsters union, so concerns were present that “outsourcing” a portion of the delivery process may jeopardize job security. As a result, UPS handles the handoff slightly differently by using sophisticated software. This software determines whether it’s truly more efficient for UPS or USPS to complete the final leg of delivery for each individual package and schedules it accordingly. And in some cases, it’s more efficient for UPS to handle the last mile of delivery.

For example, a UPS driver might already be visiting the delivery area and have multiple packages to deliver. If so, package delivery by UPS is still efficient. In contrast, FedEx uses a more general approach for that last leg of delivery. As a result, up to 60 percent of UPS SurePost deliveries are still delivered by UPS – not USPS.

Using UPS might be more likely to keep the package with the carrier and less likely it will arrive at the destination via USPS. Whether this affects delivery speed is speculative, but it’s one key difference to consider when evaluating options. But what about delivery times? How long does a package spend in transit with each of these services? Here is a quick comparison of SurePost and SmartPost.

  • FedEx SmartPost. According to FedEx, delivery time is typically two to seven business days based on the distance to the destination. There is a longer transit time outside the contiguous 48 states. Service days are Monday through Saturday, and the delivery area includes 100 percent U.S. coverage, including service to Alaska and Hawaii; Puerto Rico; Guam; U.S. Virgin Islands; all U.S. territories; P.O. boxes; and military APO, FPO and DPO destinations.
  • UPS SurePost: Delivery time isn’t published on the company’s website, but users report it’s typically around one day slower than using UPS ground. This is because on the day UPS typically would drop the package at the customer’s door, it’s dropping it off at the nearest USPS location instead.

Shipping Fees – How They Are Charged

It’s estimated that the savings using SurePost and SmartPost are significant – as much as 20 percent when compared to using standard FedEx or UPS. And while savings are significant with each, let’s take a look at some of the potential savings and fees for each service.

  • SurePost and SmartPost do not charge a residential surcharge: When shipping packages to a residential address, there is typically a surcharge for delivery, which increases the total cost to ship a package. Neither company charges this fee for these services.
  • UPS charges about 3 percent more: UPS charges about 3 percent more for SurePost compared to standard UPS; however, still no residential surcharge is charged. When looking at the potential for slightly faster speed, this additional cost might not be a serious consideration, especially since the overall cost of shipping is lower than UPS’ standard services.

When evaluating these services, it’s also helpful to consider the exact details of what you’re shipping, such as weight and dimensions. Understanding the rules and requirements for SurePost and SmartPost is a good starting point for figuring out which one is best for a specific package.

Dimension Differences and Considerations

SurePost and SmartPost have rules about package dimensions that may influence your ability to use these services. How much does your package weigh? Are the dimensions too large? Here is a quick comparison to consider for each carrier.

FedEx SmartPost:

This service can accept a package weight of up to 70 pounds and a size of 130 inches in length plus girth. In addition, it’s important to note a few FedEx special features that are not available, including:

  • Collect on delivery
  • Money-back guarantee
  • Declared value
  • Signature proof of delivery
  • Evening or by-appointment delivery
  • Hazardous materials service

In addition, FedEx SmartPost won’t pick up packages that originate outside the contiguous United States.

UPS SurePost:

A few different UPS SurePost services are available, including:

  • SurePost Less than 1 pound, with a maximum weight of 450.76 grams
  • SurePost 1 pound or more, with a maximum weight of 70 pounds
  • SurePost Bound printed matter, with a maximum weight of 15 pounds
  • SurePost Media, with a maximum weight of 70 pounds

The total dimensions of the package cannot exceed 130 inches and must be less than 1 pound if you select SurePost; it can be 1 pound or heavier and up to 108 inches in size if you select SurePost Bound Printed Matter or SurePost Media in the UPS service box.

Moving Forward to Maximize Cost Savings and Efficiency

Selecting the right shipping option isn’t always an easy choice, especially when attempting to balance cost with speed. SurePost and SmartPost provide good alternatives to help retailers operate with greater efficiency. Package delivery may be slower when compared to traditional options, but if you communicate that clearly to customers, it might not be an issue.

Striking the right balance between efficiency, cost savings, and customer needs and expectations is the key to minimizing costs and maximizing savings. As a result, a unique synergy is achieved – one that has the potential to impact your bottom line and contribute to the future success of your company.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our contract audit and negotiation services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has over 200 years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts and saved our clients an average of 19 percent.

How Does FedEx SmartPost Work?

By | FedEx, News, Shipping Knowledge

Retailers face fierce competition in today’s digitally fueled environment. People on the receiving end of shipments don’t just want their items fast, but also with no shipping costs. And since customer expectations have evolved to a point where “free shipping” is the norm, retailers must figure out how to absorb those costs. In most cases, this means developing a shipping process that is more efficient and less expensive but still maintains the reliability that customers have come to expect.

Popular carriers such as FedEx are paying attention to the feedback received from retailers about shipping costs. They realized that they needed to figure out an efficient way to drive down costs without taking a hit on margins. One area of great opportunity is that of the “last mile delivery.”

The last mile of delivery isn’t literally the “last mile”, but ranges from several blocks up to 100 miles or more. And because of all the variables that go into that last mile, it’s expensive. For example, if the last mile involves traveling to a rural location with few deliveries, the cost is much higher. FedEx created SmartPost to drive down costs for that last mile and, in turn, help retailers manage their shipping costs. But how does FedEx SmartPost work?

FedEx SmartPost: Understanding the Basics

Take a look into any retailer’s business and it’s easy to see the role that shipping plays in getting a product from production into the hands of the customer. And free shipping is a perk that customers expect. In fact, free shipping is said to be the most effective promotion a retailer can offer.

Twenty-eight percent of shoppers abandon their shopping cart if presented with unexpected shipping costs, and nine out of 10 consumers say free shipping is the No. 1 incentive to shop online. So it’s not surprising that offering free shipping is a priority for retailers. But somebody has to pay for it. And since it’s the retailers in most cases, they must figure out how to manage those costs.

As touched on previously, that last mile of delivery is a huge strategic opportunity to slash shipping costs. Yet how much is that last mile actually costing? Estimates show that the final leg of delivery can comprise up to 28 percent of a product’s total transportation costs. It’s not always efficient chugging that large, fully staffed FedEx truck to locations with low delivery volume or other factors that drive up costs, especially when there is already an organization that visits nearly every single address in the United States.  

FedEx SmartPost is similar to UPS SurePost in that it targets the last mile and uses the same partner to drive down those costs. This hybrid model utilizes the United States Postal Service. FedEx takes the package for the majority of its journey, but that last leg of the trip, which is the most expensive – is handled by USPS.

In most cases, two separate carriers, both FedEx and USPS, handle the package. The US Postal Service visits most addresses on a daily basis; FedEx does not. By offloading this last mile to USPS, maximum efficiency is achieved.

But what are the potential savings, and how could it impact your bottom line? Many retailers are surprised to find that the savings can be significant when this last-mile cost is decreased.

Understanding the Potential Savings of FedEx SmartPost

Costs for FedEx SmartPost vary based on what you’re shipping, where it’s going, and other key factors, but in most cases, it’s cheaper than traditional FedEx ground service. But how much cheaper?

Estimates suggest that it can be 20 percent less expensive than FedEx’s Home Delivery Service. For large retailers, this number is significant when multiplied across shipping costs as a whole. One place that this savings comes from is by having “no residential surcharge,” which makes residential delivery cheaper. While this item doesn’t make up the entire 20 percent savings, it’s one area where you aren’t charged, because USPS is completing the last leg of the delivery.

For example, if a retailer spends $2,000 on shipping each month, saving 20 percent could add up to $400 a month, or $4,800 a year. A shipper that spends twice that on monthly shipping could save nearly $10,000 a year. For retailers shipping large volumes of packages, the savings of using a service that reduces last-mile delivery costs can have widespread impacts and free up money to allocate to other parts of the business.

The key to successfully using this service is understanding the benefits and the trade-offs. The savings can be significant, but what are the pros and potential cons? In many cases, the benefits outweigh the drawbacks, but it depends on your situation and customer expectations.

A Quick Look Into Service Details

How long will a package take to arrive with this service? When does the service operate? And what are the package size and weight limitations? These questions are bound to come up when considering whether FedEx SmartPost is right for you. SmartPost provides efficient residential shipping for customers with low-weight packages. The service provides 100 percent U.S. coverage and can deliver to destinations beyond the contiguous U.S., such as Alaska and Hawaii. Here is a look at the major service details.

  • Delivery time: Delivery typically takes two to seven business days, depending on the distance to the destination. Longer transit time is reported for deliveries outside the 48 states.
  • Service days: Service days are Monday through Saturday.
  • Delivery exceptions: This service will not pick up packages that originate outside the contiguous United States.
  • Package size and weight: Maximum is 70 pounds and 130 inches in length plus girth. Typical SmartPost packages weigh less than 10 pounds and are going to residential addresses

These details are a good place to start when learning more about this service, but there are a few more important details to consider, including several advantages and disadvantages of using this shipping option.

FedEx SmartPost: Understanding the Advantages

Reliability is one key factor that is important when using SmartPost. Most users have an experience where they achieved the reliability that you would expect from FedEx. But since the last leg of the journey is covered by USPS, there are a few more advantages in addition to cost savings and reliability to consider, including the following:

  • The ability to deliver to all USPS addresses: FedEx has limitations on delivering packages, and one of those limitations is not delivering to post office boxes. Yet many recipients may use P.O. boxes for their mail, which makes it inconvenient to have packages delivered to a physical address that is not typically used. SmartPost allows more flexibility in the delivery process, since USPS allows packages to be delivered to physical address or P.O. boxes. SmartPost can also ship to Alaska and Hawaii, although these options might not provide the price savings of other shipment options.
  • No residential surcharge: A residential surcharge is common for delivering typical packages. SmartPost gets rid of this charge, which provides additional savings.
  • Normal delivery pickup: Busy retailers need a pickup process that is easy and efficient. FedEx SmartPost packages can take advantage of the same regular shipments. For example, if you have large pickups scheduled through FedEx, you don’t need to change anything if you use SmartPost. The only things that change are that last mile of delivery and your shipping costs.
  • Tracking abilities are unchanged: When using SmartPost, you don’t lose the ability to track packages. FedEx still provides a single tracking number, and you can use that number to monitor the package’s progress throughout its journey.

For many retailers, the advantages outweigh the disadvantages, but having a clear picture of the drawbacks makes for a more accurate decision.

What are the major disadvantages?

Retailers have many questions about using SmartPost for the first time, including questions about transit times, reliability, and tracking. Cost savings are significant, but there are some trade-offs.

  • Slower transit times: Delivery times will be slower. Plan for an additional two to five days compared to ground and home delivery. Slower transit times can be worth the trade-off when packages aren’t time-sensitive and expectations are set with customers ahead of time.
  • Shipping fees outside the lower 48 states are high: SmartPost can be used to ship to destinations such as Alaska or Hawaii. However, fees may be much higher – making the use of this service not cost-effective for these locations. In these cases, it might be best to ship directly through FedEx or a similar carrier. As a result, it’s critical to consider shipping location when figuring out whether this option is the best selection for you.
  • Unified tracking is reliable but may confuse customers: A benefit of using SmartPost is that recipients can track the package even when it’s on the USPS leg of the journey. Shippers report that once FedEx hands off the package to USPS, it will indicate briefly that the package has been delivered. USPS is then responsible for the final delivery, and within 24 hours, the package tracking will show “out for delivery.” However, this process can create some confusion during that short 24-hour period.

In addition, it’s important to understand that a few of the traditional FedEx services are not available with the SmartPost option, including:

  • Collect on delivery
  • Money-back guarantee
  • Declared value
  • Signature proof of delivery
  • Evening or by-appointment delivery
  • Hazardous materials service

With SmartPost, USPS typically provides the last leg of delivery, but in some cases, FedEx does not transfer the package for the last mile. For example, if FedEx is already in the package area and it’s efficient for the carrier to complete the last mile, then USPS is not used. However, for the majority of packages, USPS is used with this service.

Weighing the advantages and disadvantages comes down to answering one question: What are the customer’s expectations, and are those expectations flexible? If the answer is “yes”, then using FedEx SmartPost might be a good option, especially if you communicate expectations clearly to the recipient ahead of time.

Moving Forward With Greater Savings

FedEx SmartPost is not for every customer. If a customer needs fast shipping, this is not the service to use. The speed, however, is reasonable for most customers who do not need expedited shipping. Additionally, if a delivery is going to Alaska or Hawaii, it’s wise to compare costs. These destinations are within the footprint of service but may not be the most cost-effective, so it’s good to check.

Overall, in most situations, SmartPost can be a cost-saving solution for retailers shipping a large volume of items to customers that need options for savings. FedEx achieves reliability with tracking and additional perks, such as Saturday delivery. And for companies struggling to make free shipping work with their bottom line, services such as SmartPost could be the solution.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our contract audit and negotiation services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has over 200 years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts and saved our clients an average of 19 percent.

2018 FedEx & UPS Peak Season Surcharges

By | FedEx, News, Rate Increases, UPS

The FedEx/UPS near-duopoly has allowed the two large carriers to control marketplace pricing for years, echoing each other’s rate hikes to the detriment of parcel shippers, small and large. It’s no surprise then, on the heels of UPS’ latest intra-year pricing changes, that FedEx has recently announced its own set of rate increases, effective September 3rd.

The Additional Handling surcharge, for packages weighing greater than 70lbs, will increase from $12 to $20 for domestic express, international express, and domestic and international ground. Similarly, July 8thsaw UPS raise its Additional Handling surcharge on packages weighing more than 70lbs from $12 to $19 and increased its Large Package Surcharge from $80 to $90.

FedEx’s Unauthorized Package Charge will increase 125%, from $300 to $675, keeping them in line with UPS’ increased Over Maximum Limits charge which jumped from $500 to $650 on June 4th.

In addition, shippers will also see incremental, “peak” seasonal increases by FedEx to some of these surcharges to domestic express and domestic and international ground shipments between November 19thand December 24th. Compare these to the peak increases that UPS will institute between November 18thand December 22ndto all service levels and all domestic destinations.

  • FedEx Additional Handling:  $3.20 / UPS Additional Handling: $3.15
  • FedEx Ground Unauthorized Package Surcharge:  $150 per package / UPS Over Maximum Limits: $165 per package
  • FedEx Oversize Charge:  $27.50 / UPS Large Package: $26.20

Shippers saw changes to these same charges earlier this year, in terms of the surcharge amount as well as to how they’re calculated.

These rate increase announcements signal the continuation of a trend that began last year. The carriers don’t want these packages in their parcel network, but in their freight/LTL network. If shippers don’t adjust accordingly, they will find themselves paying a premium.  Expect this trend to continue.

The one area FedEx and UPS differ, in terms of these latest rate increases, is the Peak Residential Surcharge. Surprising many, FedEx will not implement this surcharge for the second straight year, while UPS will not only apply the Peak Residential Surcharge once again, but will raise the rates established last year.

ups and fedex peak season pricing

This could give FedEx a competitive advantage with shippers looking to shift some volume prior to peak.

fedex-fuel-surcharges

FedEx Fuel Surcharges: What to Know

By | FedEx, Shipping Knowledge

Based out of Memphis, Tennessee, FedEx is one of the most recognized and relied on  package carriers in the world. Processing over 14 million shipments per day, FedEx represents a key logistical resource for millions of merchants, shippers, and consumers in over 220 countries.

Clients find that working with FedEx as their third-party logistics resource can be both beneficial and challenging at times. FedEx provides access to a shipping network that is efficient, reliable, and massive in scale. Yet because of this scale, FedEx often has few competitors, presenting a challenge for businesses interested in alternative shipping options.

One of the primary reasons shippers explore different shipping options is to reduce or eliminate shipping surcharges. Like all other major carriers, FedEx applies shipping surcharges (in addition to transportation charges) to shipments that meet certain qualifications. These surcharges can quickly add up – leading to hefty increases to the total cost of a shipment.

One of the most common surcharges that FedEx applies to shipments is the fuel surcharge. This article will provide more information about what the FedEx fuel surcharge is and explore some avenues you can take to lessen it. We’ll also discuss some other common FedEx surcharges and their cost. This article will provide shippers with a greater understanding of their shipping costs and begin to explore avenues for possible reductions.

What are Shipping Surcharges?

A shipping surcharge is any fee applied to packages on top of the carrier’s base transportation rates. Fees are applied for fuel, residential deliveries, packages requiring signatures, etc. Shipments that have multiple special requirements that fall outside of the bounds of a standard shipment will incur multiple shipping surcharges.

Many shippers won’t know that they have incurred an additional charge on a shipment until they review their invoices. The charges appear on an invoice as a service charge or handling fee in addition to the transportation charges. This can lead to difficulty in keeping track of what exactly you are paying for when you are shipping an item.

Because there are so many different types of shipping surcharges, costs tend to add up quickly for shippers. This, along with the vague way that shipping surcharges are often invoiced, leaves many shippers unaware of how much they are paying in shipping surcharges.

Furthermore, many merchants and businesses don’t realize that there are proven strategies and tools that can help reduce or eliminate the amount they pay in shipping surcharges. The first step in reducing the amount you are paying in surcharges is to understand exactly what shipping surcharges are, when they are applied to your shipments, and what alternative shipping options exist.

Benchmark Report of Surcharges

To highlight the necessity of understanding exactly what shipping surcharges are and why you need to monitor them, we conducted a comprehensive benchmark report at Multi-Channel Merchant. The benchmark report yielded some results that may surprise most merchants.

First, it demonstrated the impact of surcharges on the total cost of shipments. Across a sample size of over 4.6 million shipments, accessorial surcharges accounted for 28% of total shipping charges. Put another way, surcharges can total nearly one-third of all shipping costs. The report also shows the frustration that many shippers feel towards surcharges, with 69% of respondents saying that if they could change their pricing agreement it would be to have fewer surcharges.

In addition to demonstrating the impact of shipping surcharge costs, the report also sheds light on the difficulty many shippers face in pricing agreement negotiations with carriers. 41% of respondents said that they felt that negotiating agreements with carriers was harder. This was primarily viewed as due to a lack of competition between carriers.

However, an important point to highlight here is that pricing agreement negotiation is possible, and data can help. The majority of respondents said that they relied on reporting and benchmark data to drive their negotiation. For shippers looking to save money on surcharges through more favorable pricing agreements, comprehensive shipping data for their operations is essential.

FedEx Fuel Surcharge

One of the more controversial surcharges that FedEx and other private carriers apply to shipments is the fuel surcharge. Fuel charges are applied to shipments to help carriers offset the rising costs of fuel and are calculated as a percentage the package cost. Because fuel surcharges are so common, and because they are calculated differently than other surcharges, they are worth spending some time to understand.

One of the major differences between fuel and other surcharges is that fuel surcharges are updated on a weekly basis. FedEx Ground shipping is subject to weekly rate updates, while FedEx Freight is updated and effective every Monday. This means that shippers must stay abreast of how fuel surcharges are affecting them on an ongoing basis. The current FedEx fuel surcharge can be found here.

As one would expect, FedEx calculates their fuel surcharge based on the cost of fuel. Specifically, FedEx uses the U.S. on-highway average price for a gallon of Diesel Fuel for Ground shipments and the U.S. Gulf Coast (USGC) spot price for a gallon of kerosene-type jet fuel for Express. Both are updated on a weekly basis by the U.S. Energy Information Administration and can be found here (gasoline/diesel) and here (jet fuel).

The FedEx fuel surcharge is a percentage that is applied to the transportation charge, meaning heavier packages and those moving longer distances will have a much higher fuel surcharge. The FedEx fuel surcharge is applied to a variety of shipping methods, including FedEx Ground, Express, and Freight. The fuel surcharge is applied on the net package rate and in addition to other transportation-related surcharges, such as residential delivery, on-call pickup, and oversize packages.

When looking at the fuel surcharge rate percentage you may notice that it differs from other carriers that you use. This is because each carrier calculates fuel surcharges differently. This is one controversial aspect of fuel surcharges. Because there is no law requiring carriers to calculate fuel surcharges the same way, and because fuel surcharges are a way to maintain profitability even when fuel costs rise, fuel surcharges can seem more tied to profit margins than to the actual cost of transporting goods.

Additionally, carriers aren’t actually required to pass on the money they accrue from fuel surcharges to the freight carrier or transporter who actually purchased the fuel. All of these factors can lead to frustration on the part of shippers.

There are a number of different strategies that shippers use to reduce the amount they pay in fuel surcharges. One of the most effective is data-driven. If shippers utilize a software platform that can track and analyze their comprehensive shipment data, they can then leverage that data in negotiations with carriers. Shipping carriers are often open to negotiating reductions in their fuel surcharge rate. For example, a shipping carrier may substantially reduce your fuel surcharge rate in exchange for a higher base shipping price.

For many merchants, this would result in significant net savings. In addition, shippers can use their data to show lower fuel surcharges with a competitor which may push the carrier to reduce their surcharge to match the competition. Lastly, while private carriers apply fuel surcharges to a variety of shipments, the U.S. Postal Service does not. Therefore, shippers may consider utilizing USPS Priority or Express shipping in order to avoid shipping surcharges.

Additional FedEx Shipping Surcharges

In addition to fuel, FedEx applies a variety of other surcharges. They can add up quickly, leading to substantial cost increases per shipment for many merchants. We’ll go over some of the more common FedEx surcharges in this section and break down what they are and how much they will cost you. This list will focus on only some of the most common surcharges, but you can access a full list of surcharges and how much they cost here.

Additional Handling Fee

The additional handling fee was introduced by FedEx in June of 2016 with UPS  introducing a similar fee shortly thereafter. The thresholds for the fee were updated in January 2018. Essentially, the additional handling fee is a fee applied to items whose dimensions, weight, or packaging exceed the thresholds set by FedEx.

A package may not exceed 48 inches on its longest side, 30 inches on its second-to-longest side, or 70 lbs. There are also a variety of restrictions on packaging type. The additional handling fee applies to domestic and international Express, Freight, and Ground shipments. For domestic and international ground and express shipments, a fee of $12.00 is applied to each package. For domestic freight shipments, a fee of $140.00 is applied to each freight handling unit.

The introduction of additional handling fees hit certain shippers much harder than others. Specifically, merchants who regularly shipped items that exceeded the size thresholds set by FedEx saw a substantial increase in their shipping costs almost overnight. While many shippers who are most affected by additional handling fees are already highly aware of them because of this, they may not know that there are a couple of different ways to go about reducing these fees.

First, it isn’t always easy to know exactly when you are being assessed an additional handling fee. Discerning this requires the use of a robust analytics platform that can analyze each shipment and the associated fees. Merchants that are incurring a high number of these fees are encouraged to perform a line-by-line audit of their invoices to pinpoint exactly how often they are being charged for them.

Many shippers are being assessed additional handling fees on otherwise lightweight packages, when they could simply use a smaller shipping container. As a final option, shippers can seek to negotiate more favorable pricing contracts that reduce or eliminate additional handling fees for their packages.

Delivery Area & Extended Area Surcharges

Delivery area and extended area surcharges are applied to shipments that fall outside of normal shipping locations. The addresses or destinations that fall into these categories are determined by the carrier. These may appear on your invoice as a delivery area surcharge (DAS), or extended delivery area surcharge (EDAS). These surcharges were put in place to offset the costs of deliveries to out-of-the-way or rural areas.

For FedEx, these charges are assessed based on the ZIP code where the package is being delivered. The use of ZIP codes to determine when to apply the surcharge is problematic for a number of reasons. First, ZIP codes are inexact and may be shared across a wide range of locations.

For example, a business based in an urban area may share a zip code with a rural area and may be charged for a delivery area surcharge on every shipment. The complete list of U.S. ZIP codes that are included in this fee can be found here.

An important caveat to keep in mind is that FedEx operates multiple independent delivery networks for Express, Commercial Ground, and Residential Ground delivery, and the delivery area surcharges differ for FedEx Ground Commercial with Residential Delivery and FedEx Home Delivery.

Because of this, shippers must ensure that they are shipping within the network that will reduce the surcharges that they are paying. One of the best ways to reduce costs associated with delivery area surcharges and extended area surcharges is to carefully select the appropriate delivery network.

For example, if a delivery to a residential address falls into a ZIP code that incurs a delivery area surcharge, the shipper would save $1.10 per shipment by shipping the package through FedEx Home Delivery rather than through FedEx Ground since both the residential and delivery area surcharges are lower for residential packages moving through the Home Delivery network.

Oversize Charge

FedEx will apply a substantial fee of $80.00 per oversize package. If your package exceeds the thresholds set forth by FedEx, then an oversize charge will apply. Packages that exceed 96 inches in length or 130 inches in length and girth are considered an oversized package.

For shippers that frequently ship oversize packages, the best course of action to reduce the amount of money they are spending on surcharges is to negotiate more favorable pricing in their contract. In order to do this, shippers will need comprehensive shipping data from past shipments that have incurred this charge. Often, carriers will reduce the oversize package surcharge in exchange for a higher base shipping rate which can result in substantial cost savings over time.

Residential Delivery and Pickup Charges

FedEx will also apply a fee for deliveries to residential addresses. In addition, FedEx charges a wide variety of fees for shipment pickup. Pickup fees are assessed on a weekly basis, and depend on whether the pickup location is residential, same-day, or in an extended delivery area. Residential delivery fees are based on the destination address, regardless of if a business is operated out of the same address. This leads to frustration and confusion, particularly for small businesses that operate out of a residence, or where businesses operate out of a building that has been rezoned from commercial to residential.

The most effective way around residential delivery surcharges is simply knowing what your options are. FedEx operates multiple independent shipping networks that can perform residential deliveries, but using the right one will result in the lowest package charge.

Additionally, shippers can consider shipping through USPS, which doesn’t charge a residential delivery fee. Alternatively, shippers can ship via FedEx SmartPost, which utilizes USPS for the final leg of the shipment and eliminates residential delivery fees.

Summary

FedEx shipping surcharges can quickly add up for shippers that aren’t paying close attention to their shipping costs. As we have seen, these surcharges are applied to shipments for a number of different reasons and range from fees associated with fuel to residential deliveries. The most important step a shipper can take towards reducing the amount they are spending in surcharges is to collect comprehensive data on their current shipping.

This can be difficult due to the obscure way that shipping surcharges are invoiced. Outsourcing this to a third-party logistics provider like Shipware can be a cost effective means of accessing detailed shipping information across all of your shipping channels. This data will potentially highlight areas where you are overpaying for shipping surcharges and can be leveraged to negotiate more favorable pricing on surcharges. Remember, surcharges account for up to one-third of all shipping costs, making this a top area for cost reductions.

how-to-save-money-through-fedex-contract-negotiation-shipware

How to Save Money Through FedEx Contract Negotiation

By | Contract Negotiation, FedEx, News

Whether you are in the early phases of discussions with FedEx, or if you already have a working relationship, it is essential for you to take your contract negotiation with them seriously. For those of you utilizing the services of FedEx Freight or any other carrier (such as DHL or UPS), there is a good chance that more than a third of your operational budget is spent on LTL shipping.

Because of this, it is crucial you are prepared when it comes time to negotiate your freight contract. Freight contracts are complicated, filled with dense language and challenging to see what your actual costs will be. To save yourself from overspending, you must painstakingly peruse each document a carrier presents you. By doing your homework, you will enter the bargaining table on even footing and with leverage at your disposal. Below, we will examine several tips and pieces of advice so that you can save your company money on your FedEx shipping in the long run.

Key Shipping Factors

Regardless of what carrier you use, prep work must be done before you sit down with your FedEx sales representative. The first step is to understand how FedEx will look at your business. The following are some main cost drivers that FedEx Freight uses to price your account:

What do you ship?

There are several layers to this question.  At the simplest, it’s the average weight, freight class and dimensions of a typical shipment.  To be more specific, FedEx will want to know all of the freight classes you ship (more about freight classes below); what handling units you use (pallets, loose, gaylords, crates, etc.); the dimensions of your products; the weights of your products; the frequency of your shipments (any peak shipping periods or lulls); and any special handling requirements (fragile, oversize)

Where do you ship?

The basic data set includes the origin and destination zip codes for your shipments. It is also important to know if you ship frequently to grocery store warehouses or other places with limited access for deliveries.  Another important metric is your percentage of shipments to residences or other locations that don’t have a loading dock (and therefore require a liftgate).  It will be factored into the analysis of your account.

Who is FedEx Freight’s competition (either current carriers or other bidders)?

FedEx views only a small subset of LTL carriers as direct competitors.  The rest are viewed as less of a threat based on the quality of the carrier, their service area and other factors.  FedEx positions themselves as a premium service carrier and not necessarily the least expensive option.

How many locations do you ship from?

If you ship from multiple locations, FedEx typically analyzes them separately to determine their pricing strategy.  Depending on your location, you might be in an area that has a surplus of freight (headhaul) or a deficit of freight (backhaul).  Typically, shippers in a backhaul area (South Florida is one example) can get very aggressive pricing from carriers because collecting some revenue is better than having empty trucks going back north. Headhaul pricing can be less aggressive depending on the metrics of the freight.

When do you need your pickups and deliveries to occur?

Any unique operational needs must be communicated from the outset to reduce confusion.  FedEx will review accounts periodically and come back to those whose margins are not meeting expectations with increases.  Flexibility in this is a positive when it comes to FedEx’s view of the account.

Freight Classes

Freight class is a standardized method to classify any product and help facilitate consistent pricing across all LTL carriers.  It is governed by the National Motor Freight Traffic Association (NMFTA). Products are assigned a National Motor Freight Classification (NMFC) number which corresponds to a freight class.

Classes are determined by four characteristics:  density (pounds per cubic foot), stowability (anything that makes it harder for an item to go on a truck), ease of handling (can it be loaded with mechanical equipment?) and liability (likelihood of theft/damage). The 18 classes range from 50 (most dense and best for carriers) to 500 (least dense and most expensive for shippers to transport).

One thing to be aware of is that the freight class used to rate your product is negotiable.  Just because you have an actual class of 100 doesn’t mean you have to pay the class 100 rate.  Since the rates are cheaper as your class gets lower, any adjustment to your rated class is savings right off the bat.  These adjusted rated classes are called Freight All Kinds (FAKs).  Typically, they are for a range of classes – FAK 60 (Classes 60-100) means that any shipments with actual class between 60 and 100 will be rated at Class 60.  In rare occasions, shippers will offer a single class for all shipments.

If you negotiate an FAK, FedEx will add language that reduces their liability in the case of loss or damage.  Basically, they will say the liability will be based off the rated class instead of the actual class.  This can change the liability by a significant amount.  If you experience frequent loss or damage, you would want to negotiate this language as part of your FAK.

Rating a shipment: 

The base rate of a shipment is determined by 4 factors:

  1. Origin zip code
  2. Destination zip code
  3. Freight Class
  4. Shipment Weight

That base rate is reduced by the negotiated discount to get a net transportation cost.  Every shipment then has a fuel surcharge assessed.  The fuel surcharge is a percentage that is tied to the price of diesel fuel.  As diesel goes up, the fuel surcharge goes up.

Similar to parcel, shipments can also be assessed accessorial charges based on a variety of factors.

Some of the most frequent accessorial charges are:

  • Inside pickup/delivery ($12.55/100 lbs, $132 minimum charge, $1,326 maximum charge) – carrier will go inside the storefront for the shipment
  • Liftgate ($8.74/100 lbs, $129 minimum charge, $426 maximum charge) – locations that don’t have a traditional loading dock require a truck with a liftgate. This adds costs and routing complexities to the carrier.
  • Residential Pickup/Delivery ($136 per shipment) – for deliveries to homes. Liftgates are typically part of a residential delivery.
  • Over Length ($85 per shipment with any handling unit with length of 8 feet to 12 feet)
  • Extreme Length ($157 per shipment with any handling unit with length greater than 12 feet)
  • Limited Access Pickup/Delivery ($136 per shipment) – examples of limited access include schools, churches, construction sites, mine sites, etc.
  • Notification Prior to Delivery ($58 per shipment)

Just like freight classes, these accessorial charges are negotiable.  Make sure to know what are meaningful for your shipments so that you are targeting items that have a material impact to your costs.

By answering these questions, you will have a solid idea of what your shipping needs are before you ever set foot in a room with a FedEx rep.

Potential Leverage Points To Consider

To find ways to save money in freight contract optimization and negotiations, you have to know your business and its goals inside and out. You have to know the whos, whys, whats, whens, and wheres of your business. This type of preparation will give you opportunities within your contract negotiations to work with FedEx by offering concessions or accommodations in exchange for better rates or lower surcharges.

Re-negotiating Freight Contracts with FedEx

If you already have a working freight contract with FedEx, you might wonder about when it is appropriate to re-negotiate a contract. The following are some guidelines to consider:

How often can I renegotiate?

Very rarely does a company go more than two years without renewing their FedEx agreement. Some take that the next step and set guidelines where certain items will be re-addressed annually or biannually based on changes in growth, business, or GRIs.

Some carrier contract negotiationscan take months, so it is wise to review your FedEx contract at least once a year so that you can address any inadequacies in the contract. Carriers often announce changes, some of which may seem minor, but can be significant. You should monitor such updates to see the impact they might have on your freight contract.

Is there a good time of the year to get it done?

Obviously, peak shipping times during November and December can pose a challenge since FedEx is at its busiest and reps are focused on their parcel retail customers.

In the past, FedEx announces rate increases for the following year in September. Customers should review the rate increases and see if they are adversely impacted. If so, that is a good reason and a good time to reengage FedEx.

Things to Consider When Re-negotiating

You should keep in mind the following expectations for future shipments before you meet for re-negotiations:

  • Shipment Volume – Has it increased, decreased, remained static?
  • Fuel Prices – Is fuel more or less expensive?
  • Average Shipments – Increased or decreased?
  • What was FedEx’s performance? – Were they on time with their collections and deliveries. Did your goods arrive at their location undamaged? What was their record of lost/damaged shipments?
  • Customer Service – Were you happy with the customer service FedEx provided? Was there anything missing, anything that requires amending?
  • Rate increase – Are there new surcharges or rates that will affect you much more than the announced increase?

Freight Contract Negotiating Areas to Avoid

All too often, shippers end up not fully optimized when it comes to their LTL contract negotiations.

Entering the meeting unprepared

Commonly shippers come to the negotiating table without detailed answers on their leverage points or comprehensive knowledge of their distribution. Like any meeting, you have to do your prep work. Otherwise, you are wasting time and money as well as setting up your company for future problems if the FedEx contract does not fully or ideally satisfy your shipping needs.

Without proper preparation, you will lose credibility and leave yourself at an immediate disadvantage. Reach out to contacts and experts within your network for benchmarks. If they have contracts with FedEx, you should try to find out what rate they are getting. Ask them what they would have done differently. This will help you enter your negotiations confident since you have comparison points.

Not reading the contract

Many shippers focus entirely on the contract negotiations and incentives and neglect the fine print, the terms, and conditions. Terms are a great place to look for cost savings that all too often go ignored. Further, incentives are often diminished or canceled out due to terms such as general rate increases, accessorial charges, minimum shipment charges, late payment fees and other hidden surprises.

Entering the meeting overly aggressive

Some view contract negotiations as if it were some sort of duel, but this sort of mindset will likely lead to very little good. Proper negotiation requires a give and a take; it is two mutually interested parties gathering together. If you go in overly aggressive or are unwilling to be flexible, your FedEx rep will likely be the same. Remember, his job is to get his company the best rate possible for your goods, so you must work with him to establish an agreement that both of you are satisfied with.

Avoiding carrier meetings

Along the lines of that last thought, once a relationship has been forged, you have to work on it. That requires an open line of communication and reaching out to your rep besides that times you need something from them. Have periodic business reviews and keep your rep advised of any changes to your shipping patterns.

Conclusion

Optimizing your FedEx LTL pricing is not as simple as calling your rep and asking for a price reduction.  You need to be know your data and be aware of the structure of your LTL agreement.  The time you spend preparing will be more than repaid by the savings you will earn in your negotiations.

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