The 2:00 Minute Warning

Here is a quick question for you: Are your parcel costs going up faster and higher than you expected?

I ask that question because over the past four weeks we’ve heard from several shippers who have been surprised by the increases they are seeing with their parcel costs. For those wondering “What’s driving these increases?” the answer is pretty simple.

As we shared in some Two Minute Warnings this past summer, FedEx and UPS have been very aggressive in optimizing their networks and rate structures in an effort to boost their profitability. For example, as our friends at ICC pointed out: “UPS announced that there would be changes to Delivery Area Surcharge Zips and Zonal Pairs effective October 21, 2024!  They also announced a change to Additional Handling packages effective on 10/21. This new rule will apply a 40-pound minimum billable weight to packages that qualify for the Additional Handling charge due to length, width or length plus girth."
 
Having said all this, we realize that our readers typically fall into one of three categories. One group of shippers will occasionally check out our messages, like what they see, but may not have a lot of time to take action in addressing the things we have highlighted.

A second group is people who read the Two Minute Warnings regularly, but send us nice notes telling us that they are too busy to make changes in their company.

The third group represents our “super fans.” We love to hear from them, because they read the Two Minute Warnings, watch the videos, and ask questions like, “How is this going to affect my company?” More importantly, they are willing to take action to protect their company’s supply chain or freight costs.

So once again, going back to UPS, when we issued our Two Minute Warning that addressed the following multi tiered peak season surcharges that UPS was putting into place, our “super fans” contacted us, asked questions and wanted to discuss the steps they could take to protect their costs and supply chains.

Here are the tiers:
•    Tier one - September 29 to November 23
•    Tier two - November 24 to December 28 - This is when you’re going to     experience the highest peak season surcharges. 
•    Tier three - December 29 to January 18 - This third and final tier covers the time when many returns will be handled.

One thing we encouraged them to do is to take advantage of other resources we've shared in the Two Minute Warnings, such as our interviews with parcel expert Jerry Hempstead. Jerry does a great job of proving that when it comes to parcel contracts and rates: "everything is negotiable." We all know that UPS and FedEx aren't going to come to you asking, “Do you want to pay lower rates?” After all, they want to make as much money as possible.

But when shippers take advantage of tools like TranzAct’s Parcel Toolbox and take advantage of our experience and expertise, they are in a much better position to negotiate and work with their parcel carriers.

Before leaving, I encourage you to take advantage of some of our other resources like the November Freight Market Update that we just released. It has great information about what’s going on in the truckload area and other markets.

As you review this document, if you are interested in designing a logistics and supply chain strategy that will make navigating 2025 a whole bunch easier, all you have to do is simply pick up the phone, send me an email, or lets get together on Calendly. We are always delighted to share valuable information about how you can control your transportation spend and improve your supply chain capabilities.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

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