PARCEL Jan/Feb 2021 by MadMen3

MUST SEE: 3 TMS AND 13 AUDIT/SPEND MANAGEMENT IDEAS FOR 2021

JANUARY-FEBRUARY 2021 PARCELindustry.com

CROWD-SOURCED DELIVERY PLATFORMS – A VIABLE LAST-MILE OPTION FOR RETAILERS? P. 14 3 TRANSFORMATIVE E-COMMERCE TRENDS FOR A POST-PANDEMIC WORLD. P. 16 BEST PRACTICES FOR IMPLEMENTING WAREHOUSE EXECUTION SOFTWARE. P. 22

What Is Your Supply Chain’s

TOTAL COST TO SERVE? PAGE 18

CONTENTS /// Volume 28 | Issue 1

10 16 18 22 32 06 EDITOR’S NOTE Looking Toward the Future By Amanda Armendariz

08 SUPPLY CHAIN SUCCESS What Comes Next? By Joe Wilkinson

10 PACKAGING Moving Product Packaging Processes from Chaos to Calm By Josh Roffman

12 OPERATIONAL EFFICIENCIES Lessons Learned in 2020 By Susan Rider

14 SPEND PERSPECTIVES Crowd-Sourced Delivery Platforms – A Viable Last-Mile Option for Retailers? By John Haber

16 3 TRANSFORMATIVE E-COMMERCE TRENDS FOR A POST-PANDEMIC WORLD By Kenny Tsang

18 UNDERSTANDING YOUR SUPPLY CHAIN TOTAL COST TO SERVE By Wade Wickus

22 WAREHOUSE EXECUTION SOFTWARE (WES) BEST PRACTICES By Ed Romaine

32 MAPPING THE INCREDIBLE GROWTH TRAJECTORY OF THE GLOBAL PARCEL INDUSTRY By Jason Dies

34 PARCEL COUNSEL From the Archives: Marking Up the Freight: Lawful Revenue Center, or Illegal Fraud? By Brent Wm. Primus, JD

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SPONSORED CONTENT 20 QUESTIONS ABOUT PARCEL TMS? THESE 3 COMPANIES HAVE ANSWERS. 26 WHO WANTS TO SAVE MONEY THIS YEAR? THESE 13 COMPANIES WANT TO HELP YOU. 31 INTELLIGENT AUDIT UNVEILS LOW RISK, HIGH YIELD SUPPLY CHAIN IMPROVEMENTS

PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ amanda.c@rbpub.com ]

AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ rachel@rbpub.com ]

CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (m) 608.235.2212 [ ken.w@rbpub.com ]

PARCEL (ISSN 1081-4035) is published 7 times a year by MadMen3. All material in this magazine is copyrighted 2021 © by MadMen3. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, MadMen3 or its staff becomes the property of MadMen3. The articles in this magazine represent the views of the authors and not those of MadMen3 or PARCEL. MadMen3 and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine. SUBSCRIPTIONS: Free to qualified recipients: $12 per year to all others in the United States. Subscription rate for Canada or Mexico is $35 for one year and for elsewhere outside of the United States is $55. Back-issue rate is $5. Send subscriptions or change of address to: PARCEL, P.O. Box 259098 Madison WI 53725-9098 Allow six weeks for new subscriptions or address changes. REPRINTS: For high-quality reprints, please contact our exclusive reprint provider, ReprintPros, 949.702.5390, www.ReprintPros.com. P.O. Box 259098 Madison WI 53725-9098 p: 608.241.8777 f: 608.241.8666 PARCELindustry.com

EDITOR’S PICK EDITOR’SNOTE

LOOKING TOWARD THE FUTURE By Amanda Armendariz

don’t think I’ve ever wished for a year to be over more fervently than I did with 2020, and I know I’m certainly not alone in that sentiment. School closings, financial impacts, job loss… the year was so hard for so many. But now, as the vaccines are starting to be rolled out to more and more of the population, there seems to be a glimmer of light when it comes to resuming normal life. However, this doesn’t mean that the e-commerce boon of 2020 will be going anywhere. Indeed, this last year fundamentally changed the habits of so many Americans (and, indeed, people everywhere), especially when it came to how we purchase just about every item imaginable, from groceries to clothing to school

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supplies to, well, just about anything to keep our families busy and entertained! There is no reason to think this growth will not continue in 2021 and beyond. But, as shippers know all too well, these consumers often have increasingly demanding expectations. Delivery times can be a make-or-break item when it comes to customer satisfaction, and it’s crucial that companies make sure that every aspect of the online ordering process is optimized, from ensuring their websites’ search engines are intuitive; offering different shipping options, speeds, and costs; and streamlining the returns process. Long gone are the days when customers had a few retailers to select from, and all that really mattered was they got their product for a decent price. The competition is fiercer than ever, so it’s important that shippers ensure that there are no flaws in their process that could drive their customers elsewhere. 2021 may feel like the dawn of new era, but when it comes to e-commerce, volumes just keep growing with no signs of slowing down. And that means shippers can’t slow down, either. We’re with you every step of the way as you optimize your supply chain process. As always, thanks for reading PARCEL.

Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!

Following the 2020 Holiday Season, Reducing Failed Deliveries Will Be a Top Priority

UPS vs FedEx 2021 Rate Increases: A Rising Tide Lifts Both Boats By Matt Weickert

How Retailers May Have the ‘Perfect Storm’ of COVID, Peak & Brexit By Bobbie Ttooulis

More Ecommerce Shipping Solutions for Less. More Transit Options More Delivery Choices More Integration Partners More Optimization

Less Expensive Less API Connections Less Invoicing Less Set Up Time

If you’d like to simplify your shipping with Firstmile contact us today! Oh, and our eCommerce shipping solutions are integrated with the most popular shipping and label creation platforms like ShipStation.

Scan here for more information.

www.firstmile.com | 888-993-8594

SUPPLYCHAINSUCCESS

WHAT COMES NEXT? By Joe Wilkinson

o say that the transportation markets are in flux would be a gross understatement. 2020 and the effects of COVID-19 have uncovered gaps in the resiliency of transportation networks across modes and across geographies. As we have just experienced the largest holiday peak in history, we can safely consider this the perfect transportation storm. But, after literally hundreds of conversations with shippers big and small over the last several months, I can also say that most have been so focused on getting through peak season that they have given little thought to what comes next. Let’s face it, the capacity issues,

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the surcharges, and the transit time all made 2020 a minefield to navigate. But it’s what comes next that will determine success or failure of transportation professionals in 2021. Much has been made of the explosion of e-commerce volume, with e-commerce volumes essentially experiencing five years of growth in a 10-month period. And we can expect much of this growth (although likely not all) to be sustained post-COVID. However, I have heard enough of the term “new normal” to last me a lifetime. Those who use this phrase fail to recognize that no market, and no player in a market, stays constant. For example, UPS’s new CEO Carol Tomé’s recent comments concerning her vision for the UPS network have gotten a lot of attention. To paraphrase, she intends to re-forge the UPS network better, not necessarily bigger; she intends to focus on profitable segments/accounts and largely ignore others. That is a reasonable goal. It makes sense, at least on paper. But Tomé’s vision fails to account for a few fundamental facts:  Others are going to be pursuing those high-protein accounts as well. If UPS aims at only a portion of the market, but must compete for those accounts, it is narrowing down an already narrowed target area.  Like markets, transportation networks never stay static.

They are either growing, or they are shrinking. And networks are hungry beasts. They require volume shoveled in the front end in ever-increasing chunks. While Tomé’s strategy tallies nicely on a spreadsheet, it fails to account for the fixed costs associated with keeping such largescale infrastructure in play, where even marginal business is required to fill the gaps and keep the lights on.  Maybe most importantly, the segmented market approach cedes opportunities to those looking to enter/re-enter the US parcel market. DHL has been more competitive of late, successfully securing volumes from SurePost and SmartPost more and more frequently. The USPS, with its subsidized business model, has experienced fewer capacity issues than its non-government competitors, or at least it hasn’t cut off the possibility of taking on new business. While it is true that steadfast regional carriers like OnTrac and LaserShip have temporarily implemented holds on new volume, regionals were performing strongly prior to the pandemic, and we expect them to capitalize on growth opportunities post-peak. Newer entries into the regional market such as Optima and PCF were still accepting new volumes as

late as November/December, and we anticipate very aggressive market positioning from them in Q1/Q2 2021. Perhaps the most interesting question mark of 2021 will be Amazon. The national carriers’ abandonment of segments of the market is even more baffling in light of the e-commerce giant’s forays into the transportation space. We basically have a company who has been signaling for a few years its desire to enter the parcel market, who has been buying and building out the necessary infrastructure, and who has the capital to invest due to the surge in e-commerce. Amazon must be looking at these abandoned market segments, segments already disenchanted with the national carriers due to late deliveries, capacity constraints, and seemingly never-ending surcharge increases, and thinking the next move seems fairly obvious. UPS especially should be concerned with Amazon’s plans for the future. While FedEx walked away from its relationship with Amazon last year, UPS is more reliant on Amazon revenues than ever. As of August 2020, Amazon represented 12% of UPS’s gross revenue, up from 10% reported only eight months previous. It seems inevitable that 2021 will bring a resolution of the UPS/Amazon relationship, one way or another. If UPS is going to exercise “revenue discipline,” it would do well to start with Amazon. The margins on the Amazon business are almost certainly problematic. Rather than continuing to feed the lion that is going to eat you, better to pursue other, more profitable large shippers. This would force Amazon to use the infrastructure it has been growing to service its own fulfillment, rather than compete with UPS for theirs. Of course, this is not a long-term solution, but more of a stalling tactic. 2021 isn’t likely to be a buyer’s market for shippers, at least not with the big national carriers. But revenue discipline will be difficult to maintain when the regionals are firing shots across the bow and Amazon enters the fight. While the next several months will likely require operational excellence and carrier agility to drive meaningful savings, the transportation market, like all markets, is cyclical. And that may not be as far away as the “new normal” crowd is preaching.

Joe Wilkinson is Vice President, Transportation Consulting, enVista.

JANUARY-FEBRUARY 2021  PARCELindustry.com 9

PACKAGING

MOVING PRODUCT PACKAGING PROCESSES FROM CHAOS TO CALM By Josh Roffman

s packaging artwork becomes more important to the product, delays in delivering accurate and approved package artwork have an increasing impact on time to market and a company’s bottom line. This is why the artwork surrounding your product is just as valuable and important as your product itself and it requires a well-managed process. However, incorporating artwork management into the product lifecycle can present a range of complex challenges – especially without efficient processes in place. The desire to consistently bring new products to market ahead of the competition, while managing emerging packaging and artwork design requirements, evolving regulatory compliance, the complexity of new packaging materials, and the globalization of emerging brands, provides a range of potential

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disruptions to maintaining a critical path for each project. And in today’s vast global marketplace, it’s likely you may be managing hundreds of projects with variations for each simultaneously. Adding to this complexity, during their journey, products will transcend multiple internal departments and stakeholders and interface with external resources including design shops, graphic houses, and printers. With so many stakeholders, it’s important to tightly manage the process and the routing of materials for edits and approvals. Without an efficient process in place, there is likely to be increased risk of error and potential bottlenecks in the process. Drowning in Spreadsheets To manage product artwork efficiently, you need an automated artwork approval process that can be incorporated into your product lifecycle and managed across your global enterprise. However, there are still many companies today using antiquated manual processes for artwork management. Inconsistent data, limited access to digital assets, poor visibility, reactive communications, and labor-intensive and error-prone processes mean that teams working in operational silos spend an inordinate amount of time creating and editing artwork. Then there’s the chaos that ensues when trying to determine which version is the most accurate, what

step is next, and who is left to approve. Traditionally, many companies have used spreadsheets to manage their artwork and approval processes. This manual process (which entails routing of printed documents through folders and emails) presents a host of risks and inefficiencies. First and foremost, these documents can easily be lost, damaged (think of how a spilled cup of coffee might impact plans), or misplaced, costing valuable time and energy. Then there’s generally confusion around which document copy is most current. Without proper verification, it’s not always clear if your spreadsheet has been routed to the right parties, and it becomes increasingly difficult to manage changes and provide access to final, approved content. Then there’s Excel – although this path may offer a digital alternative, it still involves a range of inefficiencies. Data entry can be time-consuming and error-prone, and these Excel docs are difficult to maneuver and maintain. Also, with Excel, real-time comments and collaboration are out of the question and the ability to quickly analyze historical data is simply not possible. Ultimately, using labor-intensive and inefficient digital options, as well as unreliable and error-prone manual processes (including the use of spreadsheets and routing of physical folders) adds time and risk to your

product lifecycle. This is especially true when there are multiple teams involved and individuals are not completing their tasks on time. Spreadsheets and trackers can be overly complex in size and result in too much time sourcing, chasing, and trafficking. These spreadsheets often require a project manager to update a master spreadsheet regularly to ensure all changes have been captured. Also, getting reviews and approvals can be a considerable source of delays with new packaging, especially when your artwork management process needs to be coordinated across a global enterprise. Therefore, getting approval for a piece of artwork or packaging is not a process that should be left to email or the routing of physical proofs. Verbal approval isn’t enough either, especially in regulated industries where it’s critical to capture audit data. Manufacturers need to implement a process where everyone within a project can see if a specific piece of artwork is approved, useable, and compliant with existing regulations. Optimizing for Success By avoiding manual, error-prone processes and inefficient Excel options and opting for cloud-based deployments with managed services, you can realize real-time collaboration and visibility while focusing your time and resources on your core business. A comprehensive artwork management solution streamlines packaging design and workflow by bringing accountability and structure to the process. By connecting users, departments, geographic silos, and business partners across your global enterprise, you can unlock massive benefits with an overall reduction in administration and elimination of duplication effort and errors. A configurable and automated solution enables you to easily manage packaging artwork and the end-to-end business processes with complete access and full transparency. The right type of solution transforms project management, streamlining the packaging concept to shelf (or end consumer) process, enabling you to lower costs, improve control and regulatory compliance, significantly decrease complexity, and reduce time to market.

Josh Roffman is VP Product Management, Loftware. Visit www.Loftware.com for more information.

JANUARY-FEBRUARY 2021  PARCELindustry.com 11

OPERATIONALEFFICIENCIES

LESSONS LEARNED IN 2020 By Susan Rider

hew; 2020 is finally behind us! As 20/20 means perfect vision, now is a good time to evaluate what lessons were learned by you or your team this past year. Online orders grew astronomically, blowing away all predictions. This hit all sorts of verticals: Food, clothing, and supplies were hit with exponential growth. Additional people to meet the demand were not readily available, and it became apparent that you must (for your own livelihood) keep your existing employees healthy to get your day-to-day business accomplished. For many, the lightbulb went off in the direction of automation. You do not have to worry about a machine getting the virus. (Although you do need to worry about the mechanic falling ill, so up to date maintenance is imperative). Previously, it was extremely hard to justify the cost of automation in some areas, while in 2020, it was obvious that the need over-shadowed the cost. Suddenly, it was not cheaper to just throw bodies at a problem because those bodies were not available. Many companies found themselves working overtime and working their employees 16-18 hours a day. Some saw their employees calling in sick just from pure exhaustion. Then there were the working parents that had to have someone caring for their schoolaged children because schools were closed. One creative company opened an available space for their employees to bring their children during work. The room was equipped with computer stations so the school-aged children could do their virtual learning. It was certainly a wild year, but it was full of lessons on how preparedness can reduce or ease the pain for accommodating the unforeseen. Orders placed in November that didn’t arrive until after Christmas will likely give those specific retail partners a black eye from which they may not recover. So how do you spend the beginning of 2021 getting your facility and teams ready to face all obstacles? Here are a few ideas: Evaluate your carriers. Which ones preformed in a stellar manner, which ones failed miserably, and

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which ones fell somewhere in the middle? Sit and work with the reps to find out how they will handle this differently in the future. What are their contingency plans? The extra volume and urgency pushed not just the people to exhaustion but the already stressed automation such as conveyors, RF guns, forklifts, printers, and many more basic equipment we seem to always take for granted were pushed to the unfortunate limit. With the pandemic, it was not easy to repair or get new items. How would you better prepare for this next time? Review areas of improvement. Simple things can have a dramatic impact. For instance: • Look at the dead zones in the warehouse that require reboots of the RF equipment. Would a simple additional antenna relieve some of this heartache and frustration (not to mention productivity loss)? • Wait times on printers! This is so simple but so impactful. Once a box is scanned, how long does it take to print a label? Five seconds is unacceptable. Five seconds for each box multiplied by the number of boxes per day (thousands) would reduce your throughput by 10-15%. Now multiply that by the number of printers in your facility! • Check the conveyor. Do you need to increase the amount of scanning eyes in the facility? Do you have a person standing

and orienting boxes so the eyes read correctly? Fix this now, if you do not. Do you have someone (or multiple someones) up on a platform reducing bottlenecks? Analyze why this is happening in order to see if automation would be a fit for this area. • If you are RF picking, is your equipment miss-applied or does it need repairing? If there are constant jams and the order filler must go and get it unblocked, this needs to be repaired immediately. Walking a 500,000+ square foot building to pick orders is work enough, but having to walk to a supervisor station to fix poor equipment is enough to make that employee want to go somewhere else. 2020 found the market desperate for people willing to work. Do a survey and ask your frontline workers what and how you could have done better this past year; this could make a big impact. 2020’s in-person PARCEL Forum was, understandably, canceled. Many of you told me that this is where you get your cost-saving and improvement ideas. The year 2021 will see a new venue for PARCEL Forum (Washington D.C.!), September 14-16, and we hope to see you there. We must all improve and perform more efficiently for the good of all our customers.

Susan Rider, President of Rider & Associates, Supply Chain Consultant, and Executive Life Coach can be reached at susanrider@msn.com.

SPENDPERSPECTIVES

CROWD-SOURCED DELIVERY PLATFORMS – A VIABLE LAST-MILE OPTION FOR RETAILERS? By John Haber

rowd-sourced last-mile providers such as Roadie, Shipt, Instacart, and DoorDash became household names during the pandemic by delivering groceries to consumers who remained at home due to COVID-19. According to an impromptu survey conducted on social media over the holidays, more than half of the respondents indicated that crowd-sourced last-mile providers were a viable alternative delivery solution. Several retailers turned to these providers in 2020 to provide an additional last-mile option to consumers, offer same-day delivery, and supplement capacity requirements that were not met by FedEx and UPS. For example, Dick’s Sporting Goods and Five Below partnered with Instacart; Petco and Chico’s partnered with DoorDash; besides Target, Shipt (acquired by Target in 2017) also partnered with Bed, Bath & Beyond and some Dollar Generals; and Roadie has partnered with such retailers as Tractor Supply, Home Depot, as well as Delta Airlines for luggage delivery. Target highlighted its same-day delivery options (order pick-up, drive-up, and Shipt) in its third-quarter earnings announcement, which increased 217% year-over-year. Meanwhile, DoorDash issued an IPO citing as its mission “to grow and empower local economies.” Indeed, going back to the survey conducted over the holidays, more than one-third of the respondents noted that crowd-sourced last-mile providers were a viable alternative delivery solution in cities. The crowd-sourced last-mile delivery market is a diverse, fragmented one in which DoorDash’s IPO

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prospectus provides us with some insight. Based on total sales, in January 2018, DoorDash’s US market share was estimated at 17%, behind Uber Eats with 39% and Grubhub with 27%. By October 2020, the market shifted primarily because of COVID-19, allowing DoorDash to capture 50% of the US market in terms of sale. Uber Eats’ market share fell to 26%, and Grubhub’s market share dropped to 16%. The dramatic shift was attributed to DoorDash’s investments in technology and its partnerships beyond grocery stores and restaurants. Despite a 50% market share in September 2020, DoorDash noted that US consumers represented less than six percent of the US population, leading it to believe that it is in the early phases of broad market adoption. In 2019, DoorDash’s revenue was $885 million with a gross profit of $335 million, and through the first nine months of 2020, its revenue was $1.9 billion with a gross profit of $944 million. The sharp increase in DoorDash’s 2020 revenue has led many industry analysts to question the sustainability of DoorDash and other crowd-sourced delivery providers postCOVID; however, expectations from many experts are that the growth will likely continue, albeit at a slower pace as more consumers return to stores post-COVID.

However, costs associated with crowd-sourced delivery providers have also raised questions. According to a recent Wall Street Journal article, grocery stores indicate that they aren’t making money through Instacart primarily because of Instacart’s commission fees of 10% or more on each order through its app. Some of Instacart’s retailer partners also indicate that the service holds too much control over customer interactions. Shippers looking for additional capacity beyond FedEx and UPS will need to weigh the benefits against crowd-sourced last-mile providers’ costs. To offer same-day delivery services via these providers is undoubtedly a benefit, but shippers will need to decide if the costs are worth it. For example, many retailers offer the service at a price to consumers, typically $9.95 or free if consumers subscribe to a subscription from a retailer (such as Target’s annual $99 subscription for free deliveries via Shipt). Most important, though, shippers, especially retailers, need to consider the importance of their brand and their connection to the consumer through the last mile.

John Haber is the Founder and CEO of Spend Management Experts and can be reached at solutions@spendmgmt.com.

BY KENNY TSANG

3 TRANSFORMATIVE E-COMMERCE TRENDS FOR A POST-PANDEMIC WORLD

e are all currently feeling the effects of the coronavirus pandemic — a crisis that has completely changed the way we interact, view, and engage with day-to-day life. Over 75% of companies have experienced negative impacts due to COVID-19, and disruption to supply chains in 2020 has exposed America’s overreliance on one country for sourcing. E-commerce merchants — already part of a growing industry — were put under the spotlight during the crisis that forced huge waves of consumers online. Naturally, the unprecedented uptake in activity resulted in stock shortages and fulfillment issues, forcing merchants to consider new approaches. Forecasts suggested global e-commerce sales would increase by 19% by the end of 2020, and while there is no way of knowing for certain whether the trajectory will continue into 2021, some trends and changes are appearing to be more permanent than others. In the face of future disruption, it will be

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vital now, more than ever, to anticipate what could happen. To prepare for what is to come, expect these three upcoming trends in 2021: 1. Growth of the online marketplace During the pandemic, we have seen mass disruption across a multitude of sectors lead to an unsurprising reliance on e-commerce, with global online marketplaces pivotal to their expansion. Platforms such as Amazon, eBay, Etsy, and Taobao have all experienced record growth this year — essentially becoming the international “virtual malls” of the future. So much so, that almost half of online shoppers admit to heading straight to a large e-commerce marketplace when making a purchase, with $1.97 trillion spent in 2019. The once localized market reserved for brick-and-mortar stores has gone global, with sellers and consumers alike realizing the variety of products available online. Exclusive online marketplace sales including Prime Day and Singles Day have almost generated double of their

year-on-year revenue — growing an international presence is easier than ever before. By utilizing the right logistical and visibility tools such as customer relationship management (CRM) systems, progressive web apps (pwas), cognitive supply chain management, and subscription services, experienced sellers can continue to capitalize on a cross-border market that is expected to grow 27% to reach nearly $5 trillion by 2026. The new normal of fast delivery Changes in consumer behavior geared towards quick, efficient, and easy delivery times have set the pace merchants will need to match. One-day delivery, a previously expensive and less prioritized option for shoppers, has become normalized through subscription-based services, and in 2021, we could see a huge 80% of consumers prefer same-day or fast delivery. Lengthy online delivery times affect sales, with over a third of online shoppers citing long delivery times as one of the key reasons to shop in store.

This could leave sellers with questions and a hard decision to make in regards to managing fulfillment. Understanding what goods will be in demand next year will be essential to meeting dynamic consumer shopping trends and expectations. One thing is for sure: Investing in the right logistics and fulfillment services should be a priority for any merchant this year. A seller’s worst nightmare is having stock in a warehouse they cannot shift, and analyzing what is coming, going, or needed in turbulent market conditions will be crucial for mitigating disruption. With hidden fees, high exchange rates, and pricey tax conversion costs associated with cross-border e-commerce platforms, sellers will need to take the time to consider the right shipping solutions for their international supply chains. Up to 10% of profits can be saved using the right cross-border payment provider, and ensuring you have all the appropriate tools could make all the difference.

Diversification of supply chains A large number of businesses — including online merchants — had to evaluate and rethink their global supply chains when COVID-19 disrupted the world’s factories earlier this year. Without the means behind production, businesses stopped, orders were cancelled, shipping became expensive, and workforce shortages showed the fragility of relying on components from one single market. As a consequence of this crisis, the shift to diversification has been supercharged for sellers and businesses that would have otherwise continued with existing suppliers. Sellers should, if they have not already, map the areas most vulnerable to further disruption and ascertain which areas to diversify. Checking if the distribution facilities are working well, as well as finding the fastest possible transportation network and quickest inventory replenishment, are just some of the many issues to be investigated. Online merchants will find some regions that can produce a similar

service or grade of product that a seller is accustomed to, and this can completely vary from product to product. It can be difficult to build this new infrastructure, and traditional hurdles of having a localized bank presence, costly exchange rates, and drawn-out shipping times have always held back the big jump. Fortunately, cross-border e-commerce tools that have emerged over the last few years (such as localization services, market insights, and global payment providers) are bridging the gap for sellers with their eyes set on global growth. With the right network of innovative partners and taking heed of key market trends, cross-border sellers have access to better knowledge of international markets than ever before. If not, they could miss out in 2021.

Kenny Tsang is Managing Director of FinTech Unicorn PingPong Payments.

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UNDERSTANDING YOUR SUPPLY CHAIN TOTAL COST TO SERVE

BY WADE WICKUS

he evolution of priorities and working capital applied to a supply chain is typically based on a metric that points to a rationale of needed change. To achieve this, an organization must discover where to focus energy in order to get the desired outcomes to meet business goals. The purpose of the Supply Chain Total Cost to Serve (SCTCS) formula is to lay the groundwork for high-level direction. We will cover the idea and basis of what is SCTCS, some useful applications of the formula, and how to manage SCTCS as a metric within your organization. What is the SCTCS formula? Some people refer to this as the total cost of ownership, but in this article, we explore a deeper model that is more end to end. Some also call this “cost to serve,” but again, the formula being shared here is more robust and different. All Inbound Costs – All logistics, receiving, inbound equipment, safety, technology, full-time employees (FTE) staff relating to this area + All Costs to Procure – All inventory variance, inventory costs, tariffs, technology, FTE staff relating to this area +

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All Holding Costs – (Product is stationary) – Storage costs, technology, maintenance, FTE staff relating to this area + All Outbound Costs – Outbound assets, routing/last-mile costs, network design, technology, FTE staff relating to this area + All Return Logistics Costs – Inventory returning, costs to return, technology, FTE staff relating to this area = Total Supply Chain Cost to Serve – Includes all the transactional costs associated with the supply chain process, after the sale of goods is complete Excluded: Sales cost, certain leadership costs (C-Suite), marketing costs, and certain administrative costs. The rationale is that these costs are required to obtain sales and are not related to the transactional qualities of a supply chain process. This formula is dedicated to the supply chain total costs to serve, which focuses on the costs of moving product through the supply chain. Useful Applications of the SCTCS Formula These will be based on a specific timeframe (period, quarter, or year). Organizations can gather useful information by utilizing the formula in the following ways: 1. As a standard metric in total to measure the overall cost dollars of the transactional supply chain. 2. Dividing the SCTCS costs by the total sales dollar amount or reflecting SCTCS totals as a percent of sales dollars.

3. Dividing the SCTCS costs by the number of cases or units sold or reflecting the SCTCS as a dollar cost per case or unit. Directionally, when you take SCTCS as a percentage of sales, you are understanding how to leverage those costs based on sales. As the costs as a percentage decline with increased sales, you are, in theory, leveraging your supply chain costs to manage more sales. Relating the SCTCS to sales, cases, or units helps to keep the relativity of your overall cost number. Managing this Metric Inside Your Organization Most of this information is tracked in a company on a high level. It is important to work with your CFO to determine the best use of this formula for your organization. Don’t re-invent the wheel, but use the data collection you already have in place on a high level to gather the course of the SCTCS metric. Then collaborate with your CFO to add on key components that you may be missing to build the right details pertaining to your company’s targeted outcomes. Engagement, empowerment, and communication are the secret sauce to ensuring that the rest of the organization is in tune with the power of this metric. Always ensure that this is not the only metric, but rather that this metric sits with other important metrics in balance so that your vision of your supply chain is well-executed. You will need to dive into certain areas of the formula to resolve issues that are driving costs. As you apply this formula to your organization, it is important to get the view of supply chain teams to create the data. This process drives engagement of the SCTCS metric as a valid tool. While meeting with teams, be sure to discuss the empowerment process of change or transformation as new ways or new processes are generated to reduce costs. This is important to expedite cost reductions, creating a culture of continuous improvement and achieving desired goals. Consistent and effective communication is the other important strategy to implementing this metric. Timely and accurate reporting is essential to building trust, and the use of this metric can be a northern star for your supply chain. Effective communication is listening to those empowered to carry out improvements based on data provided by the metric. The SCTCS metric can be a powerful tool to help your organization get to the next level in your supply chain and create a dynamic business advantage.

Wade Wickus is CEO & co-founder of Link Supply Chains, LLC. He has over 30+ years of experience in the distribution supply chain. He has spoken at several events including CSCMP, SCOPE, and other leading organizations. He has a very popular podcast called “Supply Chains…The Secret Sauce,” found on all major podcast outlets. Link Supply Chains, LLC is one of the fastest startup product information management companies in the USA and has a mission to simplify supply chains, reduce costs, and make B2B communication fun again. Visit www.linksupplychains.com for more information. JANUARY-FEBRUARY 2021  PARCELindustry.com 19

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WHO WANTS TO SAVE MONEY THIS YEAR? THESE 13 COMPANIES WANT TO HELP YOU. This past year brought almost every business many types of chaos and challenges — and almost all of these challenges affected your bottom line. Each year, we like to give you a number of ideas to help with your costs and expenses, and a great place to start this year is looking at your spend management. We all are very hopeful for a big growth year; however, one place you do not want to see big increases is in your shipping costs! There are a number of companies that can help you keep your costs down, and on the following pages are 13 companies that we are spotlighting for you. Reach out to them and find the company that can best help with your specific needs.

If 2020 brought massive swings in shipment volume, changes in the percentage of Business-to-Business vs. Business-to-Consumer shipments, changes of suppliers, huge shifts in distribution locations, or even a need for a network redesign, Alexandretta would love to put our expertise to work for you. Alexandretta is known for its expertise in optimizing both domestic & international parcel & LTL agreements; however, the analytics we use to drive optimized carrier agreements can also drive decision-making and execution based upon changes brought on by Covid-19. We are committed to integrity and building relationships of trust; for the long-term success for our clients, something that is more important than ever. As we move forward from maxed out carrier capacity and unprecedented impacts on transportation and

logistics, we’re looking to apply our expertise to help our clients thrive. With new Business Intelligence tools, we can also provide a robust portal to take a deep dive into your own shipment data to drive further analytics and queries into powerful, actionable results. We are WBE-certified and are focused on inclusivity, as well as giving back, and donate 1% of our profits to causes supporting sustainability. 2020 was a wild ride for everyone. We would love to work with you to strategize — and execute — on the best ways to move your business forward in 2021. www.alexandrettaconsulting.com 714.777.3377 info@alexandrettaconsulting.com Video

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CT Logistics is celebrating 98 years of supply chain management services in 2021. Since 1923, companies have leveraged CT for freight audit and payment and TMS solutions worldwide. CT customizes all solutions for our clients to support all modes, including parcel. CT's services will reduce your costs and save your company money. CT audits every shipment to recover money from your total parcel, package, and freight expenditures.  All rates and cost items are calculated, including bundled pricing, hundredweight, and dimensional pricing.  All shipments are reviewed for address, account number, COD, dangerous or restricted goods, declared value, and oversize.  All shipments. including third-party, are reviewed for inside, residential, dimensional, Saturday pickup or delivery, as well as GSRs (Guaranteed Service Recoveries). CT's services also include supply chain management, TMS solutions, LTL and Full Truckload shipment execution, bid management, shipment planning and execution software, as well as professional services for consulting and advising. CT's business intelligent platform provides global supply chain visibility for benchmarking and trending, with graphical dashboards for management information. CT is SOCII and ISO 9001:2015 certified. www.ctlogistics.com 216.267.2000 ext 2190 sales@ctlogistics.com

enVista is a leader in the parcel audit and spend optimization market. Its core solution for audit and payment, MyShipINFO®, is supplemented with industry leading business intelligence capabilities to provide granular visibility to all shipments in a client’s parcel network. Over the past 18 years, enVista’s consulting practice has implemented solutions to help shippers realize significant transportation savings through cost modeling, service-level analytics, and contract management. The enVista audit process focuses on four primary cost drivers. Each shipment is tracked to ensure packages are delivered on time and damage-free. All charges are compared to the carrier service guide and client rate sheet. Any billing adjustment or accessorial charge is audited to ensure that it should have been applied and that the cost associated with the charge is in line with the customer agreement. Our audit team works directly with each client

to build compliance rules to validate activities on the account, like routing rules and fraudulent shipments. In addition to world class audit services, the enVista team proactively supports clients by monitoring key metrics in order to identify opportunities that exist for service optimization, packaging alignment, and other important cost drivers. Our analysts work as an extension of our client’s team to ensure their parcel spend is optimized and that they have the visibility to drill into any level of detail captured in the audit. Robust business intelligence (BI) capabilities coupled with enVista’s consulting expertise ensure our clients have the resources needed to achieve their transportation visibility and savings initiatives.

Green Mountain Technology (GMT) provides the world's largest shippers with Parcel and LTL Spend Management solutions engineered for competitive edge. Our solutions combine a best-in-class audit system with intelligent spend analysis software to identify network opportunities and assist with contract management. We deliver unparalleled success through our proven processes focused on three key strategic areas: Process Automation, Network Intelligence, and Network Optimization. GMT's highly engaged, strategic delivery model, unique network modeling

and re-rating technology, and Fortune 500 customer base, uniquely position GMT to deliver unparalleled value. GMT's customers represent more than $7 billion in parcel spend and consistently experience a 5-10X return, net of our fees.

www.envistacorp.com 317.208.9100 info@envistacorp.com

Intelligent Audit is the technology leader in freight audit & recovery, business intelligence, and transportation spend optimization. Using our proprietary technology, paired with a team of strategic account managers, we are able to help some of the largest and most complex global shippers analyze, benchmark, optimize, and gain critical insights into their global transportation network. With best-in-class audit and reporting technology, clients can leverage their data to reduce costs, enhance real-time visibility, and improve the end-customer experience. With more than 2,800 clients representing over $23.4 billion in annual transportation spend and over 980 million shipments audited in 2020, Intelligent Audit prides itself on providing customers with the tools and insights to help them ship smarter. www.intelligentaudit.com 201.889.1110 info@intelligentaudit.com

www.GreenMountainTechnology.com 901.507.9307 contact@greenmountaintechnology.com

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Logistyx Audit is the leading supply chain platform for transportation cost reduction through automated invoice audit and freight recovery with analytics and Business Intelligence. Logistyx Audit combines data from shipment execution, carrier invoicing, and shipment status into a consolidated platform. Backed by our sophisticated data engine, Logistyx Audit analyzes, validates, identifies, and automatically submits and manages invoice recoveries across all modes, carriers, and services worldwide. Business Intelligence capabilities are its strength. Logistyx Audit produces dashboards and reports to support complex global supply chain decision-making activities. Clients realize the following benefits:  Automated recovery of all contractual invoicing errors.  Invoice line-item validation ensures charge accuracy.  Eliminate duplicate billing and manifested but not shipped packages.

 Late, lost, and damaged identification.  Online carrier collaboration portal to manage invoicing errors and recovery.  Automated and consolidated Accounts Payable reporting integrations related to GL Coding, approval to pay, accruals management, and financial file integrations.  Industry leading analytics and Business Intelligence supports clients: o Category specific topics interpreted into meaningful dashboards o Heat maps to drive geographical analyses o KPIs, score carding, visualizations, trend analyses o Hundreds of industry ready reports

Would you trust a consultant to make decisions on your behalf? Probably not, because how could a consultant possibly understand your business well enough to do so… unless they have walked a mile in your shoes? At Level Playing Field (LPF), we seek to build this level of trust because, well, we’ve managed every aspect of a parcel program as a parcel shipper. Our expertise is based on 10+ years of frontline experience creating parcel value for e-commerce companies. LPF was founded to share this experience to help companies compete on shipping. How do we this? By incorporating both parcel contract optimization and e-commerce shipping strategy into parcel sourcing solutions, customized to each client’s needs. LPF’s solutions extend far beyond the commoditized FedEx/UPS rate benchmarking process which has become commonplace in

the market. Our process begins with a detailed assessment of parcel contracts and spend and a review of client shipping strategy. When designing project solutions, alternate delivery services (not only FedEx and UPS) are thoroughly evaluated, and the most cost-effective carrier services are aligned to desired transit times. The results? The bottom-line impact you expect, and the delivery experience your customers demand. Contact Level Playing Field to discover the experience of working with a partner who understands your goals, can relate to your priorities, and has solved your challenges. Let’s win together.

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www.logistyx.com 847.884.1940 info@logistyx.com Video

www.lpfspendmanagement.com info@lpfspendmanagement.com

ParcelLogix is the leader in flat fee small parcel price benchmarking and carrier contract negotiation services. They bring visibility to appropriate small parcel rates by providing granular target pricing saving their clients millions on shipping costs. The process is straightforward: ParcelLogix offers a free assessment of clients’ pricing to identify opportunities for saving, which is typically completed in 3-5 business days. Clients then have the option of choosing from two options: Price Benchmarking or Carrier Contract Negotiations. Price Benchmarking Following a comprehensive analysis utilizing ParcelLogix’s proprietary data and analytics tools, a detailed list of custom price benchmarks and corresponding savings are presented to the client. These targets become the roadmap for the client to follow during negotiations with the carriers (UPS, FedEx & DHL). Carrier Contract Negotiations Using the aforementioned price targets, ParcelLogix assists clients throughout the carrier negotiation process to maximize the savings attained by clients. This negotiation assistance includes financial impact analysis of proposals received by the carriers, guidance on strategy plus access to ParcelLogix’s Business Intelligence Dashboards. Return on Investment ParcelLogix prides itself on being an affordable yet highly capable service provider. It is their goal on each engagement to return more savings to their clients than any other provider in the industry. In fact, many of their clients retain more than 90% of the savings achieved. Find out how much your organization is overpaying for small parcel shipping and visit ParcelLogix today. www.parcellogix.com 800.471.2310 support@parcellogix.com

Save up to 30% in 90 days! Reveel® offers the best service team and more cost savings than anyone else in the industry. Since 2006, Reveel® has been dedicated to providing Shipping Intelligence® for the smartest business decisions possible. Founded by former DHL sales executives, Reveel® was created to level the playing field and provide peace of mind. Over the past decade-plus, our zero-risk services have saved our clients hundreds of millions of dollars. At Reveel®, our mission is to increase our clients’ profitability by empowering them with shipping intelligence. We lift the veil on the pricing that your carriers

are offering to similar companies, giving you valuable industry and regional benchmarks. Our dedicated team of local experts will help you identify measurable savings with invoice auditing and real-time reporting & analytics. The best part is that all of this comes at zero cost to you. If we don’t save you money, we don’t get paid.

Your time and money are important. Want to experience increased freight audit accuracy, automatic freight invoice uploads, and an efficient discrepancy process? What about a decrease in address corrections and shipment delays? It may sound like a big ask, but you can get all that with ShipERP. With worldwide industrial expertise in manufacturing, life science, retail, aerospace, automotive, and more, you can trust that ShipERP can reduce your parcel shipping costs. By utilizing ShipERP, our customers reduced labor by 25% and saved at least $30,000 in address correction fees. The clock is ticking. Audit and approve dozens of freight invoices in seconds! Protect yourself from hidden costs like dimensional weight surcharges and accessorial charges. ShipERP is your guide to make the best use of transportation resources.

So get started on reducing parcel, LTL, airfreight, global, and domestic shipping costs. About us: ShipERP fosters digital supply chain transformation for small and medium-sized businesses (SMB) and large enterprises. We find that all our clients need to automate and increase efficiencies in business processes. By effectively integrating with enterprise systems to provide real-time information to business units, we help you reduce costs and increase profits. Contact a helpful parcel spend management expert at ShipERP.com to view a product demonstration now.

reveelgroup.com 877.421.4994 joshd@reveelgroup.net

shiperp.com 562.278.8248 sales@erp-is.com Video

Trax is the global leader in Transportation Spend Management. We offer a combination of industry-leading cloud-based technology solutions and the industry’s most global services to elevate traditional freight audit to enterprise-wide value creation and customer satisfaction for our clients. Our clients represent the world’s most complex supply chains, and they choose Trax to empower better management and control of their global transportation costs, improve data quality, and advise on logistics management optimization strategies. Trax is redefining transportation spend management (TSM). We have a model that provides companies a roadmap to go from a limited view and control of logistics performance to efficiently commanding performance across all modes of transportation at a global scale. Transportation spend management gifts you with a framework for continuous improvement across all facets of transportation and transportation data management. This wholistic control of your freight data incorporates carrier data and performance, transportation financial management processes, and strategic supply chain optimization into your model so that you evolve past chasing invoice errors and into data driven performance management. Our global footprint, multi-modal and multi-carrier strength, and obsessive focus on client success allow you to manage your global transportation spend actively and efficiently with confidence. We empower organizations with globally complex supply chains to gain control and end-toend visibility into their transportation costs for enterprise-wide efficiency, maturity, and value. www.traxtech.com 800.755.0110 sales@traxtech.com

The increasingly complex nature of small parcel shipments makes it difficult to get a timely, accurate picture of true cost and service fulfillment. High volumes, multiple surcharges, contracted delivery guarantees, limited access to information — it all adds up to a complicated invoice process prone to inaccuracies and unnecessary costs. U.S. Bank Freight Payment can help you address these challenges with robust solutions that integrate small parcel and freight data for an accurate view of true transportation spend. Transaction-level detail on more than 200 audit points provides visibility into performance and automated cost recovery eliminates laborious efforts to contest charges, file claims, and obtain refunds. Our small parcel experts work with you to

provide customized recommendations that can help proactively identify areas to reduce expenses. Plus, you can depend on the reliability and security of a bank that’s gone beyond regulatory, audit, and compliance requirements to earn the highest data certification to keep your competitive information safe. Visit freight.usbank. com/smallparcel to learn how you can get the reliability and visibility you need to make your supply chain a strategic advantage from the first mile through the last mile. freight.usbank.com/smallparcel 866.274.5898 CPSTransportation@usbank.com

Featured Parcel Audit / Spend Management Providers Alexandretta www.alexandrettaconsulting.com 714.777.3377 info@alexandrettaconsulting.com CT Logistics www.ctlogistics.com 216.267.2000 ext 2190 sales@ctlogistics.com enVista www.envistacorp.com 317.208.9100 info@envistacorp.com Green Mountain Technology www.GreenMountainTechnology.com 901.507.9307 contact@greenmountaintechnology.com Intelligent Audit www.intelligentaudit.com 201.889.1110 info@intelligentaudit.com Logistyx www.logistyx.com 847.884.1940 info@logistyx.com

Since 1992, Visible Supply Chain Management has been a parcel industry leader dedicated to helping shippers get the most value from their supply chains. Amid surging e-commerce volumes and the volume restrictions imposed by carriers last year, companies who shipped with multiple carriers were often better positioned to meet customer delivery expectations than those who relied solely on one. Visible helps shippers build effective multi-carrier strategies by using proprietary technology to determine the perfect mix of price, speed, and accuracy to achieve their goals. During the audit process, we analyze package weights and sizes, destinations, routes, and required delivery speeds to identify optimized, faster alternatives. We also actively seek opportunities to reduce customers’ shipping costs. We leverage our existing vol-

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ume to secure client discounts and apply both industry knowledge and creativity to reduce customers’ parcel spend. Our Inverted Dimensional pricing option, for example, allows clients to pay the lesser amount between size and weight. We are also one of only four USPS Approved Resellers, which means we are authorized to pass savings onto clients who do not have a USPS rate agreement in place. Visible is offering companies of all sizes, in all industries, a comprehensive free audit to help optimize shipping costs and determine your optimal parcel mix. Contact our team to schedule your free analysis today. VisibleSCM.com 887.506.2614 sales@visiblescm.com Video

LPF Spend Management www.lpfspendmanagement.com info@lpfspendmanagement.com Parcellogix www.parcellogix.com 800.471.2310 support@parcellogix.com Reveel reveelgroup.com 877.421.4994 joshd@reveelgroup.net ShipERP shiperp.com 562.278.8248 sales@erp-is.com Trax www.traxtech.com 800.755.0110 sales@traxtech.com U.S. Bank freight.usbank.com/smallparcel 866.274.5898 CPSTransportation@usbank.com Visible Supply Chain Management VisibleSCM.com 887.506.2614 sales@visiblescm.com

APPLICATION ARTICLE

Intelligent Audit Unveils Low Risk, High Yield Supply Chain Improvements We are experiencing an unprecedented time, and for many shippers, yesterday’s parcel strategies no longer apply. It is time for a new playbook. To succeed, you need to leverage specialized analysis and deep industry expertise to engineer parcel programs that protect profit and enhance customer experience. Dynamic Landscape Requires Evolving Solution Intelligent Audit provides a variety of services geared toward process improvements through actionable, easy-to-understand business intelligence. Intelligent Audit’s primary mission has always been to help companies analyze, optimize, and unlock mission-critical insights with real-time data. Intelligent Audit helps companies of all sizes recapture excess freight spend with its best-of-breed audit and reporting platform. Intelligent Audit boasts an impressive lineup of more than 2,800 clients with more than $23.4 Billion in annual transportation spend audited in 2020. Top Intelligent Audit services include: Freight Audit and Recovery Intelligent Audit’s starting focus has always been freight audit and recovery. We audit more than 150 data points to provide an enhanced contractual transportation audit. More visibility into all shipping modes, including parcel, which helps manage real-time exceptions to make faster-informed decisions.

Sweeping Business Intelligence Tools Using both EDI and API, Intelligent Audit’s cloud-based system helps companies track and manage freight spend in real-time through connected systems. That includes using normalized data to unify code differences, identify problem areas, and help implement best practices to achieve the best result possible. Transportation Spend Optimization Intelligent Audit works to figure out the best carriers, service level, and mode blend to achieve supply chain excellence. Using big data analytics, IA successfully helps shippers of all sizes build a better optimization strategy, including redistribution, route optimization, omnichannel fulfillment, zone skipping, and more to help reduce transportation costs while maintaining or reducing TNT. Advanced Financial Reporting Capabilities Intelligent Audit further helps companies track all unbilled carrier activity by location, business units, SKUs, and mode. A complete picture of landed costs and projected expenses enables proactive budgeting. That’s achieved through ongoing efforts to create and refine KPIs that help individual companies increase throughput. Freight Payment Management Improved freight payment processes also help avoid settlement delays, shorten the payment clock, and avoid financing difficulties. Intelligent Audit also partnered with Triumph Bancorp, Inc. (Nasdaq: TBK) to offer a secure payment process. Supply Chain Consultancy Services As a dedicated supply chain partner, Intelligent Audit acts as an extension of your team to enhances efficiency by continuously reviewing customer data and proactively communicating areas of improvement. Intelligent Audit helps our customer’s ship smarter, which we define as getting shipments delivered faster to consumers, with fewer exceptions at cheaper costs.

www.intelligentaudit.com 201.889.1110 info@intelligentaudit.com

MAPPING THE INCREDIBLE GROWTH TRAJECTORY OF THE GLOBAL PARCEL INDUSTRY By Jason Dies

or the past six years, the Pitney Bowes Parcel Shipping Index has closely tracked the parcel industry in 13 of the world’s most influential markets. Each year, the industry’s growth story continues. With just one exception (Japan), the forecasts for both volume and revenue continue to grow at least to 2025 for every country in the Index. Although largely e-commerce-driven and boosted by the explosion in online shopping in 2020, this growth is also generated by B2B shipments. People are shipping more and becoming increasingly reliant on the world’s carriers to move and deliver parcels. In response, carriers are powering up, accelerating innovation, and investing in infrastructure. It’s important for any business that ships parcels to stay on top of these trends, particularly businesses that send or receive packages overseas. Market volumes and trends impact carrier strategy and influence the shipping costs, tariffs, and rates that you pay, as well as the services available to you. Ultimately, this affects your customers and revenue. Here are three key takeaways from the latest index, which will help you drive your planning for 2021 and beyond. Parcel Shipping Volumes Will Continue to Rise for at Least the Next Five Years

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The report forecasts double-digit growth in parcel volume to 2025, with the highest rise in parcel numbers expected to be seen in 2020’s figures. The forecast points to a 22% year-overyear increase, with parcel volumes reaching a phenomenal 126 billion in 2020. In 2026 — as far ahead as the current forecasts project — parcel volume is most likely to reach 220-262 billion. That’s more than 8,000 parcels shipped every second in the world’s 13 major markets, compared with the 3,248 shipped every second in the latest Index. E-commerce is the biggest driver behind this growth, but in a separate study, we asked 250 US enterprises about their shipping practices during the first months of the pandemic. We found that almost 50% were sending more mail and parcels than previously. We also interviewed 450 small-to-medium-sized businesses (SMBs) in the UK, the US, and China to find out how their shipping practices had changed recently. With employees often working remotely, we found that businesses turned to traditional shipping methods to communicate with remote workers: 61% of respondents in China, a quarter of businesses we spoke to in the US, and 24% in the UK had done so. Items that employees would usually collect from the office were shipped to them at home instead, such as office supplies and legal documents. As remote working practices are set to continue, the number of parcels businesses are shipping is likely to increase further. China and Emerging Markets Continue to Exert a Major Influence on the Industry In 2014, China’s parcel volume was positioned behind Japan’s, reaching 9.19bn compared to Japan’s 9.52bn. By the following year, China had overtaken Japan as the market with the highest parcel volume. In 2019, China’s parcel volume reached 63.5 billion, reaffirming its position as the global powerhouse of the Parcel Shipping Index, although its growth is beginning to slow. Emerging markets such as Norway are also growing: Norway’s percentage increase in parcel volume is second only to China’s, with the European country shipping 80 million parcels compared to the previous year’s 60 million — an increase of 24%. India follows in terms of growth, reaching a year-over-year increase of 19% in parcel volume, shipping 2.8 billion parcels. Forecasts anticipate these markets will generate continuing growth over the next year at least, with Brazil and Australia hot on their heels. Carriers Continue to Generate Revenue in Highly Competitive Markets – Creating Customer Value The report takes a closer look at carrier movement and market share. In the US, the USPS, FedEx, and UPS account for the majority of the market, while the remainder is comprised of Amazon, DHL, regional, and local carriers. Other regions such as India have more fragmented carrier markets. One interesting takeaway from the Index is that even in the market in which parcel volume is declining — Japan — carriers are still generating profitability. Across all 13 markets in the study, carriers are finding innovative ways to expand their networks, manage increasing capacity, and improve the customer experience.

The more we shop online, the higher our expectations for e-commerce and business shipments. These expectations are driving carriers to innovate and invest, as Unmanned Aerial Vehicles (UAV) or drones, autonomous vehicles, and AI become reality. In October 2019, UPS Flight Forward Inc. received certification from the FAA for unlimited flight to operate a drone airline for parcel delivery. Earlier in 2020, UPS partnered with Wingcopter, a Germany-based drone manufacturer, to develop vertical takeoff and landing delivery drones. Similarly, FedEx has launched its SameDay Bot, “ROXO,” an autonomous delivery robot to make lastmile and same-day deliveries, and UPS has invested in TuSimple, a US-based trucking company. UPS has been using TuSimple’s self-driven trucks to make deliveries in several cities of the US. As parcel volumes rise, staying ahead of trends, insights, and carrier services could help your business improve customer experience and generate a competitive advantage.

Jason Dies is EVP and President, Sending Technology Solutions, Pitney Bowes. For more information on the latest Pitney Bowes Parcel Shipping Index, including a video, infographic, and interactive map, visit https://www.pitneybowes.com/us/shipping-index.html. JANUARY-FEBRUARY 2021  PARCELindustry.com 33

PARCELCOUNSEL

FROM THE ARCHIVES: MARKING UP THE FREIGHT: LAWFUL REVENUE CENTER, OR ILLEGAL FRAUD? By Brent Wm. Primus, J.D.

or this installment of PARCEL Counsel, we combed the archives and decided to feature a popular column from December, 2010. I have now had the privilege of authoring more than 50 PARCEL Counsel columns. Over the years, this one in particular has led to more phone calls and emails from readers than any of the others. Terms such as “Freight Prepaid and Charged Back,” “Freight Prepaid and Add,” “Freight Collect and Allowed” and other payment term modifiers are not defined in either the Uniform Commercial Code (UCC) or the National Motor Freight Classification (NMFC). Rather, they originate from industry practice and custom and have never been codified into law. The phrases “F.O.B. Origin, Freight Prepaid and Charged Back” and “F.O.B. Origin, Freight Prepaid and Add” mean that the seller pays the freight charges to the carrier but then collects from the buyer by adding the amount to the seller’s invoice. Similarly, the phrase “F.O.B. Destination, Freight Collect and Allowed” means that the freight charges are paid to the carrier by the buyer who then deducts the amount paid for the freight from the seller’s invoice. The term “F.O.B. Destination, Freight Prepaid & Add” means that the freight charges are paid to the carrier by the seller, who then adds the amount paid to the carrier to the seller’s invoice. Care must be exercised by a seller when prepaying and adding freight charges to the invoice to the buyer to avoid

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violating state laws prohibiting deceptive or fraudulent business practices. A seller would be susceptible to such a charge if it adds to an invoice more than it actually paid the carrier. Such a practice is colloquially referred to as “marking up the freight.” Similarly, a buyer would be in violation of such a state law if it were to misrepresent to the seller the amount the buyer actually paid to the carrier. While a thorough discussion of this issue is beyond the scope of this column, an example of such a violation of a state law would be when either the buyer or seller submits the carrier’s original invoice for freight charges to the other party, but then later receives an “off-bill discount” from the carrier. An example of such an “off-bill discount” would be when the carrier issues a credit based on a volume incentive which cannot be determined until the end of a given period of time. Such a credit effectively retroactively lowers the freight charges for all shipments subject to the volume incentive. As between the carrier and its customer, such discounts are perfectly legitimate. What is not legitimate is for one party to a sales transaction to misrepresent or artificially inflate the amount (i.e. by failing to include the discount) that it tells the other party it paid for freight charges. Having said that, there are perfectly legitimate reasons why the party paying the freight may be entitled to an extra amount. For instance, the party paying the carrier may be in a position to obtain much lower rates based on

higher volumes of freight than the other party could negotiate for themselves. Additionally, the party who negotiated the rates, arranged for the carriage, and paid the freight bills no doubt incurred administrative costs to do so. There is nothing inherently unlawful about marking up freight charges; it just must be done in a non-deceptive manner. A similar analysis applies when a seller quotes a product at a given price plus “shipping.” If the seller is “marking up the freight,” this would be a deceptive trade practice. In this situation, the problem is easily resolved by using the phrase “shipping and handling.” Accordingly, if one party to a sales transaction wants to be paid something more than the amount paid to the carrier, an agreement needs to be reached with the other party. For example, the parties could agree in a separate writing that the term “freight” means “the freight charges actually paid to the carrier plus 20%” or “the freight charges actually paid to the carrier plus $20.” Failure to have such an agreement exposes the party “marking up the freight” to both civil and criminal liability. All for now!

Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on the PARCEL website (PARCELindustry.com). Your questions are welcome at brent@primuslawoffice.com.