PARCEL January/February 2025

PAGE 18

THE POWER OF AI IN PARCEL APPLICATIONS.

PAGE 16 HOW ARE WAREHOUSING TRENDS ADAPTING TO CHANGING CONSUMER DEMAND? PAGE 20

PEAK SEASON 2024: HOW DID SHIPPERS AND CARRIERS HANDLE IT? PAGE 22

/// CONTENTS

Wm. Primus,

11 PARCEL SHIPPING RATES ARE UP IN 2025: IT’S TIME FOR NEW CARRIER CONTRACTS

26 CUT COSTS. CORRECT MISTAKES. BE MORE EFFICIENT

How Parcel Audit and Spend Management Companies Can Help

Kris Kniaz

EDITOR’S

NOTE

WHAT LIES AHEAD?

By Amanda Armendariz

As we leave January behind and head into February, a sense of uncertainty abounds. Businesses and consumers alike are worried about the tariffs President Trump has promised to enact, although as of this writing, he has paused the implementation of the tariffs on Mexico and Canada for 30 days (which means that they could still go into effect right around the time this issue hits our readers’ mailboxes). The tariffs against China are now in effect, and the potential impact on the average American consumer is something that economists are watching closely. As of right now, the sectors predicted to be impacted the most are homes, automobiles, and energy — not exactly the items that fit into small pack-

ages, which is a small silver lining to those of us who ship things for a living. However, the de minimis loophole that allowed low-value packages to come into the US duty-free was recently halted, which means that the e-commerce landscape will likely be hard hit. Add in the fact that President Trump briefly stated that no packages would be accepted from China and Hong Kong (although that decision was quickly reversed, with the USPS stating it would continue to accept packages from these locales), and it’s no wonder that folks are scrambling to keep up.

Naturally, if you’re in the small-package industry, these events are likely causing some uncertainty on your end. While we can’t control much of what is happening at the highest level of government, we can stay on top of what is happening in our organizations. Looking for ways to cut costs and improve efficiency in operations is one of the best ways you can safeguard your company against this current supply chain uncertainty. Hopefully, the articles contained within this issue give you a plethora of ideas to help you take your small-package operation to the next level. And no matter what, we’ll be by your side as your trusted industry resource to navigate these ever-changing waters.

As always, thanks for reading PARCEL.

EDITOR’S PICK

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!

The Five Myths of Tariffs’ Impact on the American Economy

By Robert Handfield and Jason Miller

How to Implement Lightweight Packaging Without Compromising Durability

By Emily Newton

Analysis: The 2025 GRIs

By Josh Dunham

SUPPLY CHAIN SUCCESS

USPS CHANGES IN 2025: HIGHER COSTS, SLOWER DELIVERY, AND CONTROVERSY OVER PRIVATIZATION

By Andy Johnson

The United States Postal Service (USPS), a cornerstone of American communication and commerce, is set to undergo significant changes in 2025. Here’s a look at what’s ahead for one of the nation’s most essential institutions.

Price Increases on Shipping Services

Starting January 19, 2025, USPS customers will see higher shipping rates, a move approved by the USPS Board of Governors and pending review by the Postal Regulatory Commission. Here’s how the adjustments break down:

Priority Mail and Priority Mail Express will increase by 3.2%, maintaining their respective delivery times of one to three and one to two business days.

USPS Ground Advantage will rise by 3.9%, delivering packages in two to five days.

Parcel Select, often used for bulk shipments, will see the largest hike at 9.2%, with delivery times ranging from two to eight days.

Longer Delivery Times Ahead

The USPS is revising its delivery performance targets for 2025, reducing its on-time goals for both First-Class two-day mail (from 93% to 87%) and three-to-five-day mail (from 90% to 80%). This means that rural customers or those farther from USPS hubs may face delays, and mail delivery times will remain within the maximum thresholds of five days for Ground Advantage and three days for local First-Class mail.

The Postal Service defends these adjustments as part of its ongoing “Delivering for America” 10-year plan, which aims to save up to $3.6 billion annually while modernizing operations and improving service for urban and suburban customers.

The Privatization Debate Resurfaces

The conversation around privatizing the USPS has been reignited by President Donald Trump, who suggested it’s “not the worst idea” during a recent press conference. This marks a return to a controversial proposal from his first term, where privatization was framed to reduce cost and boost efficiency.

While private carriers like FedEx and UPS offer competitive alternatives, they rely on USPS for deliveries in less-profitable rural areas. Privatization would likely result in:

Reduced service to remote communities.

Increased rates for deliveries.

Cuts to employee pay and benefits.

Critics argue that privatization would undermine the USPS’s constitutional mandate to provide affordable and universal mail delivery. Bipartisan support for a public Postal Service remains strong, particularly among lawmakers from rural areas.

Balancing Modernization with Financial Struggles

The USPS faces mounting financial challenges, reporting

$9.5 billion in losses for fiscal year 2024. Its “Delivering for American” modernization plan includes $40 billion in investments in technology, infrastructure, and workforce development. However, critics, including Postmaster General Louis DeJoy, have acknowledged that reaching financial stability remains elusive.

Congress’s 2022 postal reform legislation relieved some debt but stopped short of addressing long-term operational costs. Lawmakers continue to scrutinize DeJoy’s performance and reforms as the USPS navigates an uncertain future.

What These Changes Mean

For consumers and businesses, the 2025 adjustments could mean higher costs for shipping and potential delays in delivery times. However, the USPS emphasizes its commitment to maintaining six-day-per-week service and improving its operational efficiency through an updated fleet, automated sorting facilities, and IT systems upgrades.

As debates over privatization and funding loom, one thing is clear: the USPS remains an integral part of American life, from delivering letters to rural households to handling e-commerce shipments. How it adapts to its financial and logistical challenges will shape its future — and its role in the lives of millions.

Andy Johnson is Project ManagerParcel Consulting at Körber.

How Intelligent Audit Solved a $3 Million Problem

Leading Freight Audit Provider Intelligent Audit Resolves $3M+ Weekly Billing Error for Global Healthcare Corporation

One of the world’s largest healthcare corporations partnered with Intelligent Audit to optimize their global transportation spend. The global healthcare corporation relied heavily on a major national carrier, shipping tens of millions of parcel shipments annually. At such a high shipping volume, even the slightest error could result in significant financial impact.

The Challenge

Intelligent Audit identified a critical error: the national carrier had mistakenly lowered the customer’s weekly volume tiers, which directly determine shipping rates. This misstep led to overcharges totaling $3 million — per week.

Intelligent Audit’s Solution

Proactive Detection, Rapid Escalation, Collaborative Resolution, and Continued Monitoring

Using proprietary advanced technology, Intelligent Audit pinpointed discrepancies at the shipment-line level, quickly isolating the tier reduction error before it could persist unchecked. Recognizing the magnitude of the issue, Intelligent Audit’s team immediately alerted both the customer and the carrier to promptly address the problem.

Intelligent Audit partnered with the carrier to investigate the root cause of the error, facilitating transparent communication among all stakeholders to ensure accountability and a swift resolution. Intelligent Audit’s continuous, real-time audit process prevents similar errors, safeguarding the integrity of the customer’s billing processes moving forward.

“Intelligent Audit’s ability to catch and resolve a $3 million weekly error reinforces why they are our trusted logistics auditing partner. Their dedication to precision and collaboration is unmatched.” – Executive, Global Healthcare Corporation

The Outcome

Intelligent Audit’s swift intervention prevented $3 million in weekly overcharges, safeguarding the customer’s bottom line from significant financial loss. By resolving the issue, Intelligent Audit ensured the customer’s financial reporting remained accurate, reinforcing the value of detailed, granular audits. Intelligent Audit’s collaborative approach earned the carrier’s appreciation, fostering a stronger and more productive partnership moving forward.

About Intelligent Audit

Founded in 1996, Intelligent Audit is a global leader in multimodal transportation invoice auditing, business intelligence, AI-enabled optimization tools, and secure carrier payment. They continuously invest in technology, processes, and people to transform transportation data into actionable intelligence, helping shippers ship faster, reduce costs, and minimize exceptions. This commitment to innovation is why Intelligent Audit is trusted by the world’s leading brands.

Contact: Scan QR code to explore more real-life results

Reach the Intelligent Audit team at intelligentaudit.com

BUSINESSES FOCUSING ON LOWER RETURNS COSTS

By Tony Sciarrotta

The second half of 2024 was one of return volumes holding steady but was a mixed bag for returns costs, according to the Reverse Logistics Association’s (RLA) returns index.

“It seems we’re holding steady despite sales volume increases,” one survey respondent noted. Indeed, businesses have been managing volumes better and focusing more on the costs through changes in returns policies and technology investments.

RLA’s research team conducted a returns policies study using the National Retail Federation’s (NRF) top 100 retailers list as the basis. Of the top 100 retailers, 30% charged restocking fees and 75% of retailers limited what could and could not be returned. An interesting trend noted was better return options such as free shipping and longer periods to return items through subscriptions such as Target’s 360 and Home Depot’s branded credit card.

The RLA research team predicts that customized return policies will become increasingly sophisticated and widespread over the next decade. Currently, nearly 20% of retailers offer return benefits to select, potentially more trusted customers. In addition, some retailers also provide more lenient return policies for their in-house brands.

While businesses aim to reduce the total number of returns, they are also facing an increase in fraudulent returns, which are driving up returns volume for some businesses and costs for all. According to an NRF survey, a majority (93%) of retailers said retail fraud and other exploitative behavior is a significant issue for their businesses.

Some retailers are telling shoppers to keep their unwanted merchandise to reduce return costs. A 2023 survey on holiday shopping trends by ReturnPro found that nearly 60% of retailers have keep-it policies for items that aren’t financially viable to ship back. Others, like H&M

Group, are turning to technology. The Swedish fashion retailer is investing in software that uses artificial intelligence to generate personalized shipping and return fees.

In addition, 3PLs and technology companies are expanding their returns management capabilities by acquiring specialized providers.

For example:

Blue Yonder acquired Doddle in 2023. Returns are a big problem in retail, especially after the holiday season. When a customer initiates a return through Doddle, they are asked specific questions about the condition of the item and packaging, given choices on how and where to return it, and given the sustainability impact of the different return options.

Also in 2023, Accenture acquired OnProcess Technology. The acquisition will enhance Accenture’s supply chain capabilities, specifically in asset recovery and service supply chain management, “making it easier for clients to manage service orders, drive returns, track movement and ensure the appropriate reuse, disposal or recycling of assets,” according to its press release.

UPS acquired Happy Returns in 2023. The acquisition provides customers with an online returns portal allowing customers to make a boxfree return at a convenient location and have their item shipped, sorted, and

returned to the merchant.

The most recent acquisition is DHL Supply Chain’s announcement to acquire Inmar Supply Chain Solutions to advance its returns processing in North America to include product remarketing, recall management, and supply chain analytics.

Managing the reverse logistics process is complex. When comparing forward to reverse logistics, the differences are apparent, NRF vice president of corporate social responsibility and sustainability, Scot Case told the publication DC Velocity. “When you think about forward logistics, you’re shipping goods to a store, all in uniform-sized boxes, but when items are returned, they have to be separated, sorted, and handled in some way, and pallets could be filled with a mix of products that are not packed efficiently,” he explained. “You could be spending large sums of money to bring back low-value products.”

As we all know, supply chains are not linear but instead circular. When businesses focus on improving efficiencies and lowering costs in their overall supply chain, they need to also consider reverse logistics costs.

Tony Sciarrotta is Executive Director of the Reverse Logistics

Association. The RLA offers various tools, white-papers, and monthly webinars that provide best practices in managing reverse logistics.

Parcel Shipping Rates Are Up in 2025: It’s Time for New Carrier Contracts

Despite being a buyer’s market for parcel shippers for a few years, UPS and FedEx have continued to raise rates through GRIs and a huge list of mid-year surcharge updates. The result? Many parcel shippers’ costs are higher than they realize and out of alignment with what they should be paying. With the added weight of other supply chain challenges like inventory management and forecasting demand, 2025 could be a makeor-break year for many companies.

With some industry experts expecting shipping demand to strengthen in this year, rates will likely rise further. This signals companies to take a more unified approach to their supply chain with solutions that include a mix of improvements to address the strategic (such as inventory and planning) and the more tactical (renegotiating new parcel contracts). There is an urgency to secure better rates in the short term while setting a path for savings for years to come.

Why TransImpact? Why Now?

TransImpact was founded in 2008 to help shippers negotiate better parcel contracts, but our team’s collective parcel industry knowledge goes back much further. We recognize the extreme parcel market dynamics and the extraordinary opportunity available to shippers who work towards new contracts.

We know there are misconceptions about parcel contract negotiation that cause companies to miss important moments like this. Perhaps the biggest is that parcel contracts cannot be renegotiated until they have expired — which is not true. What is true is that plenty of companies claim they can save you money on your agreements, but very few ever deliver.

Our approach is different. TransImpact understands how to generate the most savings — and we guarantee it. We’ve helped clients achieve a 23.6% average cost reduction over the past

three years, which is game-changing savings for most companies. Negotiating the best carrier agreement takes industry expertise, market data, and technology to attain market-appropriate rates based on your volume and shipping DNA.

And remember, our unified approach does more than just lower your parcel rates. We create Intelligent Inventory: an end-to-end solution to optimize planning, enhance efficiency, and increase profitability from forecasted demand to product shipped.

Know Your Rates Before You Negotiate

Here’s one more reason why TransImpact is better. We will tell you BEFORE you start to renegotiate what your rates should be — to within 1/10 of one percent. Our team and technology can not only find more savings than anyone else, but we also remain as an active partner once you’ve signed the new agreement.

How do we know what your parcel rates should be? We calculate the range of rates you should pay using our market knowledge and leading parcel analytics technology. From there, we can pinpoint your precise market-appropriate rates because we know where the profit line is for the carriers. Then, we team with you to leverage a simple but well-practiced process that anticipates the carriers’ behavior and responses during negotiations while unearthing the hidden costs buried in your agreement.

This is not a set-it-and-forget-it process, either. Our clients receive weekly report cards validating their savings. And, as your shipping needs and patterns change over time, we’ll guide you in adjusting your shipping program accordingly. Together, we continue to optimize your rates as we monitor your company’s shipping patterns, what’s happening in the market, peak season surcharges, GRI implications, and any other changes that may impact your overall parcel spend.

The bottom line? TransImpact integrates parcel spend management with supply chain and business planning, a powerful synergy designed to transform your supply chain operations. With us, you’re assured of getting market-appropriate rates and all the savings you deserve across your supply chain.

www.transimpact.com

jey.yokeley@transimpact.com 252.764.2885

SAFEGUARDING AND EXPANDING YOUR SHIPPING FOOTHOLD IN 2025’S PARCEL MARKET

By Ray Hardwick

With 2024’s holiday season in the rearview and the 2025 GRIs now in effect, parcel carriers are gleefully watching their new and improved revenue numbers trickle in. Though thankfully not the 6.9% jump seen in 2023, shippers have undoubtedly assessed this year’s 5.9% increase to be about as welcome as an ice storm on Christmas Day. That said, UPS and FedEx are still aggressively competing for business in light of a milder peak season compared to recent years and softer-than-expected 2024 earnings. With carriers remaining on the back foot, shippers will continue to have leverage to partner with carriers that can best serve their pricing and operational needs. This article aims to detail the overall market state and provide actionable suggestions, not only to reinforce your current discount programs, but head into fresh negotiations this year at parity with your carriers.

Establish a Baseline

Reassessing your shipping program after the GRI and aligning expectations within the broader parcel landscape

is a valuable exercise for businesses of all sizes. Along with reviewing your net rate sheets, consider requesting a Letter of Notification (LON) from your carrier representative. A LON offers a clear summary of updated tier discounts and minimum reductions, providing additional insight into the impact of the GRI — details that may not be fully captured in your net rate sheets. As your company evolves, it’s imperative to partner with carriers that understand your operational needs and provide you with pricing that meets your financial ones.

Understanding the Numbers

FedEx and UPS have reported annual revenues of around $90 billion in recent years, underscoring the importance of every shipper — large and small. Even smaller programs can attract attention, as carriers prioritize customer retention in a competitive landscape.

A focus on surcharges can yield unexpected savings opportunities. For instance, while a 100% waiver on all Delivery Area Surcharge (DAS) variations may be unrealistic, targeting specific surcharges based on your shipping profile could be more achievable.

Hypothetically, if your commercial DAS discount increased from 35% to 60%, it could result in significant savings, as illustrated in the chart on the next page.

By carefully understanding how surcharges are impacting

you financially, shippers can strategically address cost pressures that are impacting your bottom line.

The chart illustrates the potential savings benefit that would occur from an increase in FedEx/UPS commercial DAS discounting from 35% to 60% if 500,000 commercial packages are hit with said charge. Between the scenarios, realized savings would increase from $735K to $1.26M if the commercial DAS incentive were improved, a >40% overall increase. Using examples like the above to weigh your problem surcharges and the impact on your program is just another strategic tool you can use to stay one step ahead as you determine which carriers and their pricing models work best for your organization.

Looking Ahead

The ongoing capacity surplus in parcel networks continues to influence carrier strategies, even as FedEx and UPS implement operational changes through initiatives like Network 2.0 and the Network of the Future. Despite these adjustments, unpopular surcharges, including Demand fees, remain a challenge for shippers. Meanwhile, regional carriers like Veho and Clearjet are gaining traction with competitive surcharge structures, offering viable alternatives in certain markets.

As shippers evaluate their options, asking key questions can help guide decisions

around volume consolidation, diversification, or exploring alternate carriers:

Are we close to meeting tier thresholds, and how might near-term changes affect them?

If cost savings are evident with a multi-carrier strategy, are the operational challenges of switching justifiable?

Could lateral solutions, such as in-house delivery options, provide cost or service benefits?

While regional carriers are not yet poised to significantly

disrupt the volumes of UPS and FedEx, they are creating meaningful options for shippers. In this environment, staying informed about your program’s structure and negotiation leverage is essential to maintaining savings and partnering with the right carriers to fit your operational and pricing needs.

Ray Hardwick is a Sr. Transportation Analyst at Intelligent Audit, with over a decade of experience in carrier operations, 3PL, and finance roles.

How to Build a Customer-Centric 3PL EMPIRE

By Katy Schroedl

Let’s face it, third-party logistics (3PL) providers are the unsung heroes of the supply chain. They work tirelessly behind the scenes to ensure that packages reach their destinations on time and in perfect condition. But in today’s competitive landscape, simply fulfilling orders isn’t enough. 3PLs must go the extra mile to deliver exceptional customer experiences on behalf of their clients.

The Secret Sauce to Customer Satisfaction

So, what’s the key to customer satisfaction? It’s a combination of technology, communication, and a customer-centric mindset. By implementing these strategies, 3PLs can transform their operations and deliver exceptional service.

Let’s break down the key ingredients:

Quality Control

Quality control is the backbone of customer satisfaction. It’s like having a team of quality assurance superheroes inspecting every package. By minimizing errors and damages, you’re protecting your reputation and strengthening customer relationships.

A seamless online shopping experience is crucial for customer loyalty. A recent PwC study shows that 51% of consumers agree that an online shopping experience can negatively impact loyalty if it isn’t as easy or enjoyable as shopping in person. By investing in rigorous quality control

processes, you can ensure that your customers have a positive experience and remain loyal to your brand.

Value-Added Services

Offer a range of value-added services, such as custom packaging, kitting, and assembly. It’s like giving your clients a Swiss Army knife of convenience. By providing additional services, you’re not just meeting their needs; you’re exceeding their expectations.

For example, optimizing cartonization can significantly reduce shipping costs. By carefully selecting the right box size and using efficient packing techniques, you can minimize shipping expenses and pass the savings on to your clients. Additionally, offering sustainable packaging options can appeal to eco-conscious consumers and enhance your brand reputation. In fact, according to the 2024 ProShip Report, nearly 54% of shippers agree that sustainable shipping practices are very important to their companies. By prioritizing sustainability, you can differentiate yourself from competitors and attract environmentally conscious customers.

Real-Time Visibility

Imagine being able to peer into the future of your shipment. With real-time tracking, you can provide your clients with this superpower. By offering visibility into the entire shipping journey, from the moment it leaves your warehouse to the moment it arrives at the customer’s doorstep, you’re not just delivering packages; you’re delivering peace of mind.

Real-time visibility has become a non-negotiable requirement for modern businesses. In fact, a Tive’s State of Visibility 2024 survey revealed that 77% of respondents believe real-time visibility is a “must-have” for their operations. By providing your clients with real-time updates, you can build trust, reduce anxiety, and improve overall customer satisfaction.

Real-time visibility is the cornerstone of exceptional customer service. By leveraging advanced analytics, you can gain valuable insights into carrier performance, surcharge analysis, and service level benchmarks. This data-driven approach can help you optimize your shipping strategies, reduce costs, and improve overall performance.

Proactive Communication

Don’t let your clients feel lost in the shipping abyss. Be their knight in shining armor and proactively communicate with them. A simple notification about a slight delay can prevent unnecessary worry. A well-informed client is a happy client.

Proactive communication extends beyond just customer interactions. By forging partnerships with elite and tech-enabled vendors, you can ensure that they proactively monitor your operations. This includes tracking server performance, carrier rate updates, and other critical metrics. By anticipating potential issues and taking preventive measures, you can safeguard your supply chain and deliver exceptional service. After all, proactive communication is key to building trust and loyalty.

Customers today crave personalized communication. In fact, 90% of customers want to be able to both receive and respond

to messages from businesses. By offering multiple channels of communication, such as email, SMS, and social media, you can provide a seamless and personalized customer experience.

Strong Relationships

Building strong relationships is the cornerstone of a successful 3PL business. By fostering strong partnerships with your clients, carriers, and technology providers, you can create a robust supply chain that delivers exceptional results.

Client Relationships: Invest time in understanding your clients’ unique needs and challenges. By tailoring your services to their specific requirements, you can build trust and loyalty.

Carrier Relationships: Develop strong relationships with a diverse mix of carriers to ensure flexibility and reliability. By rightsizing your carrier network, you can optimize shipping costs and improve service levels.

Technology Partnerships: Partner with innovative technology providers to leverage the latest tools and solutions. By staying up-to-date with the latest advancements, you can streamline your operations, improve efficiency, and enhance the customer experience.

Level Up Your Game with Technology

To truly revolutionize your 3PL operations, you need to leverage technology. Advanced shipping software can streamline your processes, improve accuracy, and enhance the overall customer experience. By investing in the right technology, you can gain a competitive edge and deliver exceptional service.

Find a future where your operations are automated, your data is insightful, and your customers are delighted. Advanced shipping software can make this vision a reality. By streamlining workflows, reducing manual errors, and providing real-time visibility, you can significantly improve efficiency and customer satisfaction.

For example, a robust shipping software solution can empower you to offer real-time tracking, automate order processing, and leverage advanced analytics. This allows you to proactively communicate with clients, optimize shipping strategies, and build stronger carrier relationships. With access to a variety of carrier APIs and on-platform carrier engines, you can select the best shipping options for each shipment, reducing costs and improving service levels.

Remember, technology is not just a tool; it’s a strategic advantage. By embracing these strategies and leveraging the right technology, 3PLs can elevate their service offerings, gain a competitive edge, and foster long-lasting relationships with their clients.

VISIBILITY IS POWER

“Without data, you’re just another person with an opinion.”

— W. Edwards Deming

Most organizations understand the power of data but struggle to efficiently collect or utilize it to streamline processes and make better business decisions. Orca’s advanced Freight Audit & Analytics solution benefits your entire operation:

C-SUITE: Gains deep insight into supply chain performance to save on costs.

OPERATIONS: Obtains centralized and mobile supply chain visibility and reporting.

LOGISTICS: Negotiates the best carrier rates and optimizes the supply chain.

Katy Schroedl is a Content Marketing Manager at ProShip, a leading provider of multi-carrier shipping software solutions. With a passion for storytelling and a love for all things creative, Katy leverages her expertise to provide practical insights and actionable advice. Contact her at kschroedl@proshipinc.com or connect on LinkedIn: www.linkedin.com/in/katelyn-schroedl/.

FINANCE: Benefits from outsourced freight audits and 100% payment accuracy.

THE POWER OF AI IN PARCEL APPLICATIONS

By Cameron Clark

A“I” was the buzzword of 2023 and 2024 — and for good reason.

AI’s potential to improve how parcel shippers work is undeniable. Most shippers already rely on a number of software tools (transportation management systems, inventory management systems, audit solutions, logistics intelligence, etc.) to make their lives easier.

While these tools help shippers do work more efficiently, next-generation tools powered by AI will do more work for shippers, allowing them to focus on other responsibilities.

Here’s what you need to know to make the most of this new generation of parcel tech.

What Kind of AI Are We Talking About?

When you hear “AI,” there’s a good chance you picture a conversational large-language model like ChatGPT, or perhaps an image-generator like Adobe’s Firefly.

Those newer tools employ “Generative AI,” which generates new content based on prompts. They have exploded onto the scene recently, but follow their longstanding counterparts, “Traditional AI.”

Traditional (AKA Narrow) AI completes tasks based on predetermined algorithms. These have been around for years (think of a chess-playing algorithm as an example). A specific subset of this category is Predictive AI, which uses historical data to make predictions.

While Generative AI (particularly large language models) is rapidly advancing in the parcel technology space, Traditional AI is making a big impact today.

Traditional AI in Parcel Tech

Parcel software companies use a number of AI models to power their solutions. Here are a few popular ones, and their specific use-cases in parcel shipping.

Nearest Neighbor:

What it is: A model that uses data proximity to identify similarities and make predictions. Social media sites use this AI model when showing you content similar to posts you’ve interacted with before.

Parcel use case: Nearest Neighbor can show where you fit in the parcel landscape. One example is measuring your average transit times compared to other shippers in your industry, which can uncover competitive advantages/disadvantages.

Random Forest:

What it is: A prediction model that uses decision trees to come to one conclusion. Banks use this to assess a customer’s risk.

Parcel use case: Logistics intelligence tools use Random Forest for a number of predictive models. One is distribution network optimization, which can project the shipping cost impact of a new send-from location, ensuring a shipper chooses the best city for a new DC or 3PL partner.

K-Means Clustering:

What it is: A model that groups similar data points to identify underlying patterns and make predictions based on that. An example you’re probably familiar with is Netflix’s “users who watched this also watched” recommendations.

Parcel use case: K-Means Clustering allows shippers to compare themselves to companies with truly similar shipping profiles (not just similar spending) and determine what “bestin-class” metrics really look like.

Finding AI Tools

Now that we’ve covered the basics, what

should you look for in a software partner that uses these AI models?

The most important rule — don’t share your data with just any tool. Search for parcel-specific solutions for security purposes and more relevant results.

AI models, at their core, use a sophisticated framework to give structure and understanding to the underlying data. If not using an industry-specific framework, and not trained on industry-wide information, the model provides limited value.

“Industry-wide” is important here. Many businesses will opt to build out their own AI models to monitor their parcel operations, but if it’s an internal-only tool, it will lack the greater context needed to get the best results.

A company’s shipping profile is a single point on a map. Third-party parcel AI tools use industry-wide inputs to fill in that map and can tell a single shipper where they fall. This helps them know how their performance compares to peers, where they need to improve, and set goals to make the

biggest impact. Without this context, parcel KPIs are just numbers.

Another advantage for parcel-specific software is data security and privacy. Sharing data from carrier invoices with publicly available tools (like a ChatGPT) gives the benefit of learning from other data sets, but also potentially exposes your data to others.

On the other hand, industry-specific software providers understand the intricacies of parcel invoices, and the sensitivity of the data within them.

While user data improves the accuracy and acumen of their AI models, specifics are never shared with anyone else.

AI Is the Future

Parcel software powered by AI is quickly matching — and even enhancing — what a traditional consultant can do.

The parcel world is more complex than ever. To take action in a timely manner, sophisticated software to analyze that complex data is becoming a requirement.

Some might question if software and AI can match the human expertise of

someone with years of experience in parcel shipping. When that AI tool was designed by those very parcel experts, and informed by inputs from thousands of shippers, it certainly can.

When an AI-powered platform puts the knowledge of a consultant at a shipper’s fingertips, they can do that work themselves, allowing a process of never-ending monitoring and optimization.

The future isn’t just about efficiency — it’s about evolving with smarter tools that drive continuous improvement. Embrace AI to stay competitive and unlock new opportunities in parcel shipping.

Cameron Clark is the manager of data science & analytics at Sifted, where he builds complex systems that bring power to the potential of shipping data. By creating tools that transform raw information into powerful insights, Cameron’s team ensures SiftedAI can help shippers continuously push for 100% parcel optimization.

WHAT TO EXPECT FROM A DYNAMIC PARCEL MARKET IN 2025… AND BEYOND

By Rick Miller

One of the best — and sometimes the worst — things about the parcel shipping industry is that change is inevitable. Depending on if the economy is up or down, there is either excess capacity or no available capacity. No matter if the carrier’s performance has been stellar or lacking, a consistent cost increase will occur each year (although this may vary slightly based on the factors listed above). However, as with many other predictable things in life and in business, the carrier’s General Rate Increase (GRI) will occur each year.

The state of the economy significantly affects costs, specifically carrier contract procurement events. This is closely tied to parcel volume demand and the available capacity of carriers. Parcel list rate costs always go up. However, the openness of carriers to cost concessions and other contract negotiable items depends on whether they need more volume or are at capacity with their current book of business.

In this regard, the parcel industry operates like any other supply-and-demand economy. The more available capacity, the more volume the carriers want. When capacity is over-extended as it was during parts of 2020 and all of 2021, the carriers do not want additional volume unless it ensures higher profits from those shipments. This greatly affects their openness to discussions during parcel contract events.

Factors Influencing Carrier Contract Procurement (Beyond Capacity)

Carrier capacity is not the only factor that can make a significant difference in how carriers approach contract procurement events, but it is probably the most common and widespread. The attractiveness of a specific shipper’s packages and shipping characteristics can also make a large impact. For example, carriers may also consider the percentage of residential vs. commercial packages, density of both pick-up and destination locations, percentage of express vs. ground vs. economy shipping services normally chosen by the shipper, and the number of odd or larger size packages the shipper normally ships (just to name a few.)

If we take a quick look back at a few years prior to 2020, carriers were mostly keeping up yearly growth in parcel shipments for their capacity. Contract compromises were

relatively equal, with most discussions focused on managing peak volumes and allocations. Overall, both sides were able to balance their priorities in a fairly amicable way.

By mid-2020, parcel volumes soared, and carrier capacity was overwhelmed. The supply and demand imbalance shifted the advantage to carriers, who could demand increases and extra fees without a lot of leverage to fight it from the shippers. Carriers focused on growing profit margins while shippers felt a little taken advantage of from a parcel contract perspective.

By 2022, the surge in parcel volumes had subsided, and the carrier’s capacity had caught up with the volume demands. With capacity no longer being an issue, carriers sought more volume. This shift led to carriers being more open to shippers’ requests for cost concessions. However, the carriers couldn’t just cut costs at the request of the shippers without taking huge declines in their margins, which would have been unacceptable to their stockholders.

In 2023 and 2024, we saw the carriers and shippers engage in much more open dialogues about contracts and pricing. However, most of the cost concessions the carriers agreed to have been quickly followed by announced service guide changes and fuel index adjustment to help the carriers re-coup and maintain their current margins.

What’s On the Horizon for Parcel Shipping?

Looking at the year ahead, I expect the situation to remain similar to 2024. I don’t expect an outright “price war” from the major carriers, as they can’t afford that with their commitments to Wall Street and their stockholders. However, I do expect the carriers to find ways to incentivize the shippers to stay with or move volume over to them.

Additionally, there are also looming changes at the USPS that are making it more like the Big Two carriers. The Postal Service is getting better consistency in its service and on-time delivery and strategically making it harder for other carriers to use it as a last-mile carrier only. Specifically, USPS has a distinct advantage on very low-priced/small shipments (e.g., less than one-pound packages) due to its mail service.

Additionally, OnTrac (formed by the merger of LaserShip and OnTrac) now claims to cover 70% of US households and

seemingly continues to expand coverage on a regular basis. Tack on the niche and smaller regional carriers, and there is an excess of capacity currently. Ultimately, my expectation is that the carrier contract events will continue to be like 2024. Shippers are going to expect some kind of relief from the contracts they signed two or three years ago.

And beyond? Every time I hear these words together, I think nostalgically about the 1995 Toy Story movie and Buzz Lightyear’s phrase, “to infinity and beyond.” We have a hard time predicting what parcel shipping will look like a year or two down the road — much less “and beyond.”

Parcel shipping, at least for the foreseeable future, is not a commodity. Therefore, there are too many variables for blanket statements to resonate with accuracy for each specific contract and situation.

For at least the next three years, it seems that the market and contract expectations will likely stay the same unless there is a major disruption, such as another event like 2020 that causes a surge in “shop from home” behavior, or Amazon deciding to remove all restrictions and becoming a full carrier. These two events would affect capacity in very different ways, which would alter the landscape of parcel contract procurement events.

Setting Up for Success — No Matter What the Future Holds

So, what should you do to prepare for your next procurement event? Here are some best practices to follow:

Know where your contract stands.

Fully understand your costs — are they driven primarily by your base rates, accessorial fees, or fuel?

What trends are you seeing? Are you receiving a lot of penalty fees associated with size or weight? Are you fulfilling orders from optimal origin locations?

Work with a trusted third party who can give you some insights into your contract and identify opportunities for improvement.

Have this advisor also review your network and find places where you are not shipping optimally. These changes can be made outside of a contract event but will help set you up for a better discussion with carriers going forward.

Whatever the future holds, one thing is certain: changes in parcel shipping are inevitable.

Rick Miller is a Director of Strategic Solutions at Green Mountain, having joined the company in 2015. Rick oversees a group of manager teams, providing best-in-class Parcel Spend Management solutions for large parcel shipper clients. He also oversees the Advisory Services team, responsible for keeping up with parcel market trends and insights as well as providing parcel contract pricing advice to all Green Mountain clients (representing more than $12B in annual parcel spend).

By Nick Fryer

HOW ARE WAREHOUSING TRENDS ADAPTING TO CHANGING CONSUMER DEMANDS IN TRANSPORTATION?

Warehousing has undergone a dramatic transformation in recent years. The rise of e-commerce saw a surge in demand for faster, more efficient delivery experiences. At the same time, supply chain optimization, streamlined inventory management, and just-in-time (JIT) practices have also forced warehousing operations to adapt and adjust.

The Surge of Automation in Modern Warehousing

Consumers want shorter lead times, high product availability, and flexible delivery options. Meeting these needs requires a flexible approach from retail warehouse operators keen to embrace the smart warehouse and drive better transportation and logistics.

A study on the transition from manual to smart warehousing demonstrated some of the innovations that retailers are using to meet evolving consumer needs. Some of the more interesting automation applications include:

Goods-to-person solutions that slash fulfillment speeds.

Autonomous Mobile Robots (AMRs) to reduce picking speeds and drive accurate order fulfillment.

Transportation Management Systems (TMS) to ensure optimal routing and efficient carrier selection.

Computer vision technology for automated quality control inspections.

Swedish food retailer Coop’s groundbreaking distribution system that will use robots for fulfillment, packing, and even deliveries to customers’ homes.

These innovations show that modern warehouses and distribution centers exist on the bleeding edge of technology, thanks to the adoption of AI and robotics across the supply chain. With customers demanding quicker and more convenient deliveries, warehouse management efficiencies will help cut costs and lead times across the entire chain, contributing to faster fulfillment.

Micro-Fulfillment Centers: Enhancing Proximity to Consumers

Micro-fulfillment centers (MFCs) are small, strategically placed warehouses. Typically, they are positioned near densely popular areas. The appeal here is obvious: quicker delivery and transit times and more flexible delivery options. Many of these facilities use AI and robotics to process and pick orders, making use of automated storage and retrieval

systems (AS/RS) and customer-friendly real-time tracking systems.

The implication of using an MFC is that it caters to what modern retail consumers want. Bringing warehouses closer to urban areas helps reduce carbon emissions and opens up different delivery options, such as electric vehicles, bikes, or even delivery lockers.

With the right location, retailers can offer click-and-collect options, quicker exchange and return processing, and real-time order tracking. Each of these advantages aligns with consumers’ expectations for low-cost, fast, and sustainable transportation. Customer experience is a point of differentiation in a competitive market. Retailers must offer these transportation benefits or risk being left behind.

While the benefits of outsourcing logistics management are well-established, using MFCs for this purpose is another useful option for modern retailers. Outsourcing to MFCs gives businesses access to cutting-edge automation and robotics across a wider range but without the infrastructural investments required for this kind of comprehensive rollout.

On-Demand Warehousing: Flexibility for Seasonal and Peak Shipping Periods

Managing seasonal inventory, dealing with fluctuating demand, and distributing goods for short-term projects are common problems in the warehouse and logistics industry. In the past, retailers have struggled to scale their facilities up and down, with many forced to rent large premises to handle these temporary requirements.

On-demand warehousing solves these problems. The benefits of this approach are clearly outlined in the book Digital Supply Chain Transformation: Emerging Technologies for Sustainable Growth Some of the ideas communicated in the chapter “An Introduction to Flexible, On-Demand Warehousing: E-Space” are included below.

Cost Optimization

Some cost-saving benefits of on-demand warehousing include:

Retailers can avoid long-term lease

commitments.

Overhead costs are reduced during peak seasons.

Fixed asset and infrastructure investments are lowered significantly.

Better Customer Service

Businesses that embrace on-demand warehousing can unlock greater customer satisfaction through:

Slashing fulfillment and ordering times.

Meeting customer expectations, even during peak demand times.

Assistance with different retail strategies, such as ship-from-store, collect-fromstore, and same-day delivery.

Scalability and Expansion Options

Finally, on-demand warehousing can also suit businesses that want to scale into new markets or geographical regions. The approach is particularly suited to rapid expansion. Here are a few of the reasons why this approach is proving popular with retailers.

Businesses can establish a local presence without significant infrastructure investments.

Storing inventory closer to customers reduces both shipping times and costs.

Allows retailers to mitigate the risks involved in expanding into untested markets.

Aside from the obvious appeal to high-growth businesses, on-demand warehousing offers more direct transportation benefits. For example, retailers can drive down delivery times with more strategic inventory placement based on consumer buying patterns. Additionally, on-demand facilities can act as local service centers and help reduce costs by providing free shipping.

Last-Mile Delivery: How Warehousing Innovations Are Driving Success

Last-mile delivery is a response to shifts in customer expectations. Modern consumers want fast, low-cost deliveries. These demands pose considerable issues for retailers and distribution centers struggling to stay competitive in the face of escalating labor and fuel costs. However, last-mile delivery has emerged

as a credible supply chain management solution. In effect, the practice acknowledges that the final mile of a delivery is typically the most problematic in terms of cost, complexity, and the need for tracking and customer communications.

Solving the inefficiency within the last mile is a pressing concern for retailers and distributors. Warehousing hubs offer benefits similar to those of MFCs. Yet, businesses must embrace innovative approaches to provide the quick, lowcost deliveries that consumers demand.

Sustainability is another massive factor when thinking about last-mile deliveries. Younger consumers and those with higher incomes are willing to pay more for sustainable deliveries, and many large logistics firms have sought to accommodate this trend by testing more sustainable delivery options. For example, electric vehicles and cargo bikes are solid, low-impact options for urban deliveries, while drones can reduce carbon footprint in rural areas.

Adapting Warehousing to Stay Ahead in Transportation

The warehousing industry is rapidly evolving to meet the changing demands of modern consumers. By embracing automation, adopting micro-fulfillment centers, leveraging on-demand warehousing, and innovating last-mile delivery, retailers are enhancing efficiency, reducing costs, and improving customer satisfaction.

These trends not only address the desire for faster, low-cost, and sustainable transportation options but also position businesses to remain competitive in a dynamic market. As consumer expectations continue to rise, the integration of these warehousing innovations will be crucial for retailers looking to adapt and thrive in the future of transportation and logistics.

Nick Fryer is Vice President of Marketing, Sheer Logistics. He has over a decade of experience in the logistics industry, spanning marketing, public relations, sales enablement, M&A and more at 3PLs and 4PLs including AFN Logistics, GlobalTranz, and Sheer Logistics.

LAST-MILE DEMAND DURING THE HOLIDAY PEAK SEASON

By Jay Kent

Ashorter, condensed peak holiday season saw strong demand between Black Friday and Christmas. Beyond that, however, the overall season was a mixed one for most retailers and carriers.

The CNBC/NRF Retail Monitor, powered by Affinity Solutions, showed a 1.74% month-over-month increase in total retail sales for December, excluding automobiles and gasoline. Core retail sales, which excluded

restaurants, rose by 2.19% month over month. In comparison, there was a 0.19% decline month over month in November’s tepid performance. The shift in Thanksgiving timing, with Cyber Monday and the Sunday after Thanksgiving falling in December rather than November, gave the final month of the year a meaningful boost, according to a CNBC and NRF announcement.

“In North America, Black Friday week was our largest demand week

ever on Nike Digital, with sales up double digits,” Nike’s Executive Vice President and Chief Financial Officer, Matthew Friend, told analysts during the company’s Q2 earnings call on December 19.

Indeed, FedEx’s Executive Vice President and Chief Customer Officer, Brie Carere, noted a similar trend during FedEx’s Q2 earnings call in December. “I will say it picked up after Cyber Monday, it was a very strong week, and we are, from a December perspective, pleased volumes are running ahead of forecast. And as I mentioned, our peak surcharge capture from an absolute dollar amount will be up year-over-year. So we do think that December is going to be a very strong month.”

However, the peak holiday season for parcel carriers began in October, with increases in demand surcharges from FedEx and UPS. These surcharges gradually increased throughout the season, along with other surcharges, to capture anticipated increases in volumes.

But visions of volume increases were tempered at best. UPS CEO, Carol Tomé, told analysts during the company’s Q3 earnings call in October, “We’ve been collaborating with our customers on daily volume expectations and the timing of their promotions. While our customers are still expecting a good holiday selling season, recently, shippers have tempered their volume expectations.”

The founder of shipping consultancy ShipMatrix, Satish Jindel, forecasted that UPS, FedEx, and other delivery firms would handle nearly 2.2 billion deliveries and returns between Thanksgiving and New Year’s Eve. The package carriers were prepared to handle 120 million parcels per day during the peak holiday season, but demand was estimated to be just 106 million packages per day.

For the three months ending November 30, the average daily volume for FedEx’s ground home delivery and economy parcels declined 0.4% while revenue per package for

ground packages fell 0.6% for the quarter. On a quarter-to-quarter basis, revenue per package also slipped, which could be due to rate discounting to gain volumes.

While we do not know how UPS performed during the holiday season as of this writing, we can surmise its performance in December, at least, may be similar to FedEx. UPS expected December 18 to be its peak shipping day, estimating it would handle two million more packages than last year’s peak shipping day.

Retailers Turn to Alternative Last-Mile Services

The compact holiday peak season and higher surcharges from UPS, FedEx, and other traditional carriers resulted in retailers turning to crowd-sourced delivery services such as DoorDash and Instacart for same-day deliveries and deliveries past cut-off dates from traditional last-mile delivery providers. December 18 was UPS and FedEx’s deadline for ground deliveries to reach their final destinations in time for Christmas, but for retailers such as Academy Sports, fast delivery at a lower cost for customers up to Christmas Eve was needed. “As we head into holiday, we’ve expanded our partnership [with DoorDash] to allow for same-day delivery options on academy.com, which is also powered by DoorDash. We expect this to be a big unlock the last four to five days leading up to Christmas,” Academy Sports CEO Steve Lawrence told analysts in December.

Additional retailers announced during the holiday season were Five Below, David’s Bridal, and Sports Basement. According to the DoorDash announcement, the new retail partners will also be available on DashPass, DoorDash’s membership program that offers members a $0 delivery fee.

Meanwhile, Canada’s pet retailer, Pet Valu, expanded its partnership with Instacart by offering over 600 locations across Canada exclusively on Instacart for same-day delivery.

Retailers’ In-House Last-Mile Services

Walmart and Target supplement their contracts with traditional parcel carriers such as UPS, FedEx, and the USPS with their own last-mile delivery services. Delivery speed is typically a reason for the use of these offerings.

Overall, the 2024 holiday peak season was one in which UPS and FedEx mitigated their costs with higher surcharges, while retailers who would have normally handed a certain percentage of volumes to traditional carriers instead gave those volumes to alternative

carriers such as DoorDash and Instacart to reduce costs and expand service levels.

“The popularity of expedited delivery has resulted in more than 30% of orders coming from customers and members that elected to pay a convenience fee to receive their delivery in less than one hour or less than three hours,” Walmart’s CFO John David Rainey told analysts during the company’s earnings call in November. Walmart likely benefitted through the holiday season by offering its own delivery service.

Target also noted growth in its last-mile services. Target’s CEO, Brian

Cornell, told analysts in November, “We saw nearly 20% growth in our same-day delivery powered by Target Circle 360, as more guests learn about it and respond to the value and convenience this service offers. We also saw double-digit growth in Drive Up this quarter, which accounted for more than $2 billion in our Q3 sales. We also saw healthy growth in our ship-to-home business in Q3.”

What 2025 Holds

Overall, the 2024 holiday peak season was one in which UPS and FedEx mitigated their costs with higher surcharges, while retailers who would have normally handed a certain percentage of volumes to UPS, FedEx, USPS, and other traditional carriers instead gave those volumes to alternative carriers such as DoorDash and Instacart to reduce costs and expand service levels.

In addition, retailers continued to encourage Buy Online, Pick Up/Return in Store (BOPIS/BORIS) and deliveries to third-party locations to further mitigate costs and expand options to customers.

In 2025, retailers will continue to shift volumes away from traditional last-mile carriers because of costs and introduce new service levels, while those retailers that offer their own last-mile delivery services will likely handle more volumes themselves.

Jay Kent is the founder of SLB Performance, a business advisory company that helps companies lower their costs and drive shareholder value for the company. Jay has more than 25 years of experience in growth and turn-around companies with deep expertise in supply chain, global/domestic transportation, operations, omnichannel, retail, B2B, third-party logistics, vendor management, manufacturing, procurement, contract sales, industrial engineering, inventory planning/allocation, technology deployment, wholesale, and C-Suite executive leadership for medium to Fortune 150 companies.

HOW TO UTILIZE YOUR RETURNS OPERATION TO IMPROVE CUSTOMER SATISFACTION

Returns are an inevitable part of e-commerce. What started as a feature to reduce risk for consumers when buying online has grown into a massive issue affecting consumers, merchants, and 3PLs alike.

The scale of returns in the United States surprises most people. According to the National Retail Federation (NRF), almost $1 trillion worth of goods will be returned to retailers this year. E-commerce is fueling this growth, as online transactions are returned at a rate eight times higher than in-store purchases. Returns present significant challenges. Consumers demand ease and efficiency, with 96% saying they’ll buy again from retailers offering “easy” or “very easy” returns policies. Conversely, a poor returns experience makes customers three times more likely to abandon a retailer. For merchants, inefficient returns handling can lead to delays in restocking, increased waste, and the risk of fraud, costing retailers over $100 billion annually. Meanwhile, 3PLs find returns especially labor-intensive, often requiring three to five times the effort of outbound fulfillment tasks, further complicated by the lack of appropriate technology.

However, a well-optimized returns operation can address these challenges while enhancing customer satisfaction. Here’s how merchants and 3PLs can make returns an asset rather than a liability.

Improving the Customer Experience

1. Make Your Policy Clear and Accessible Confusing or hard-to-find policies reduce conversion and frustrate customers. Revisit your website as if you were a first-time visitor. Is the return policy easy to locate and understand? If not, simplify it and make it prominent. A clear policy builds trust and removes purchase barriers.

2. Partner with an RMA Provider Return Merchandise Authorization (RMA) tools simplify return processes for both customers and merchants. Without them, returns often rely on slow and cumbersome email communications, which frustrates customers and burdens your customer service team. Once your returns volume exceeds a couple of hundred per month, an RMA solution becomes essential. It enables faster processing, better communication, and a smoother experience for customers.

3. Offer a Customer-Focused Returns Policy

A customer-centric returns experience starts with clarity and convenience. Consider offering at least one free return option — it’s often the deciding factor for hesitant buyers. Additionally, explore label-free and box-free return options. These not only improve customer convenience but can also reduce fraudulent returns by ensuring items are processed in person.

How 3PLs Can Partner with Merchants to Turn Returns into an Asset

As returns grow in scale and complexity, 3PLs have a pivotal role in helping merchants enhance customer satisfaction while minimizing the negative impacts of returns.

1. Identify a leader

For merchants with a high rate of returns, such as those in footwear and apparel, returns are not just about receiving items back. They’re about efficiently re-integrating these goods into inventory. A dedicated returns leader within a 3PL organization can help prioritize reverse logistics and streamline these processes.

2. Work closely with your clients Collaboration is key to effective returns management. Begin by reviewing highreturn-rate clients and establishing clear standard operating procedures (SOPs) for inspection, grading, and restocking. Align on shared KPIs and customer experience goals. Integrate returns processes into client onboarding to ensure everyone is aligned from the start. Transparent and collaborative relationships make it easier to optimize operations.

3. Invest in the right technology Returns-focused technology can transform operations. Tools that enable intelligent sorting, automated grading, and real-time analytics can significantly enhance efficiency. They reduce processing times, improve accuracy, and provide valuable data to both 3PLs and their clients. For 3PLs handling 100-200 returns daily or more, these technologies are a worthwhile investment.

4. Remember that people are most important

While technology and processes are

critical, people remain at the heart of successful operations. High-performing 3PLs have strong leadership and comprehensive onboarding and training programs. Establish clear feedback loops so frontline employees can share insights and suggest improvements. This fosters innovation and ensures that operations evolve to meet client and customer needs.

Looking Ahead

As e-commerce continues to grow, returns will remain a critical challenge for merchants and 3PLs. However, this challenge presents a tremendous opportunity for innovation. The future of returns will likely include:

More automation and intelligence: AI and machine learning will improve workflows and enhance efficiency.

Focus on fraud: Advanced fraud prevention measures will protect retailers from growing abuse.

Circular economy moves into the mainstream: Returns will increasingly feed into recycling, refurbishment, and resale programs.

Customer experiences are still in fashion: Faster, more convenient returns processes will become the norm, supported by advanced logistics operations.

By investing in their returns operations today, merchants and 3PLs can turn a common pain point into a competitive advantage. Those who innovate in this space will not only reduce costs and inefficiencies but also build stronger customer loyalty and long-term success.

Kyle Bertin is the co-founder and CEO of Two Boxes. He is passionate about using technology to make the supply chain more efficient and sustainable. Previously, Kyle held roles in strategy and operations at Outrider, Flexport, DeepScale (acq. Tesla), U.S. Silica, and Deloitte. He holds a BA in Economics from Northwestern University and an MBA from UC Berkeley’s Haas School of Business. In 2022, Kyle received the Pros to Know award from Supply & Demand Chain Executive.

CUT COSTS. CORRECT MISTAKES.

How Parcel Audit and Spend Management Companies Can Help.

Companies that don’t stay on top of their transportation spend quickly risk losing hundreds of thousands of dollars — or more. Auditing and spend management tasks are crucial but can often seem daunting. Luckily, they don’t have to be. Check out these 7 companies below; they’d be happy to help. And when you reach out, make sure to mention you saw them in PARCEL.

Here at Advanced Carrier Technologies, we want to make your job easier and more productive and make your company more profitable. We take tedious and annoying audit processes and move them into the “done” column for our clients, recovering dollars from carriers each and every week. Then we do what we are frequently told isn’t possible: we find ways for our clients to reduce their freight spend, usually using the same carriers they are currently using. No BS, we only get paid if we save you real dollars.

CT Logistics is celebrating our 102nd anniversary in the freight audit and payment industry. We are a global logistics supply chain provider, delivering impactful cost reduction solutions. When leveraging CT, you’ll have experienced assets available 24/7 for services including: freight audit and payment, TMS, Managed Freight, bid management, benchmarking, peer group comparison and expert spend analytics. CT customizes all solutions to minimize your costs and save your company money. CT’s staff includes knowledgeable Professional Services teams for consulting and advice. CT’s business intelligent platform provides global supply chain visibility with graphical dashboards. CT is ISO 9001:2015 and SOC certified.

Parcel

With

and advanced analytics,

and BI tools, Intelligent Audit helps identify billing errors, recover overcharges, and optimize shipping operations. Their expertise in data-driven decision-making empowers businesses to reduce shipping costs, improve service levels, and enhance supply chain performance. By leveraging Intelligent Audit’s cutting-edge technology and guidance from industry veterans, shippers gain a competitive edge while ensuring maximum ROI on their transportation spend.

Get full supply chain visibility to cut costs, optimize processes, and maximize profits.

Orca’s Freight Audit & Analytics solution ensures your invoices are 100% accurate while gathering critical supply chain information and presenting it to you via interactive dashboards customized to your specific KPIs. No more searching for your shipping and payment data, guessing your freight partners’ performance, or blindly estimating the cost to serve your clients.

It’s time to take control of your transportation spend. Orca Freight Audit & Analytics solution will help you get there.

The parcel shipping industry is at a crossroads, with rising costs, complex contracts, and high consumer expectations challenging traditional ways of operating. To survive and thrive in this landscape, the industry must foster a culture of innovation that empowers shippers to make faster, smarter decisions with confidence. By adopting advanced tools like Reveel’s Parcel Spend Management 2.0, shippers can gain the real-time visibility, actionable insights, and control they need to optimize costs and service levels. In doing so, they can achieve peace of mind, knowing they are fully empowered to navigate the complexities of modern parcel shipping with ease and precision.

TransImpact integrates parcel spend management with supply chain and business planning, a powerful synergy designed to transform your supply chain operations. This unified approach creates Intelligent Inventory: an end-to-end solution to optimize planning, enhance efficiency, and increase profitability from forecasted demand to product shipped.

As the industry’s most trusted partner in parcel spend management, our premier consultancy and SaaS tools help businesses negotiate optimal rate agreements, streamline shipping operations, and unlock hidden savings. Through TransImpact’s enhanced capabilities and intelligent software, we enable your business to achieve peak efficiency and cost savings without compromising on service or customer satisfaction.

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. Our small parcel experts work with you to proactively identify areas to reduce expenses with customized solutions that integrate small parcel and freight data for an accurate view of your true transportation spend.

SUPPLY CHAIN RESILIENCE:

WHEN INNOVATION MEETS A “BACK TO BASICS” APPROACH

By Kris Kniaz

At any given time, ensuring your supply chain is running smoothly is already a demanding task, but a perfect storm of supply chain disruptions — ranging from escalating geopolitical tensions to extreme weather events like back-to-back Florida hurricanes, which we saw at the end of 2024 — makes it even more unpredictable.

When businesses aren’t able to meet consumer demand amidst these uncertainties, they miss out on opportunities to boost their bottom lines and retain loyal customers. In fact, new research from Cin7 shows that 71% of consumers are frustrated by shipping delays, and 54% said they would be willing to pay more for items that are guaranteed to be in stock and available for immediate delivery.

To navigate these disruptions and win the favor of consumers, supply chains must be more resilient than ever. Despite years of digital innovation, many leaders are still struggling to anticipate and recover from unforeseen challenges. That’s why it’s critical to return to the fundamentals, reinforcing the basics to ensure successful tech integration and better crisis management.

Rising Need for Resiliency

Supply chain resilience is the ability to quickly recover

from any abrupt change in operating factors, whether from man-made or natural disasters, economic slowdowns, or even something as simple as changes in consumer behavior. Achieving this requires supply chain leaders to not only predict disruptions but also adapt operations swiftly and innovate in the face of uncertainty. A key challenge in this process is gaining full visibility across the entire supply chain — something the industry is still working towards

Although innovations like IoT and AI are helping address these challenges, long-term resilience requires more than just technology. It starts with a “back-to-basics” approach, laying the right groundwork. Here’s what supply chain leaders need to focus on:

Success Begins with Your Network: At its core, supply chains are really all about your network, and ensuring that they are aligned to fulfill your business mission should be the number one priority. While adopting digital processes and AI solutions certainly makes things easier and more efficient, your foundation must be set on a strong network.

In today’s world, relying on one supplier for your business is no longer a competitive strategy. Just look at the East and Gulf Coast port strikes and catastrophic weather events from late last year to understand why the ability to quickly pivot away

from one supplier to another is critical. Supply chain leaders need to understand who their suppliers are, how they operate, what risks they have to their business and ensure that they have backups in place when these disruptions happen.

For example, if an event forces one of your suppliers to go offline or is unable to fulfill your orders, your business must have a contingency plan in place. Leaders need to understand whether or not they can replace one supplier with another, if they can leverage other means of transportation (like air freight), and what impact this will have if they are not able to do so.

Know Your Market: With new disruptions constantly popping up, supply chain leaders need to understand how these might cause vulnerabilities and what needs to be done to mitigate them. For example, while no business could have predicted COVID-19, studies show that companies who kept tabs on the day-to-day spread of the disease and reacted accordingly fared much better since they had an early mover’s advantage.

Supply chain leaders must be as informed as their competitors and up to date on market developments. This can only be achieved if procedures are updated regularly and can be applied quickly, allowing for quick decision-making at multiple levels.

Inventory Management and Forecasting: Long-term success for your supply chain relies on certain business principles that must be mastered. When it comes to dipping your toes into innovation, forecasting and inventory management are invaluable tools in mitigating disruptions. For instance, forecasting allows businesses to know what is required of them to meet consumer demand and ensure a steady flow of accurate and timely market information. After all, a distributed network is best leveraged when businesses can anticipate the pivots they might need to face in the wake of disruption. When it comes to meeting consumer demand during the peak holiday season, inventory management is also critical to avoid stockouts and overstock situations. While stockouts can damage a business’s reputation with its consumers by not having enough goods to meet their demand, overstock can have a tremendous financial impact on business. Tracking inventory and activity across all layers of the supply chain helps to be more resilient against these disruptions and minimize risk.

Embrace “All Digital:” By mastering the above basics, supply chains will now have a strong foundation that will allow them to go all in on digital processes. When it comes to supply chain management, data production, enhancement, and exchange are critical as it allows leaders to have a holistic view of all processes at once. As a result, leaders can unlock new capabilities to anticipate disruptions and make important adjustments in real time. This not only helps supply chains build long-term resilience, but enables them to adapt and innovate quickly and efficiently, helping to mitigate near-term challenges as well.

17% Reduction in Parcel Costs!

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Just as it’s important to carefully select and understand your supply chain network, businesses must be careful when selecting digital providers. In the face of disruptions, if your providers are not resilient, you will not be either. Some important things to understand include whether or not they are in the cloud or a fixed data center, if they are in compromised areas, whether they are SOC 2 compliant, and if they have published disaster recovery scenarios in place.

Given this, supply chain leaders also need to thoroughly understand the risk involved when selecting these digital providers.

The Bottom Line

Digitally transforming your supply chain is essential in today’s rapidly evolving landscape, but it’s crucial not to overlook the power of a back-to-basics approach. By first establishing a strong network, building a dynamic team, and leveraging deep market knowledge, supply chain leaders can confidently integrate AI and other digital technologies. Whether navigating peak holiday seasons, unexpected disruptions, or just day-today business, this foundational approach ensures businesses can fully realize the benefits of true supply chain resilience.

Kris Kniaz is CTO of Cin7.

PARCEL COUNSEL

INSURANCE FOR THE “FRAUDEMIC”

By Brent Wm. Primus, JD

In the September-October 2024 issue of PARCEL, we took a look at the legal and financial risks faced by parcel shippers. Some of these are old risks that have existed for many years. However, as a result of the explosion of criminal activity in the supply chain, new risks have substantially increased in just the last few years. In this installment of PARCEL Counsel, we will take a look at how to insure against these new risks.

Fraud and Deceit Insurance

When contracting with motor carriers and brokers, shippers will usually require the carrier or the broker to have cargo liability insurance. However, these policies will usually specifically exclude the new risks, such as identify theft, double brokering scams, fraud, and so on. Other policies might not specifically exclude these risks but may use language that won’t allow coverage to trigger if the loss is due to double brokering, fictitious pick-ups, and so on.

For instance, a policy might use language such as “coverage for losses to cargo in the due course of transit…” but fictitious pick-ups never travel in the intended course of transit. Or, the policy language might say that it covers

“loss to cargo that the broker tendered to an authorized motor carrier.” However, if it was intercepted by a fraudulent actor, the broker probably didn’t tender it to them.

Generally speaking, there aren’t policies available for just fraud and deceit. Rather, such coverage can be included as part of a motor carrier’s cargo liability policy or a broker’s contingent cargo liability policy. Thus, a shipper would need to specify that the required cargo liability policies would also include coverage for losses due to “dishonest acts of carriers and third parties” in their contracts.

Alternatively, rather than relying upon the transportation provider’s insurance to protect a shipper, a shipper can protect itself by acquiring its own shipper’s interest cargo insurance specifically including coverage for theft due to dishonest acts of carriers and third parties.

Crime Insurance

Traditional commercial crime insurance policies are designed to protect a business from its own dishonest employees or other bad actors that steal funds, steal or destroy company property, forge documents, and other similar activities that cause financial harm to the business. While larger motor carriers may carry this type of insurance, it is my sense that smaller motor carriers generally do not. Accordingly,

a shipper would have to make a specific request for crime insurance when contracting with a motor carrier.

Similarly, brokers seldom carry crime insurance. However, a broker’s employee could be part of the criminal activity and, accordingly, a shipper could protect itself by requiring that the broker obtain crime insurance coverage.

Not all crime insurance policies cover the same risks. Accordingly, a transportation provider’s crime insurance should specifically provide coverage for “physical loss or damage to cargo as a result of criminal, fraudulent, or dishonest acts of employees.” Such crime insurance can be obtained through an individual, stand-alone policy, or as part of a motor carrier’s cargo liability policy or a broker’s contingent cargo liability policy.

To conclude, I would like to credit Lisa Vranich at Avalon Risk Management Insurance Agency LLC for her assistance in my research for this column. 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 PARCELindustry.com. Your questions are welcome at brent@ primuslawoffice.com.