Coronavirus (COVID-19) Resources for Shippers
Tools for navigating the shipping industry
Just like you, we’ve never been through this before.
But we do know how to make the most of your shipping budget no matter what’s happening in the industry.
If you haven’t spoken to your carrier rep by now, do it today. Do not wait for them to come to you — only the proactive will win in the current environment. Ask questions like:
Can I lock in my earned discount tier for the rest of the year and suspend the shipment minimums tied to my discounts?
What discount can you give me on ground residential rates now that so many of my packages are going to residential areas?
How much can you discount my residential delivery and delivery area surcharges? (These are two separate surcharges that can drive up costs when delivering outside commercial areas.)
UPS is making pricing changes on a customer-by-customer basis in reaction to the increase in residential deliveries. As always, watch your invoices and carrier reports carefully and push back on changes that are out of line.
When it comes to negotiating your carrier contract, our best advice is always to establish clear, open communications with your carrier rep. In the current environment, it’s even more important to create a strong partnership with your rep and find a way to work together. A few things to keep in mind when you start negotiating your new contract.
Prepare to switch if needed. Some of our clients report that their carrier is stalling negotiations. In this case, we recommend letting the carrier know that you are open to taking your business to another company. However, before communicating this to your carrier, have an exploratory conversation with other carriers to make sure they can meet your service level needs. Threatening to leave your current carrier will be useless if you can’t actually make the move.
Pay attention to the trends. Take a hard look at your data — has anything changed during these last few months? Which surcharges are trending? Are you seeing higher package weights after the additional handling surcharge weight threshold was lowered from 70 lbs. to 50 lbs. at the beginning of 2020? Use this information to develop the points you want to negotiate with your carrier. It’s not all about your discount tier — there are many other areas you can negotiate and lower costs.
Find out what changes your carrier is making. Ask your carrier about the resources they’re putting into their infrastructure to protect against another tumultuous event. Ask yourself this question about your own business as well and make sure your next contract accommodates your plans.
As always, knowing as much as you possibly can about your own shipping profile is the first step in any successful negotiation. Dig into your data and prepare!
This crisis has been a shock to the shipping industry, making it imperative for every shipper to consider how they can protect their business moving forward. Consider these issues when you are looking at the future of your business:
What do customers want? Has this situation lessened the “Amazon effect” and trained your customers to be more patient with shipping? Explore ways to maintain a healthy supply chain. Consider in-store fulfillment, shipping to one of your stores or shipping to a partner location or locker, keeping the safety of your employees and your customers at the forefront of the process.
What should your distribution network look like? This is a unique opportunity to reimagine your network.
How are your products placed across your network — can it be improved to lower costs?
Should you redesign your conveyor system for greater efficiency?
Can you invest in the latest scale technology and stay ahead of the carriers’ shift to dimensional weight pricing?
Is your packaging optimized to what you’re selling most frequently now? Carriers are not only increased surcharge rates in 2020, but they also changed the thresholds.
If sales are slower right now, take this chance to rethink your shipping operations and prepare for the future.
What if service-level guarantees don’t return? Carriers have suspended their guarantees — how will your business fare if that’s permanent? Food and beverage companies, as well as others that ship and receive time-sensitive items, should be working with their carrier to move their shipments through the network as quickly as possible. Carriers will work with certain business types if you are proactive in making the request.
Looking ahead requires you to also look back at your shipping data so it can guide you in your decision making. Look carefully at both the last few months and last year’s numbers to determine your next steps.
Because carriers have dropped their service guarantees, it’s much harder to get packages where they need to be at a predictable speed. But we’re all in this together, and most of our clients are finding that their customers are understanding of shipping delays — as long as they are kept in the loop.
Transparency is key. Setting reasonable expectations results in reasonably satisfied customers. This also protects you if a customer insists on expedited shipping.
Food, medical supplies, pharmaceuticals, are all items that have been deemed essential and take priority at this time. That being said, if you sell these items, you need to be an advocate for your business and ensure that your account has been marked as essential and given priority.
Companies that are shipping non-essential items like apparel are taking the biggest hit and being shipped as carriers’ capacity allows. If your company falls in this category, it’s absolutely essential you communicate clearly with your customers about exactly when they can expect a package to ship and keep them updated every step of the way with as much information as you have. Our customers who sell non-essential items are seeing an additional one to two days tacked on to their shipping times.
Time will tell whether service guarantees as we knew them will return. In the meantime, every shipper should do their best to ensure customer satisfaction with solid communication and a close eye on your own shipping productivity.
Frequently Asked Questions (FAQs)
The WHO has stated that the likelihood of an infected person contaminating commercial goods is low and the risk of catching the virus that causes COVID-19 from a package that has been moved, traveled, and exposed to different conditions and temperature is also low.
Shippers who sell household goods and medical supplies that can be used to support health and safety during the COVID-19 outbreak may need to suddenly implement new practices with their carrier. Contact your carrier rep to manage your shipping volume changes. Make sure they are prepared to handle those changes and offer you competitive pricing.
With the rapidly changing situation at hand, contact your carrier rep as soon as possible to discuss locking your discount tier or arranging new pickup methods and frequencies.
COVID-19 News from the VeriShip Blog
Need more help?
That’s what we’re here for.
We can help you make sure your carrier contract and shipping operations are in top shape to keep costs down and customer satisfaction up.