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Category: Shipping

On September 18th, 2012, FedEx Express announced that they will increase prices for U.S. services by a net average of 3.9%. The full average rate increase will be 5.9%, but this will be partially reduced by a change to the company’s fuel surcharges. Specifically, the threshold at which fuel surcharges begin will be increased, effectively reducing the surcharge by 2 percentage points.

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Effective January 2, 2012, the published rates for UPS services will be increasing. However, according to UPS, this increase enables them to continually expand and improve their portfolio of solutions, helping serve you and making the services you offer your own customers even better.

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USPS has announced that they will be taking the maximum increase allowed under current law, which is 2.1%.  The actual percentage price increase for specific products will vary, however, the overall average price increase for all mailing services is capped at the rate of inflation as measured by the Consumer Price Index (which is 2.1%).  The new prices will go into effect on January 22, 2012 for most mailing services.

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When deciding which order fulfillment warehouse is the best fit, choosing a partner in the wrong location may mean an additional 4% in costs to you. Here’s how….

As the saying goes, it’s location, location, location that really counts. Your order fulfillment facility should be located near the hub (or center) of your client base. If you are selling primarily on the West Coast, then the facility you partner with should also be on the West Coast. And if you’re a regional publisher with customers in the Southeast, then you want to locate a facility in the Southeast. When you are national in scope, then finding a fulfillment partner located in the Midwest should be your focus.

Choosing the right location gives you three (3) major advantages:

  1. Saving money on transportation costs
  2. Increasing customer satisfaction with fast product delivery
  3. Reducing your carbon foot print

1. Saving Money On Transportation Costs

Have you noticed the higher prices at the gas pump lately? A gallon of regular is almost $5.00 per in Chicago it’s predicted to reach $6.00 before the end of summer! Every time I fill up, I can feel the pinch from the higher gas prices. If your order fulfillment facility is not in the right location, you are paying for extra fuel to have your merchandise delivered. These extra costs are being passed along to you by the carriers in the form of increased based rates and increased fuel surcharges.

The average publisher spends as much on transportation as they do on their warehousing services. If your business has a national reach and you are working with an order fulfillment facility that is located anywhere but the Midwest, you are paying almost 4% more for their services because of the transportation penalty. It costs between 5% and 7% more to ship to the U.S. population from the East Coast or West Coast than it does from the Midwest. And this will only increase as fuel prices continue to rise.

2. Less Transit Time Means Happier Customers

Another major benefit in choosing a fulfillment facility in the right location for your customer base is the amount of transit time merchandise to arrive at the customer. Today’s consumers want instant gratification. The days of people placing orders and waiting weeks for the product to arrive are over. Customers know what they want and they want it yesterday.

From a Midwest location, you can reach 58% of the U.S. population in 2 days and 99% within 4 days. However, when shipping from Los Angles you can only reach 21% of the U.S. population in 2 days and only 47% within 4 days. From the East Coast product will reach 48% of the U.S. population within 2 days and 81% in 4 days. A Midwest location provides the least amount of transit time and therefore, will increase your customers overall satisfaction.

3.    Reducing Carbon Footprint

Partnering with an order fulfillment warehouse that is centrally located means a reduced carbon footprint for your company. Shipping from a warehouse that is centrally located to your customers means a reduction in the miles that products will travel to reach them, and this reduces green house gases emitted. From another perspective, higher shipping costs and longer transit times are symptoms that you are burning more fossil fuels in delivering your product.

Selecting a fulfillment warehouse to partner with in the right location will make you more efficient and you will reap the benefits of saving money, increasing customer satisfaction, and reducing green house gases.

usps-logoBy law, the USPS is required to ask the Postal Regulatory Commission for an Advisory Report on any change in their services. The Postal Service advised the Commission that due to declining mail volumes and revenues, they are considering the elimination of Saturday mail service with the exception of Express Mail and existing Post Office Box service.

Last week, the Postal Regulatory Commission issued their thoughts on the Postal Service’s plan to eliminate Saturday mail service. To follow are the key findings of the Commission’s report:

  • The Commission’s estimate of annual net savings is $1.7 billion
  • The estimated savings by the Postal Service is $3.1 billion
  • In either case, full savings is unlikely to be achieved until year three after implementation
  • The Commission estimates net revenue losses of $0.6 billion due to volume declines caused by the service cuts
  • The estimated net revenue loss by the Postal Service is $0.2 billion
  • The planned changes would cause an average of 25% of First-Class and Priority Mail to be delayed by two days
  • The Postal Service did not evaluate the impact of the proposed cut on customers who reside or conduct business in rural, remote, and non-contiguous areas

It should be noted that customers in rural or remote areas can be particularly affected by the Postal Service’s plans. To gain a better understanding of these issues, the Commission received significant input from rural America by traveling to South Dakota and Wyoming to meet directly with rural customers and community leaders.

The elimination of Saturday service has been proposed many times before and was debated extensively in 1977 and 1980. However, in 1983, Congress adopted specific language that required the Postal Service to maintain six-day delivery. Congress will now consider the Commission’s Advisory Report, as it reviews the Postal Service’s request to change the law.

As an outsider looking in, it is my opinion that elimination of Saturday service will occur later this year. What do you think will happen? Please feel free to post your opinions and comments on this blog entry.

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