Industry News and Links
Worried about managing supply-chain risk? All you need is cash.
Or so many companies appear to think these days. Research by one academic has uncovered a possible reason for the dramatic rise in cash reserves among U.S. firms over the last few decades.
A more recent buildup of cash, in a time of stubbornly low interest rates, has been chalked up to anxieties arising from the Great Recession of 2008. Following that debacle, many banks pulled back from various aspects of supply-chain financing. Some smaller businesses could no longer obtain loans at all.
Meanwhile, transportation costs were plunging, the result of a deregulated trucking industry and slack demand for its services. And businesses were coming under intense pressure to cut supply-chain costs to the bone.
UPS, FedEx and the U.S. Postal Service are all projecting major growth in holiday shipping volume during the peak season, driven by the continued boom in ecommerce activity.
UPS, for example, is projecting 700 million deliveries between Thanksgiving and the end of the year, a 14% increase over 2015. This year has two extra shipping days, which contributes a few percentage points to the increase. UPS includes the last week of the year in its holiday forecasts because of the growth of returns, gift card activation and inventory replenishment during this period.
WASHINGTON — The United States Postal Service today filed notice with the Postal Regulatory Commission (PRC) of price changes for Mailing Services products to take effect next year, following the end of the holiday mailing season.
Each year, at least once per year, the U.S. Postal Service changes rates across various mail classes and extra services. The next USPS price change will take effect on January 17, 2016. UPS and FedEx will also increase rates, on December 28, 2015 and January 4, 2016, respectively.
FedEx and UPS Dimensional Weight Change for 2015: Time to Measure the Cost
For years, UPS and FedEx have been working diligently to expand volumetric pricing – or dimensional weight pricing. Each has paid close attention and watched eagerly to the trends driven by the e-commerce business model as it has exploded and redefined the customer purchasing experience.
Although this model has benefited the carriers with historic shipping volumes, it has also brought increased cost and a decrease in per package density. Many times, due to improper box selection, the carriers find themselves delivering boxes that are much larger than required for the safe delivery of a given product. When magnified across all shippers, this causes vehicles to “cube out” before they actually reach their physical weight capacity.
Experts: New UPS Dimensional Weight Pricing Will Have Significant Impact
On the heels of a similar announcement last month by rival FedEx, United Parcel Service announced it will expand dimensional weight pricing for all U.S. ground shipments, effective Dec. 29, 2014. UPS already uses dimensional weight for domestic and international air services, as well as UPS Standard service to Mexico and larger packages sent to Canada. The company said it will also start using the billing method for all packages shipped to Canada through UPS Standard. Dimensional weight pricing is a common industry practice that sets the shipping price based on package volume — the amount of space a package occupies in relation to its actual weight.
Will Postal Service Rate Cuts Steal Business From UPS and FedEx?
While UPS and FedEx are preparing to raise rates on many smaller packages, the U.S. Postal Service is dropping the price of shipping heavier parcels. The move can be seen as part of a concerted effort by the Postal Service to draw business away from the two private carriers, who together handle nearly 80 percent of U.S. ground shipping volumes.
In addition to companies such as Home Shopping Network, Amazon and others, it was recently announced that Urban Outfitters and Nordstrom would both locate facilities in the growing Lancaster area. Lancaster is a growing hub for logistics and supply chain companies due to it’s proximity to the populous Northeast US, “Southcentral Pennsylvania is within one day’s drive of more than half the U.S. population”.
In the 20 years since the North American Free Trade Agreement (NAFTA) took effect, trade between the US and Canada has increased by 300%, and the countries are each other’s top trading partners. A key provision of the agreement is the elimination of duties on eligible products traveling between the U.S., Canada, and Mexico. Eligible products “originate” in one of the three countries, and NAFTA lays out detailed “rules” as to what constitutes origination. Determining NAFTA eligibility, and knowing how to apply for benefits can be time-consuming and complicated.
Business-to-business e-commerce operators and the service providers that help them manage online sales often struggle to find business analytics, technology and customer experience professionals, according to a Forrester Research Inc. report.