Editors Note: After the untimely passing of long-time contributor William Augello, PARCEL Magazine searched for a columnist to author the column for the February issue. Jerry Hempstead stepped up to the plate; thank you, Jerry!
I recently was asked at a shippers conference what I thought the best deal in the market was for air parcel shipments. I really did not have to think about it the answers came to mind immediately but the person who asked the question had never, ever heard of the options I offered up. How can that be, I wondered? The answer is simple the carriers really dont advertise what I described. Most salespeople for the carriers dont like to promote the product because they dont get credit for the sale of the product or only get partial recognition or compensation for selling the product. The parcel consulting companies dont like to talk about it because they dont make any money if you buy and use my suggested option, at least in the current compensation methods Im familiar with. So what is this elusive method, you might ask? I am talking about pre-purchased options.
If you think of traditional air express, the carrier bills you for the transportation and gives you the packaging for free. In the pre-purchased world, you buy the packaging, and the transportation is free. One of the beauties for the parcel companies is that they get their money up front. They dont have to send an invoice, chase past due amounts, write off unpaid bills and, in most cases, many of the pre-purchased items never get used, so the carriers get some free money.
The USPS, for example, has two pre-purchased options, Flat Rate Priority Mail Envelope and Flat Rate Priority Mail Box. The envelope is $4.05, and the box is $8.10. Those prices will change in May, but for now, this is the cost for what the USPS says is two to three day service. My experience has been that ever since the USPS subcontracted to FedEx the movement of the air portion of Priority Mail, the service is very consistent, and the vast majority of the time the parcel arrives in two days. I think people don't realize how good and how consistent the USPS Priority Mail product is. The price is for everything you can stuff in the container. The letter is the standard cardboard letter container (12" X 9"), and you can pre-purchase these with the postage already affixed. Or, if you'd like, you can also pre-purchase these with prepaid and pre-printed options for additional USPS services like signature or delivery confirmation. The USPS has two different sized Flat Rate Boxes. (11 7/8" x 3 3/8" x 13-5/8" and 11" X 8.5" X 5.5"). There is no fuel surcharge, no pick up fee, no delivery area surcharge, no residential surcharge, no address correction fee. Furthermore, the USPS delivers to every address in the country six days a week, it's not extra for Alaska, Hawaii and Puerto Rico, and if it's undeliverable, the Postal Service will return the package to you for free. Of course, one thing the USPS does that the private carriers don't yet do is that if you have left a forwarding address, the USPS will send the piece on to your customer for free. They also can deliver a shipment to a PO Box, which, at this point in time, the private carriers cannot do. I also suspect that if you have a large enough buy, the USPS could agree to custom printing or co-logo the outside of the package.
The next option is the DHL family of Ship Ready Products. Like the USPS products, you purchase a container and the shipping is free. The packaging difference is that DHL only has flats. They have a letter size like the USPS, a longer legal size (15" x 9") and a Pack (16" x 12"). The service is next morning delivery to the morning delivery ZIP Codes with a guarantee by Noon, versus the two to three days the USPS takes. The price is elastic with the size of the order, which the following chart demonstrates.
The price is all you are going to pay. The Ship Ready products never expire. They can be a hedge against future price increases or increasing fuel surcharges. They don't charge extras, however, Saturday delivery is not provided, nor can Ship Ready be used for off shore shipments. UPS formerly offered this service but no longer does.
The most efficient product on the market is the FedEx Prepaid Stamp. You can buy the stamps depending on the service level you need. They are available for FedEx Priority Overnight, FedEx Standard Overnight and FedEx Two Day. You buy the stamp at your corporate rate for use up to a maximum weight, which you specify. So, for example, you can buy two day, five pound stamps for your Region (Zone) 5. My experience has been that FedEx does not send a balance due bill if you go over the weight you purchased the stamp for, but it could remedy that issue at any time, so Caveat Emptor. They also reserve the right to charge a pick up fee if the package is picked up at a place that is not a regularly scheduled pick up point. This, too, I have never seen done, but it does reserve the right to charge it. I did a test once to enter into FedEx every imaginable exception to the rules to see if I ever received a bill for a balance due. I never have. It just may not be worth their while to chance to balance due.
UPS has the following prepaid options: UPS Internet Shipping is the rate calculated when you ship a package with a label generated by using the shipping tab on UPS.com or from MyUPS. You can print the labels ahead of time and use later. When using UPS Prepaid (U.S. Only), you are shipping your package using a UPS Prepaid label. UPS Prepaid is a convenient and money-saving way to send urgent letters and packages. With UPS Prepaid, you can purchase labels for UPS Next Day Air and UPS 2nd Day Air services. When the need arises, simply attach a label and send your shipment on its way.
There is great peace of mind knowing what a shipment is actually going to cost. There can also be some great savings if used properly. I would send every two-day rural, residential shipment that I could fit in the pre-purchased box via the USPS. It may be impractical, but I'll bet just about every shipper would save money on those shipments. There are also ways of getting reduced prices on the DHL, UPS and/or the FedEx programs depending on what kind of program and discount you have with the carrier. I have recently seen discounted Ship Ready products on eBay. If you want me to share where to go or how to get better pricing, just send me an email at email@example.com. I'll ask a few questions, and depending on your discount level, I can determine if you can find a lower price. I'm here to serve.
Jerry Hempstead retired from the parcel industry in January of 2006 as a Vice President of National Accounts Sales after over 32 years of service. He is the busiest retired guy not working in the industry. Jerry has served as Vice President of Programming for the South Florida Roundtable of the Council of Logistics Management, now known as the Council of Supply Chain Management Professionals (CSCMP), as well as the New York Roundtable. He is currently a board member of the American Society of Transportation and Logistics and in 2004 was conferred the title of Distinguished Logistics Professional (DLP).