As the pandemic continues to influence the work force in unprecedented ways, the “great resignation” coupled with COVID sick-outs have created the perfect storm of labor shortages across the board. Most severely impacted may be supply chain operations.

The Big Picture

According to a recent report in the Bureau of Labor Statistics as reported in Forbes, “there were 10.9 million open positions as of the end of July 2021, yet only 6.7 million hires were reported. This disparity is compounded by an increasing number of voluntary separations, with the number of employees leaving their jobs reaching 930,000 in July alone.” 

According to Kristen Fowler, Vice President at JMJ Phillip Executive Search,   

“Employers do not have the labor or capacity to effectively manage, process and unload U.S. imports, and the resulting slow delivery times and shipping delays have rippled across the entire supply chain.”

Keep on Truckin’?

What does that mean for e-commerce retailers?  The short answer is bad news, but there is good news on the road ahead as shippers pivot to meet a stark reality:

The American Trucking Associations estimates that in 2021 the truck driver shortage will hit a historic high of just over 80,000 drivers (the difference between the number of drivers currently in the market and the optimal number of drivers based on freight demand).

At current trends, the shortage could surpass 160,000 in 2030. This forecast is based on driver demographic trends, including gender and age, as well as expected freight growth. Because there is no single cause of the driver shortage, that means there is no single solution, according to the Association. 

Driver shortages are a contributing factor to the shipping capacity challenges facing small and mid-size retailers. It’s become apparent that carrier diversification is essential if they are to compete on an even playing field with the “big three” e-commerce businesses.

Carrier Diversification Simplified

In the past, carrier diversification has meant expensive, multiple contractual arrangements, lengthy, complex documents, hidden charges and tracking difficulties. The good news is that today, small and mid-size retailers can achieve carrier diversification simplified.

AirTerra provides “all-in” pricing, based on several factors, including distance from the retailer’s distribution center to the AirTerra sorting center, destination, and size of your parcel. This pricing model means there won’t be any surprise surcharges.

AirTerra can keep its pricing low because it aggregates demand across mid-size retailers, gaining scale in price negotiations with final mile delivery providers. In addition, the company utilizes “zone skipping” in its middle mile delivery service, enabling cost-savings on every delivery, which gets passed on to its customers.

Most importantly, carrier diversification means that AirTerra customers have a built-in buffer against the labor shortages that will continue to plague the trucking industry. 

Need more help with your parcel shipping strategy? Contact us at Sales@AirTerra.com to learn how we can provide you with the value of carrier diversification, without the costs.

GLOSSARY OF TERMS

PHRASE ACRONYM ABBREVIATION DEFINITION
Additional Handling Surcharge AHS Additional fee shippers pay due for extra care needed for a shipment because the shipment is fragile, oversized, awkwardly packaged, or heavy.
Address Correction Additional fee shippers pay when a customer address is incomplete, incorrect, or difficult to interpret. The carrier will attempt to interpret and correct the address for proper delivery.
Army Post Office APO A post office or PO box on a military base for armed service members. Only USPS delivers to APO addresses.
Advanced Shipping Notice ASN A document that provides detailed information about pending shipments/delivery.
Bill of Lading BOL A list of contents in a shipment given by the shipper to the receiver via the carrier. It is a legal document required in the movement of freight.
Carton ID The numeric, scan-able ID given to a package within a fulfillment center before a tracking ID has been assigned.
Cross-dock or

Cross-docking

Xdock

XD

The transfer of freight from an inbound truck to an outbound truck to a distribution center.
Delivered Duty Paid DDP This is an Incoterm. The shipper is responsible for all Duties and Taxes for the shipment.
Delivered Duty Unpaid DDU This is an Incoterm. The receiver is responsible for all Duties and Taxes for the shipment.
Delivery Area Surcharge DAS Additional fee shippers pay when packages are delivered to remote residential addresses. Think rural, sparsely populated areas.
Department of

Transportation

DOT Federal regulatory agency that defines rules for carriers and shippers in order to promote safe and ethical transportation of goods.
Destination   the place to which a ‘shipment’ is going or being sent.
Dimensional Factor DIM Factor A division factor provided by carriers to determine the DIM Weight of packages. A higher DIM Factor will lead to a lower DIM Weight and therefore a lower shipping price.
Dimensional Weight DIM, DIM Weight The volumetric weight of a package determined by multiplying the length, width, and height to get the volume and dividing by a Dimensional Factor. Essentially determines the density.
Diplomatic Post Office DPO A post office or PO box at an embassy for Diplomats and the US State Department. Only USPS delivers to DPO addresses.
Direct to Consumer DTC, B2C A shipment sent directly to a customer rather than a customer purchasing in store.
Dispatch   To release a driver/trailer/truck from a facility.
Downgrade DG Using a ground service level even though customer requested overnight/express because it can still meet commitments but at a cost savings
Drop Ship DS A shipment directly from a vendor to the customer skipping the ‘middleman’ or seller’s warehouse.
Extended Delivery Area Surcharge EDAS Additional fee shippers pay when packages are delivered to extremely remote residential addresses. Think remote, hard to reach addresses.
Fleet Post Office FPO A post office or PO box on a military base for navy service members. Only USPS delivers to FPO addresses.
Freight   Goods transported in bulk by truck, train, ship, or aircraft.

 

Fuel Surcharge FS Additional fee shippers pay for fuel costs that a carrier incurs while shipping. Often charged as a percent of the total base freight charges in conjunction with the DOT’s weekly fuel scales.
Gaylord   Large corrugated box typically with a pallet size foot print (48”x40”) and height of 48” to 96”. Used to ‘overpack’ smaller packages & polybags.
Hazardous Materials HazMat, Haz Products that are dangerous to ship via certain methods or require special care. These products can include batteries, perfumes, and aerosols. They require special markings on the outside of the packaging, and require further classification & documentation to ship Air.
Induct/ Induction Point The location where packages are accepted (inducted) into a carrier’s network.
Intercept Interrupting a package in transit to reroute or initiate a return to sender. A shipper would chose to do this if a customer selected the wrong destination address or the shipper sent the wrong product.
Large Package Surcharge LPS Additional fee shippers pay when packages are small enough for the parcel network but require lots of additional handling due to size or weight.
Length + Girth L+G 2 x the width + 2 x the height where length is the longest side. Used to determine the maximum dimensions allowed for certain carriers and service levels.
Must Ship By MSB The date/time a package has to leave a site in order to get to the carrier on time to make sort.
Node The origin for the shipment. Could be the DC, FC, or Store depending on the shipper and shipment.
Non-Conveyable Non-Con Products or packages that are too large for a conventional conveyor system.
Over Maximum Surcharge OMS Additional fee shippers pay when packages are too large for the parcel network but were still shipped in the parcel network. Carriers will often still deliver but for a fee of $850 or more.
Over-pack (v)   To place & seal smaller packages within a larger package or container.  Polybagged parcels are ‘overpacked’ in a Gaylord for transport.
Overage, Shortage, Damage OSD Report that notes an overage, shortage, or damage to the shipment.
Parcel

Package

 Pkg An item or collection of items wrapped in paper, corrugate, or poly in order to be carried or transported.
Post Office Box PO Box, PO A locker unit inside a post office to which customers can have mail or packages delivered. Only the USPS is legally authorized to deliver mail and packages to a PO box.
Proof of Delivery POD Proof provided by a carrier that they delivered a package to the recipient. Can include GPS scans, signatures, or photographs taken of the package.
Residential Surcharge Resi Additional fee shippers pay when packages are delivered to a residential address rather than a commercial address. Think a home in a neighborhood versus an office on a busy street.
Seal Plastic strap or bolt with a unique serial number used to lock a trailer or truck door, and act as proof of tampering if load arrives with seal changed or removed.
Seal Number Unique serial number found on trailer seals.  Used to ensure load security.
Solo Driver  Solo A single driver who completes a deliver alone. A driver is only allowed to drive a maximum of 11 hours and must rest for 10 hours.
Sort Sort as a noun – the process where packages are sorted by the carrier for distribution to the next terminal or delivery point.
Surcharges SC Additional fees shippers pay in addition to the base freight charge for a variety of reasons such as fuel or additional handling.
Team Driver   Two drivers working together complete a deliver. The drivers take turns driving and resting to follow DOT driving restrictions and guidelines.
Tender To release freight to a driver/carrier.
Tracking ID The numeric, scan-able ID given to a package for use with a shipping carrier. Allows the customer to track their package on the carrier’s site. One order can have multiple packages and therefore multiple Tracking IDs.
Upgrade Using a faster service level than requested in order to meet customer commitment
Zone Essentially a distance factor from origin to customer address. It is used with weight to determine the shipping expense. Closer zones typically ship faster and cost less than far zones.
Zone Skipping Choosing to linehaul the freight to an induction point closer to the final destination to take advantage of closer zones. Often only economical for high density shippers.

 

Contracts: MSA’s and contracts that run from 75-150 pages and take weeks to negotiate – just so you can send parcels to your customers. And once you’re signed up there are penalties for an early out, but surcharges can be added at the carrier’s pleasure.

Pricing / Surcharges: The runaway surcharge train has left the station! DAS, EDAS, Resi, Peak, Non-Peak, Fuel, oversize, undersize, close zones, longer zones, and future surcharges that we don’t even know about yet. Shippers are going to need PhD mathematicians and actuaries to truly understand their costs!

Audits and Reconciliation: In many cases, shippers do not have any idea of the amount they are paying for parcels until their 3rd party audit firm goes through all the numbers. Where is the simplicity in that?

Labels, Certifications, New Lanes: Just the simple act of onboarding a new carrier, printing a new label, and setting up a new lane is a big investment of time and money. Why does it need to be so complicated? And why so many different labels? Why not one ‘Universal’ label for all shippers?

TnT Calculations: Is it business days or calendar days? Do we include Saturdays or Sundays? Do we deliver to all zips all days or only certain zips certain days? It gets complicated.

Carrier Diversification: Now multiply all of the above simplicity complexity by the number of new carriers a shipper wants/needs to onboard. One thing for sure: it’s going to be complicated, expensive, and time consuming, now and in the future to maintain all of these new contracts.

The solution?

Introducing AirTerra, where ‘Simplicity’ is a pillar of our Ethos. We keep it simple when it comes to contracts, pricing, visibility, onboarding, communications, and responsiveness. We have one contract, expansive last mile capacity, superior service, and support. Give us a call to learn more!