Recent disruptions highlighted the dangers of an overloaded supply chain, with capacity strained by the very business models that built consumer reliance on e-commerce. An agile and resilient supply chain has become one where capacity is key, and retailers look beyond legacy carriers for shipping solutions.

In a world where the only certainty is uncertainty, here are three ways carrier diversity offers small and mid-size retailers the flexibility they need to succeed in e-commerce:

Matching Volume with Capacity

There is a natural ebb and flow of parcel volume, driven by a combination of seasonality, consumer demand and product availability. Small to mid-size retailers are seeking capacity that aligns with their needs require flexibility.

By aggregating parcel volume from multiple shippers within a few metropolitan areas, AirTerra is able to lower shipping costs while getting product moving down the road to customers.

Building in Predictability

Consumers are demanding speed, reliability and predictability in their purchase process. Legacy carriers that rely on a hub-and-spoke model experience more delays, lost packages and other snafus just by virtue of their many touchpoints for each parcel.

AirTerra’s point-to-point network ships long zone parcels to major metro markets, cutting time, lowering cost, and eliminating unpredictability.

Power of Choice

The greatest benefit of carrier diversity is that it is not a one-size-fits-all solution. AirTerra provides a complete end-to-end shipping solution by offering retailers a choice of many regional parcel carriers and USPS delivery options for the last mile.

The Case for Change

A recent article in the trade publication Sourcing Journal provided an inside look at American Eagle Outfitters which is walking the talk of carrier diversity with its purchase of two logistics companies, AirTerra and Quiet Logistics, creating a network for businesses to share supply chain logistics and boost efficiencies.

“We at American Eagle are creating a supply chain platform that levels the playing field for everyone,” said Shekar Natarajan, chief supply chain officer at American Eagle Outfitters in the interview with Sourcing Journal. “Networks are built analog, but supply chains and commerce have become more digital. We’re basically trying to put the two together,” he said, adding that while the industry average is about 1.4 shipments for every order, AEO can now do it in 1.05. “And it’s not just fewer packages showing up faster at your doorstep, but more importantly, it’s showing up cheaper as well”

AEO began by asking the important question: ‘How do we get closer to the end consumer but do it in a smarter way?’” The answer: carrier diversification.

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. 

Looking back on all the broken links of the supply chain that snarled global supply chains in 2021, one rectifiable issue stands out: capacity. Lack of capacity plagued many retailers, but among those most affected were small to mid-size retailers. These e-commerce businesses cannot compete for capacity with retail goliaths.

In the first days of 2022, Logistics Managers’ Index (LMI) released its monthly survey-based gauge, compiled by researchers at five U.S. universities. It predicted that “the bigger-than-usual rush to stockpile products on U.S. retail shelves and in warehouses ahead of the holidays might give way to an economic hangover of sorts.”

As retailers are faced with a dire need to move this excess inventory, they’ll require a shipping solution that offers access to more capacity and greater flexibility.  If there was ever a time to disrupt the supply chain, it’s now.

Introducing co-opetition which puts small-to-midsize retailers on an even field with the “big three.”  Co-opetition means teaming up on the back end, to succeed on the front end.  

Co-opetition is all about capacity. While it may have been anathema to speak to any retailer just a few years ago, to talk about working with your “enemy,” the time is now to disrupt the supply chain by doing just that.  Pre-pandemic retailers couldn’t keep up with giants and 3PL fulfillment also used the same shippers.  With COVID, their business accelerated, while others fell behind in part because they lacked access to shipping capacity.

If there is one thing retailers have learned is that their most valuable assets are their brand and their inventory – not the means of moving their inventory. Co-opetition allows retailers to focus on the product, while sharing capacity to move their products.  They are realizing that supply chain is not competition – scale is competition. The goal of co-opetition is to simplify relationships and bring scale and efficiency to the business of moving inventory.

The time is NOW to be BETTER TOGETHER: the name of the new game is co-opetition.

AirTerra, an innovative parcel shipping company, announced today it has been nominated for a 2022 Edison Award. The Edison Best New Product Awards™ is an annual competition honoring excellence in new product and service development, marketing, human-centered design, and innovation. AirTerra is nominated in the Manufacturing, Logistics and Transportation Category.

The competition is open to innovative organizations across the globe, such as AirTerra. The Edison Awards are focused on the innovators as much as the innovations – a unique distinction in the world of award programs. Award winners represent “game-changing” products and services, as well as excellence and leadership in innovation around four criteria: Concept, Value, Delivery, and Impact. The 2022 Edison Award winners will be announced in February 2022 on Thomas Edison’s 175th birthday.

Over the last 34 years, being recognized with an Edison Award has become one of the highest accolades a product can receive in the name of innovation success. The awards are named after Thomas Alva Edison (1847-1931) whose inventions, new product development methods, and innovative achievements changed the world, garnering him 1,093 U.S. patents and making him a household name around the world.

The Edison Awards are operated by the Edison Universe a 501c3 non-profit organization with the mission of recognizing, honoring and fostering innovations and innovators.

About AirTerra
AirTerra is an innovative parcel shipping company that solves ecommerce challenges in a unique way so retailers and brands of all sizes can compete on a level playing field. With AirTerra, you get access to more capacity, greater flexibility, and benefit from simplified pricing, contracts, onboarding and carrier management, all without the additional cost required to manage multiple carriers. We provide Diversification Simplified. Learn more at https://airterra.com.

About The Edison Awards™
The Edison Awards™ is an annual competition designed to honor excellence in new product and service development, marketing, human-centered design and innovation. Winners represent “game-changing” products, services, excellence and leadership in innovation around four criteria: Concept, Value, Delivery and Impact. Started in 1987, The Awards are named after inventor Thomas A. Edison and symbolize persistence and excellence in innovation as personified by him. Learn more at https://edisonawards.com/.

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!

Logistics executives measure success in miles: first, middle and last. In today’s growing Direct-to-Consumer (DTC) supply chain, it’s essential to explore the benefits of diversity in first, middle and last-mile carriers. In fact, the new DTC business model makes access and control of daily parcel capacity an urgent industry imperative.

The future of the supply chain is carrier diversity. However, utilizing different carriers can mean extra contracts and paperwork, higher costs and surprise fees. But what if the separate carrier entities could act as one national carrier with a platform that integrates several carriers, quickly adding carrier diversification and increasing capacity with one single contract? This simplicity is how transportation diversification can succeed – and it’s already happening.

AirTerra is an innovative parcel shipping company that solves ecommerce challenges in a unique way so retailers and brands of all sizes can compete on a level playing field. AirTerra is a single national parcel and postal carrier that has integrated Regional Carriers and the U.S. Postal Service, adding more to last-mile capacity. They were one of the first to market a point-to-point network built to handle the growth and transportation capacity, built for the DTC digital market.

With AirTerra, you get access to more capacity, greater flexibility, and benefit from simplified pricing, contracts, onboarding and carrier management, all without the additional cost required to manage multiple carriers. We provide Diversification Simplified.

It’s time to get in front of the parcel carriers that capping capacity and meet all the capacity, flexibility and transparency needs of the DTC supply chain.

Here is what to expect from UPS:

  • an average net increase of 5.9% for UPS Ground, UPS Air, and International services; and
  • an average net increase of 5.2% for UPS Air Freight within and between the U.S., Canada, and Puerto Rico

In addition to the overall price increases, UPS is continuing to punish large package shippers with its pricing efforts. The message is clear: if you want to ship large packages at UPS, you will pay a premium to do so. The large package surcharge will increase within the 8%-16.7% range and the additional handling weight/dimensions will increase from 5.2%-13.9% depending on zone. And the majority are increasing by more than the announced 5.9%.

For all retailers, UPS is also continuing to penalize lightweight shippers, with ground minimum charges increasing 6.9%, from $8.76 to $9.36, with 1 pound-to-5 pound packages to increase by almost 8%, with most of the largest percentage changes in the lower weights and fairly consistent across zones.

Additional charges Increases: Delivery Charges; Pickup Charges Remote/Extended Delivery and Pickup Charges; Residential Surcharge; Return Services w/ Pickup; Saturday Delivery and Pickup; Signature Required Services; Additional Handling, Large Package and Over Maximum Limits; Oversize Pallet Handling Surcharge; and Peak Surcharges.

UPS confirmed what most of the marketplace has already concluded – UPS is focused on driving profits first and is far less focused on maintaining relationships with their customers. Increases for 2022 will be larger than those in the past and this “peak” is highly unlikely to end anytime soon.

 

Here is what to look for from FedEx:

FedEx’s rates will increase by an average of 5.9%. Premium services will experience higher increases than Ground, especially in shorter zones.

  • Priority and Standard Overnight shipments for zones 2-4 will increase by 7.1% or more.
  • Express Saver rates for zones 2-4 will increase by as much as 9.8%.
  • Ground service rates will increase by about 6.0% across all zones.

What about the Ground minimum?

That’s changing from $8.76 per package to $9.36 per package – an increase of 6.8%.

How will the Residential surcharge be impacted?

More shippers will trigger the post-peak Residential surcharge. Plus, that surcharge will cost considerably more:

  • Shippers will trigger the Residential surcharge sooner – when they hit 25,000 packages rather than last year’s threshold of 30,000 packages.
  • The $0.60 per package Residential surcharge that will go into effect for high-volume weekly shippers on January 17, 2022 represents a 100% increase over last year’s $0.30 post peak Residential surcharge.

    What about the Ground minimum?

    That’s changing from $8.76 per package to $9.36 per package – an increase of 6.8%.

    How will the Residential surcharge be impacted?

    More shippers will trigger the post-peak Residential surcharge. Plus, that surcharge will cost considerably more:

    • Shippers will trigger the Residential surcharge sooner – when they hit 25,000 packages rather than last year’s threshold of 30,000 packages.
    • The $0.60 per package Residential surcharge that will go into effect for high-volume weekly shippers on January 17, 2022 represents a 100% increase over last year’s $0.30 post peak Residential surcharge.

    What’s happening with the Additional Handling and Oversize surcharges?

    FedEx’s Additional Handling and Oversize surcharges are both changing from flat fees to zonal ones. And depending on how far packages ship, it could wind up costing companies up to 38% more than they’re currently paying.

    • Only Zone 2 shipments will cost a bit less (just $0.25) for Additional Handling in 2022.
    • For Zones 3+, all other Additional Handling charges will see prices ranging from:
      o $17.50 to $21.50 for dimensional (up 9.3 – 34.3% from this year’s charge of $16.00)
      o $27.50 to $31.50 for weight (up 7.8 – 23.5% from this year’s charge of $25.50)
      o $16.00 to $18.00 for packaging (up 14.3 – 28.6% from this year’s charge of $14.00)
    • Customers of U.S. Express and FedEx Ground will pay Oversize surcharges of anywhere from $110.00 to $145.00 per package (up 4.8 – 38.1% from this year’s charge of $105.00).
    • FedEx Home Delivery customers will be charged anywhere from $135.00 to $170.00 per package (up 3.8 – 30.8% from this year’s charge of $130.00).

     

    Are there any new surcharges?

    FedEx has also added several new charges – or modified existing ones – to make the terms more favorable for its bottom line. For example:

    • Ground Economy (formerly called SmartPost) shippers will also be subject to a new $1.00 per package surcharge for any package that is classified as “delivered or returned.”
    • The International Out-of-Pickup-Area and Out-of-Delivery-Area surcharge will be based on a tiered zip code list.

    There is a silver lining in the shipping marketplace. Companies like AirTerra are the answer to the aggressive price increases and unilateral capacity caps hitting retail and DTC brand shippers by the duopoly. AirTerra built a nationwide delivery network that provides a super reliable,
    cost-effective option for zones 6-8 parcel shipping as well as the shorter zones – whether you need more capacity, more reliable delivery times, or just a more competitive price.

    In summary, retailers shouldn’t wait until peak season is over to avoid high shipping costs, because additional charges await you in 2022. It’s time to utilize companies like AirTerra rather than wasting more money with the duopoly.