Having a reliable shipping supply chain is critical for small businesses, especially in the world of Amazon where customers expect fast delivery.
While the recent threat of a UPS strike appears to have been averted, it should make companies consider having a diversified shipping strategy or at least a contingency plan, experts say.
“You always have to have a Plan B because you have to continually monitor carriers to make sure service levels and the rates you’re paying are the best,” said Tony Nuzio, founder of ICC Logistics Services Inc., a Hicksville-based transportation and logistics consultant. “Understanding your delivery options is critical.”
Last month, UPS workers authorized their union to call a strike, if necessary, amid contract negotiations, but 10 days ago they announced a tentative five-year agreement. The current contract expires July 31. The last strike, in 1997, lasted 15 days.
“The handshake agreement represents strong progress toward what we believe will ultimately be finalized agreements that meet the needs of all parties involved,” said UPS spokesman Matthew O’Connor. The tentative deal covers all contractual issues related to approximately 250,000 UPS small-package employees, he says. Topics still under discussion include local work rules, such as time-off procedures and job preferencing, he says.
“UPS and the Teamsters continue to negotiate an agreement for approximately 11,000 UPS Freight employees, and we are confident that we will reach an agreement for that group that meets the needs of our employees and the company,” O’Connor said.
That’s welcome news for shippers.
Despite other options, “it’s hard to knock UPS out of the package delivery business for any period of time without having an impact on the rest of the industry,” said Nuzio. UPS delivers 20 million packages and documents daily, according to its website.
While some small businesses may find it easier to work with one carrier to negotiate the best rates, as a best practice companies should assess their carrier relationships at least annually, says Christopher Cadigan, president of Oyster Bay-based Unishippers of Nassau County, a franchised freight brokerage firm.
And if a firm’s shipment profile changes (for example, to offer faster service or ship heavier items), executives should review their agreements regardless, he said. “We talk to shippers all the time about looking at their shipping structure and who they work with.”
New technologies can help assess your shipping options, said Cadigan, who has a proprietary system to help customers manage their shipments and compare costs. But he said there are third-party applications such as ShipStation, a multicarrier shipping software, that shippers can utilize.
Pitney Bowes, a global technology and shipping company, also offers software to help assess carrier options called SendPro, according to Jason Dies, president of SMB Solutions for Stamford, Connecticut-based Pitney Bowes.
SendPro, which generally costs $15 to $37 a month, allows shippers to compare their shipping options “in a multi-carrier environment,” he said.
“You might be surprised at how different the rates are based on carrier or class of service,” Dies said, noting many small businesses don’t consider all their options. “It’s whatever comes up in their web browser.”
Jodi Gallaer, owner of Farmingdale-based JustShoesforKids.com, an online retailer of children’s shoes, was considering all her options in light of the threat of a UPS strike.
While she uses the U.S. Postal Service for delivery to customers, her vendors ship to her via UPS, and she uses UPS to send some of her inventory to an Amazon fulfillment center, where she keeps some stock.
“We have negotiated rates with UPS,” she said. “If we had to switch to FedEx, it would probably be slightly more expensive.”
She was relieved to hear of the tentative deal: “It means there will not be a disruption in my business operations.”
How important is the right shipping?
A report last year found that 54% of shoppers abandoned their carts due to expensive shipping, 39% due to no free shipping, and 26% due to slow shipping.
Source: Temando: State of Shipping in Commerce