Can you afford todo nothing?

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Your Presenter – John Kruzan

Senior DirectorGlobal Alliances, Distribution Solutions

Pitney Bowes

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The Perfect Storm is Coming

Historic rate changes from the big three carriers – USPS, FedEx, & UPS are only 48 days away – and are going to greatly impact your shipping operation and bottom line

Industry experts are saying these

changes could result in double-digit

cost increases for shippers

Arm yourself with all the information and learn how your organization can address these changes – it’s not too late

Because, doing nothing today will cost you something tomorrow

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What’s Happening & When

Expanding

dimensional (DIM)

weight pricing to

ALL packages

4.9% General

Rate Increase

(for UPS® Ground, Air,

International, UPS Freight®,

and UPS air freight services)

Expanding

dimensional (DIM)

weight pricing to

ALL packages

4.9% General

Rate Increase (for FedEx Ground®, FedEx

Express®, FedEx Freight®, U.S.

import and export services)

Intelligent Mail®

package barcode

(IMpb) Requirement

on ALL packages

DECEMBER 29, 2014 JANUARY 5, 2015 JANUARY 26, 2015

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What is Dimensional (DIM) Rating?

Dimensional

Weight = L x W x H

DIM FactorL = length in inches

W = width in inches

H = height in inches

DIM Factor = represents the

volume of a package allowed

per unit of weight

DIM weight pricing takes into account the dimensions—the space a package takes up—to determine the pricing

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Which costs less to ship? With DIM rating – it’s not what you think

Actual Weight

3 LB

Dimensional Weight

3 LB

Billable Weight

3 LB

Actual Weight

1 LB

Dimensional Weight

7 LB

Billable Weight

7 LB

1 LB teddy bear3 LB laptop

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FedEx & UPS—Dimensional Rating

FedEx and UPS will be expanding

dimensional rating to small packages in 2015:

UPS: December 29, 2014

FedEx: January 1, 2015

Previously, UPS and FedEx Ground service packages

were only subject to dimensional weight rating if they

were 3 cubic feet or larger

18” x 18” x 16”5,184 cubic

inches(3 cubic feet)

or larger

NOW TOMORROW

All

packages

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Remember the Teddy Bear?

Tomorrow

Actual Weight

1 LB

Dimensional Weight

7 LB

Billable Weight

7 LB

Cost

$10.52

Let’s compare shipping this Teddy Bear with UPS from New York City

to Chicago now and in 2015 when dimensional rating does into effect

(Zone 5 ground shipment)

Today

Actual Weight

1 LB

Dimensional Weight

No dim rating

Billable Weight

1 LB

Cost

$7.17That’s a 47% Increase!

($3.35 more per teddy bear)

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What if you ship 50 Teddy Bears to Chicago each week?

Tomorrow

Cost per Teddy Bear

$10.52

Cost per week

$526

Cost per month

$2,279.33

Cost per year

$27,352

Today

Cost per Teddy Bear

$7.17

Cost per week

$358.50

Cost per month

$1,553.50

Cost per year

$18,642

Can your budget afford a $8,710 increase in shipping spend in 2015?

x50

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What does this all mean for you?

It’s estimated that

85% of all ground shipments*will be subject to this new pricing structure, and in

many cases, it will result in a large price increase

Some experts are estimating

double-digit cost hikes**for shippers when annual rate

increases are factored in

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Your Shipping Costs with UPS & FedEx Could Skyrocket

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Software generated Label

Commercial Base (CBP) or Commercial

Plus (CPP) rates (discounted rates)

Free Insurance: $50 CBP

and $100 CPP

Intelligent Mail® package barcode (IMpb)

Starting January 25, 2015, all USPS packages

must be shipped with an IMpb tracking label

There are two options available:

Pre-printed Label

Retail rates (no discount)

Insurance if it is scanned at Post Office

Retail Counter

+

OR

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What if you ship the Teddy Bear with USPS?

Tomorrow

Billable Weight

1 LB

Rate

Retail

Cost

$6.15

Today

Billable Weight

1 LB

Rate

CBP

Cost

$5.54

Let’s compare shipping this Teddy Bear (without a software solution)

with the post office from New York City to Chicago now and in 2015

when IMpb goes into effect (zone 5, priority mail)

That’s a 11% Increase! ($0.61 more per teddy bear)

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Tomorrow

Cost per Teddy Bear

$6.15

Cost per week

$307.5

Cost per month

$1,332.5

Cost per year

$15,990

Today

Cost per Teddy Bear

$5.54

Cost per week

$277

Cost per month

$1,200.33

Cost per year

$14,404

What if you ship 50 Teddy Bears to Chicago each week with USPS?

Can your budget afford a $1,586 increase in shipping spend in 2015?

x50

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What is IMpb Exactly?

USPS® “next generation” tracking barcode

Improved Visibility • “Built in” tracking

• Better delivery prediction

End-to-end tracking • Competitive tracking

capabilities

Required for discounts (Commercial Base Pricing—CBP)

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Benefits of IMpb

Access to best prices

End-to-end tracking information

Better predictive delivery

Faster, more efficient service

Automatic Insurance (Priority Mail®), up to:

• $50 (for Retail and Commercial Base Pricing)

• $100 for Commercial Plus Pricing

Combines Tracking with Extra Services barcodes

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What is the total impact? What if you ship 50 Teddy Bears per week with UPS and 50 with the post office:

Tomorrow

UPS Cost per Year

$27,352

USPS Cost per Year

$15,990

Total Cost per Year

$43,342

Today

UPS Cost per Year

$18,642

USPS Cost per Year

$14,404

Total Cost per Year

$33,046

doing nothing to in 2015 is going to cost you a whole lot more

That’s $10,296 More! (A 31% increase)

x50

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It really is a perfect storm!

IMpbRequirements

So, what can you do,

so you don’t get invoice

shock in January?

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1. Audit Your Shipping Operation

Which carriers do you use?

How often do you use them?

What types of packages do you ship?

How much are you spending?

Doing nothing, will cost you something

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2. Standardize Boxes

Look at the boxes that you use to ship

• How many different types of boxes do you use?

• Reducing box sizes can help you reduce the

negative workflow impacts of dimensional

rating—measuring each box

Are you shipping boxes with lots of empty space?

• This is going to cost you more in 2015

• Implement strategies to maximize the

space used when shipping – ship two

items in one box, for example

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3. Negotiate

Reach out to your carriers to re-negotiate

your contracts

Identify areas where you can save money

Doing nothing, will cost you something

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Shift demand from UPS & FedEx

• USPS is a great choice now

– Tracking with IMpb

– New discounted priority mail rates

(announced Sept. 7th)

– UPS and FedEx already use

USPS for last-mile delivery

(they are their biggest customers),

you can trust them for the full journey

• Regional carriers

This will not only save you money, but will

help mitigate the risk of shipping with just one carrier

Shipping those 50 teddy bears

with USPS instead of UPS in

2015 will save you:

USPS: vs. UPS:

$5.54 $10.52

That’s almost $5 in savings per

package and nearly $13,000 in

savings per year

USPS vs. UPS

$5.54 $10.52

4. Shift Demand

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5. Implement a Multi-Carrier Software

A multi-carrier software solution can help you

make the smartest choice when shipping

Bring all your carriers, including USPS and

regional carriers, onto one platform

Choose the best rates easily

Reduce manual workflows for a more efficient

shipping operation

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Pitney Bowes Can Help

SendSuite Live: Multi-carrier shipping software that is IMpb compliant and can help you ship

smarter, helping you improve your workflows and reduce shipping spend

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You Can’t Afford do to Nothing

Take a look at your shipping

operation today, so you can save tomorrow

Don’t put your organization’s operating budget at risk

These are historical rate and carrier changes,

prepare yourself for 2015

Doing nothing, will cost you something