FedEx Express Not Out of the Woods Yet

Martha Coakley, the MA Attorney General and candidate for the Senate seat vacated by the late Ted Kennedy, paid a visit yesterday to a UPS facility in Watertown, MA to meet with Teamsters Local 25 and to sign on to support the Express Carrier Employee Protection Act.

UPS and the Teamsters claim that FedEx has operated at an unfair advantage since its inception by being allowed to classify employees of the Express business unit as railroad and airline employees. UPS employees are organized under the Teamsters.

Coakley's support comes after last month's ruling that the IRS would drop all pending investigations into FedEx Ground operations. The Ground business unit was under investigation for the same employee misclassification which would have lead to the IRS' involvement in auditing previous years of FedEx revenue.

Also present was Sean O'Brien, president of Teamsters Local 25. "This loophole has allowed FedEx to operate on an unfair playing field," O'Brien said. "Most workers at FedEx in the Boston area don't have anything to do with aircraft operations, yet they are trapped under the jurisdiction of the Railway Labor Act. These sorters, drivers, truck mechanics and package delivery drivers deserve the opportunity to join a union to improve their working conditions and benefits."


The Express Carrier Employee Protection Act is cleverly attached to the FAA reauthorization bill which will be heard and discussed by the Senate in the coming months. Some government action is expected.

Teamsters Gain Support From Coakley for FedEx Express Carrier Legislation -- BOSTON, Jan. 15 /PRNewswire-USNewswire/ --

Retail Pricing at Pack and Ship Stores - Is There a Better Way?

[note: this article is in response to the large number of new Facebook fans PA & Associates has garnered since last month; many of which are not commercial shippers, but retail consumers who will, from time to time, need to ship a package FedEx or UPS]

A few years ago, I was in a pack and ship store (the type of retail operation offers post office boxes/mail receipt, shipping supplies, ships packages FedEx/UPS, etc.) picking up some mail. At the counter was a delightful, elderly woman with one small, beautifully wrapped holiday package.

She approached the counter and the clerk asked if he could help her. She said, "Yes; I'd like to send this Christmas present to my grandson in Boise, Idaho. Can you tell me how much that would cost?". Recalling his sales training, the young man working the counter went right in for the kill, "sure -- I'm assuming since its a gift its valuable and you want to make sure it gets there, right?". Grandma replied, "yes, I would guess so". And with that, the clerk had the open door to scare the kindly old woman in the hazards of blindly handing Junior's package off to the black hole that is the US Postal Service versus sending the package through the highly-reliable and trackable service of a parcel package carrier.  The whole time, I'm eavesdropping while I pretend to sort the mail from my box.

She seemed very thankful that the clerk had taken such an interest in her and the package's well-being. After her crash course in parcel shipping, she was sold on the value of sending the package UPS. The clerk took the package from her and placed it on the scale. He called out the weight of the small box to her, "Looks like five pounds...from here to Boise would be $65". She seemed bewildered at the price, but knowing that it was important to have the extra care and handling of Brown on her side, she nodded her head. I just about had a coronary. It took everything in me not to come to her rescue, put my arm around her shoulders and escort her outside to safety -- and ship the package on her behalf at about a 90% savings.

To understand the independent pack and ship retail pricing, you need to know that FedEx and UPS provide three levels of pricing: daily rates, retail rates and discounted rates. Simply put, daily rates are undiscounted "list rates" offered to commercial shippers who have a daily UPS pickup. Retail rates are also undiscounted and provided to shippers that do not have a daily pickup with UPS -- in the past, these were also called counter rates. Retail rates are usually 13%, or so, higher than the daily rates. The remainder of the shippers have some carrier agreement in place with UPS and/or FedEx that provide some level of discount from the daily rate based on package volume and spend.

Independent pack and ship facilities -- those not part of the FedEx Office (formerly Kinko's) or UPS Store system -- usually use the retail rate and add a markup to the price. Remember that the retail rate is already 13% higher than the "list" rate published at ups.com or fedex.com. The "independents" frequently have discounts with UPS and FedEx and make a significant profit margin between the amount they charge their customers and what the carriers charge them.

Is there a better way?

For the average person needing to ship a package FedEx or UPS, here are some tips to reduce the cost:

• If you're employer has a daily pickup and relationship with FedEx or UPS, inquire with your managers or mailroom about shipping the package for you (check with your Human Resources department about company policy). Offer to reimburse your employer for the shipment. If you use one of the "user defined" fields when you create the airbill to include your name or other identifying text, it will be quite easy to find that shipment in the billing data from the carrier for reimbursement.
• Use the US Postal service -- although the tracking isn't as sophisticated as FedEx and UPS, they offer a number of options at a much, much lower rate. For example, Granny's box would have shipped for $4.95 using the Flat Rate Box (inclusive price, no surcharges, boxes and pickup are free).
• And a tip for reducing the shipping fees for items you order online; look for an option to use your own account number (if you have one). Always try to send the package to a commercial address, such as your place of employment, if given the option. Online retailers will pass on the FedEx and UPS residential delivery surcharge to you when you state your home address as your delivery address.

2009: The Year of Paralysis - How Business is Like Surfing

Now that we've turned the corner and closed the last chapter on the year 2009, I'm seeing many posts, tweets and status updates about people ready to say goodbye to the year that was. I will agree that 2009 certainly wasn't the best year for many (in the way we all usually measure success). For some businesses, though, 2009 was a critical and pivotal year for business.

For starters, most trials of any type usually produce something positive. The old adage, "what doesn't kill you will only make you stronger" tends to be true most of the time. Considering the trial by fire that 2009 was for many individuals and businesses, the tough times do serve to burn away the dead brush and make way for healthy growth to come. And, in some cases, the fire got so hot under some businesses that much of what was built (or, really, the unnecessary bloat that was piled on over the years) was burned away so completely that refinement took place; not unlike the way that impurities are scoured from gold to create a more pure and valuable form.

I was recently reflecting with my business partner on what this past year has brought (and what it hasn't).  We discussed how interesting it was that the year started with so much activity. Smaller, more nimble businesses were among our new clients as their CFOs and CEOs were about cutting costs and managing indirect spend categories in an effort to thoroughly ensure the careful stewardship of their organizations and to go about the hard tasks of making difficult decisions designed to weather this storm and ensure that the value of what they serve their market would survive when their market returned. Thinking about a matrix for a second, I'll put these leaders and their businesses in the lower, left quadrant -- SMB market leaders at the early part of the year that took advantage of cost reduction, spend management and looked after the health of their organizations.

At the other end of matrix -- larger companies and later in the year -- we found that most of them couldn't get out of their own way to make a decision. Was it the confusing signals coming from employment numbers, the stock market, the media? A number of false starts and no real turnaround to the economy? I think that's part of it.

Another part of it that we found so very interesting was how organizations make decisions. I'm not talking about the obvious differences between the bureaucracy of large organizations versus the lack thereof in smaller ones. This is something much more subtle; almost like the big (leveraged) organizations were so close to the edge that any decisions -- good or bad -- were not being made. Not unlike the avalanche survivor that can see a pinhole of sunshine as they're buried under the snow, yet so afraid to make a move toward it for survival in fear of the rest of what's around them caving in and taking their life.

And, so, we scratched our heads throughout the last quarter of 2009. Never in the nearly 20-year history of PA & Associates did we have a year in which we spoke with more prospects and issue more service agreements for review. Never, or at least as far back as my now 44-year old memory will allow, can I remember a time when CFOs and others considering our services were more enthusiastic about our approach, our references and our results. Yet, many of these same organizations never figured out how to push past whatever was holding them back; likely the fear of making any decision...good or bad. The paralysis had taken hold.

In my younger years I did a fair bit of surfing and windsurfing. Anyone that's spent any amount of time in the ocean with waves knows that swells come in sets; increasing in size and strength. Good surfers understand where to be at all times. This not only allows for them to catch the best waves, but also provides safety. As waves increase in size and power, they can also break further from shore. This requires paddling TOWARD a wave...and not away from it. Counterintuitive, until you've been caught in the impact zone and you get pounded. That's a feeling you never forget and are not keen on reliving soon.

A long way around to get you back to the point...2009 (and 2010 -- a New Year's celebration doesn't mean this is over) saw some organizations paddling to stay out of the impact zone. It expended energy, but their still alive to catch the next great wave. Others were paralyzed -- caught like a deer in the headlights as the monster waves mounted one after another and pounded them.These were the organizations that needed to paddle the hardest and many of them had the resources to do so. They froze in fear. Shaking their head from the last beating and coming up in the white water, they're big enough to weather another set. They're also over-analytical and fearful of making any decision, good or bad. The sets don't seem to be letting up any time soon. I wonder how many will paddle toward the waves and how many will wash up on the shore licking their wounds from the safety of the beach.

As always, your comments are welcome.

Snap out of it -- one person and one task at a time

This blog entry is meant to be an encouraging appeal to people in businesses everywhere, from the mail room to the CEO suite. Examine your personal philosophy about how you do what you do. The premise is simple and is one that I conveyed to my children just recently: singular, repeated excellence has a funny way of snowballing into corporate excellence (no, I do not talk corporate governance/motivation with my kids).

I am reminded of a well-worn quote that has stayed with me for years from one of the more quotable characters in our rich history, Teddy Roosevelt, who stated,

"It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat."

So what is the application to our daily lives? Well, this life is your story. You have to live the story. Why live it in a mediocre way? You are not designed for mediocrity. Rather, go out and sweat and bleed in the dust and in the arena, as Teddy says, so that you can know, at the very least, what it means to pursue high achievement. In all tasks, micro or macro, tell your story by the manner in which you approach your life, your work, your tasks. No matter where you fall on the corporate ladder; you have a job to do. Do it well.

Recently, I had occasion to be in the Midwest for business at the headquarters of a Fortune 500 company. As we waited in the vast lobby for our meeting to begin we were introduced to Fred. Fred is a security guard at the front desk and he greeted each and every person by first name! Now, to paint a clear picture of the scene, there were literally hundreds upon hundreds of people walking in and out of the building past his station during this particular lunch hour and he knew every single person’s first name. We came to learn that this small but impactful (and repeated) gesture resulted in Frank’s presence at national sales meetings and board meetings for this company for the purpose of illuminating excellence in customer service and attention to detail.

Bottom line: get in the arena and live your story.

IRS Reverses FedEx Ground Ruling

In what appears to be the latest chapter in a series of long-awaited FedEx rulings on their independent contractor woes, the IRS announced that it has dropped the last audit of FedEx. At present, FedEx does not expect any more audits on the company for this matter.

The IRS ruled in late October that it will reverse its earlier stance and previous assessment that FedEx had misclassified some of its package delivery drivers as independent contractors. The reversal squarely backs the FedEx stance that its classification of certain drivers in the network as independent contractors is appropriate. Furthermore, the ruling drops a potential $319 million assessment by the IRS. FedEx broke the news in their SEC filing.

For the past three years, it has been common for us to hear UPS warn our clients during presentations about the status of FedEx independent contractors and to watch for a huge move by the federal government to push for the classification of these drivers to employees. That would open the door for potential  labor union representation and a more level playing field when it comes to how this part of FedEx's business is managed (UPS drivers and other parts of UPS are represented by the Teamsters). Now that appears to not be the case.

What we're seeing as we complete a record number of projects in 2009 and slated for 2010 is that FedEx has made aggressive moves to gain market share among dwindling and finite package volume. Most recently, FedEx announced the introduction of their SmartPost service; a low-priced ground residential delivery service that has significant cost savings in the 1-10 lb range. The delivery of SmartPost packages is handled by both FedEx and the US Postal Service.

At the same time and within the same climate, we're seeing backward moves by UPS. Although most pricing remains competitive, UPS is tendering odd documents with their new rounds of pricing; including loosely-worded early termination agreements. For nearly two decades, UPS has been overt in their education to the shipper that their pricing documents are "Carrier Agreements" (as worded clearly on the top of every document) and not a "contract". With the advent of early termination, one would construe that there must be a term...and with the statement of penalties for early termination, it would appear that these are now contracts.

The months of January and February are always interesting in our organization, as we're fielding calls and requests from clients and prospects for assistance with the rate increases that they knew were coming, but didn't know how they would affect their bottom line. This winter will also be an interesting time to watch the continued jockeying of the two remaining global service providers in this space.

IRS Drops Last FedEx Audit
IRS Reverses FedEx Ground Ruling

When Rates Caps Aren't Enough in 2010

The 2010 general rate increase will impact your business in more ways than one. Don't let 2010 be another year when the carriers raise your base rates well over 5% and also increase the surcharges that will ultimately drive up your overall cost of doing business. For example, the FedEx accessible dangerous goods surcharge will increase over 9% going from $65 to $70. Another example is the FedEx Express oversize charge increasing by 9% from $45 to $50 per package. We are all experiencing one of the most challenging economic environments in recent history and the road ahead is treacherous at best. PA & Associates is poised to take your carrier negotiations to a new level with a financial model that has produced an industry leading 42% average savings for our clients. Our value stems from over 18 years of logistics and financial expertise and a team of logistics professionals that deliver quantifiable results.

PA & Associates understands your desire to elevate your ROA (return on assets) and effectively streamline your supply chain. We provide solutions and deliver financial results. Call PA & Associates today at 1-866-200-SAVE to discuss your potential for savings!

website:www.paaa.com

Contributors: Steve Syverson, Clorisee Canada, Scott Guldin

Help! My Bus With The Right People On It Is Sinking In The Blue Ocean

Sorry to mix business self-help metaphors but I cannot stand empty slogans and war cries! It is a real chafe.

For example, many companies now espouse a “spend management” platform. Like so many hackneyed terms in business, spend management is now overhyped by those companies that are trying to use it as a sword but their services prove to be a meat cleaver instead. Let’s be clear; spend management is more than just cost reduction. Spend management is a philosophy, a practice, a discipline, and ongoing best practices management. And CFOs beware; there is a lot of “sizzle” but no “steak” with many of these service providers and consultants that purport to adhere to spend management principles. Spend management should be the manner in which companies control and optimize the money they spend. So, while cost reduction is the immediate impact, spend management presumes an ongoing discipline and internal practices to control and optimize the spend environment.

Well then, Chris, how can I seek out true spend management companies you might ask? I am glad you asked. Characteristics to be mindful of when considering utilizing a vendor to provide spend management services include: proven data-driven results; the breadth of expertise within that spend area; the makeup of the project team to ensure they bring relevant acumen to the table that is of value to your company; technology solutions--technology solutions--technology solutions; a client list that speaks to your specific industry and spend criteria; white papers, and a consultative and partnering mentality that they bring to each and every project. Experience has shown that such characteristics would indicate that the vendor is capable of not only cost cutting but also implementing far-ranging spend management practices.

The number of indirect spend areas that are in the crosshairs of the vigilant CFO is growing (energy, waste management, logistics, telecom, office supply, accounts payable, printing, cost segregation, etc.), so would the real cream please rise to the top?!!