F. Curtis Barry & Company Blog

UPS, Teamsters Agree in Principle to Changes with SurePost Delivery

UPS, through meetings with the International Brotherhood of Teamsters, has recently reached a tentative agreement to reduce the size of SurePost packages eligible for delivery through the U.S. Postal Service. This move aims to optimize operations and enhance efficiency in the final mile of package delivery. While specific details have not been disclosed, the agreement holds potential implications for both UPS and its customers.

As ecommerce, retail, and wholesale companies continue to grow, so do the challenges they face in terms of fulfilling orders. These challenges include investing in warehouse systems, automating processes, managing warehouse space requirements, and staying competitive. 

Fortunately, third-party logistics (3PL) distribution can help address these challenges by outsourcing product fulfillment. We will explore the benefits and advantages of 3PL distribution and how it can help businesses scale.

Fulfillment is a crucial aspect of any ecommerce, retail, or wholesale business. With the continued rise of online shopping, businesses must ensure that they have a reliable and efficient system in place for fulfilling orders. One option is to handle fulfillment internally but outsourcing to third-party logistics (3PL) companies has always been a strong alternative.

In this article, we will explore the benefits of outsourcing fulfillment operations to 3PLs and why it can be an advantage and a key to success for businesses. We will also address common misconceptions and challenges associated with internal fulfillment operations.

As 3PL consultants, we have helped many businesses find their first fulfillment partner as well as switch to a new partner that may be more aligned in their goals or provides additional services.

As inventories pile up, warehousing and inventory management continue to be a significant challenge for businesses.  This environment is continuing to drive up costs and hurting profitability.  We explore the impact of excess inventory on companies and discuss strategies to address this issue. 

For context, according to a recent CNBC Supply Chain Survey, many companies are struggling to manage their warehouse inventories, which are putting pressure on their bottom line. The survey, conducted between March 3-21, involved 90 logistics managers.   Respondents provided insights on current inventory levels, inflationary pressures, and strategies for managing excess inventory.

Current State of Freight and Inventory Positions

Freight companies are experiencing a decrease in demand for their services, and they are dialing back their expectations for a strong recovery in the second half of the year. Economic uncertainty and signs of caution from retailers are contributing to this trend.

The volume of goods moving through supply chains has not met expectations for the beginning of the year, and retail sales figures are causing concern about the direction of the economy. As a result, freight companies are feeling less optimistic than their customers.

Economically, we are certainly in some grey areas, where even the most intelligent economic minds are unsure of what will happen. Most recently, MarketWatch published an opinion piece on the feds ability to execute a soft landing with the economy, and the chances of stagflation. To understand the potential impacts of stagflation on retailers and supply chain models, we first need to understand what stagflation means.

3PLs play an integral part of many ecommerce and wholesale distribution supply chains. But if your company has ever researched costs, you will find that no two vendors have similar models when it comes to storage fees. Understanding how vendors charge for storage can be difficult, especially if you are starved for data.  

At a high-level 3PL storage costs follow one of two pricing models, on demand type storage, and dedicated space models which are more fixed cost. To understand which model is more advantageous for your ecommerce business or whole distribution, we need to look at each option further.  

Peak season brings unique supply chain and operational challenges that are not experienced at other times of the year. The need to improve warehouse operations during non-peak times is critical. It can be very difficult to improve order fulfillment during the peak season. However, just because you can’t make changes, it doesn’t mean you shouldn’t be looking for changes to make.

Most distribution center operations have seen significant increases in warehouse labor costs, as well as all time high lease costs for a new facility. These factors have driven more companies to consider warehouse automation to remain in the current facility longer and reduce the labor costs. These two cost components can radically increase your cost per order. However, this does not mean that companies should simply employ automation without achieving a cost-effective warehouse automation ROI.

One of the first aspects in determining the warehouse automation ROI is to ensure that the automated solutions being considered are realistic for your business. Many companies begin their process with some “YouTube shopping”, becoming enamored with a certain automation system. That skips over any detail consideration of current process, systems and costs.

Labor is typically one of the largest distribution expense items, along with freight costs, for most companies. According to Indeed.com, the job employment website, the average base pay for warehouse workers is $16.78 in the U.S. However, when you factor in benefits such as healthcare, training and more – the fully loaded cost balloons to $28.86 per hour. Companies typically have the following costs over and above the base pay:

• Benefits and healthcare: 35% of payroll costs
• Workers comp and unemployment: 8% of payroll costs
• Training: 4% of payroll costs
• Recruitment, hiring and HR: 25% of payroll costs