To avoid these problems entirely you may even consider hiring a third-party logistics service to manage your deliveries for you. For that, check out our guide on how to choose the right 3PL partner.

Here are the top ten most common logistical problems, and how to overcome them:

1. Rising fuel costs

One of the biggest challenges facing logistics companies is the ever-increasing cost of fuel. This can make it difficult to maintain profitability, and can even lead to some companies going out of business.

There are a few things you can do to help mitigate the impact of rising fuel costs:

• Use a routing optimization tool to find the most fuel-efficient route for your deliveries. Shorter routes and well-informed drivers can make a big difference in your overall fuel costs.
• Avoid idling, idle vehicles are burning fuel, and this can cost you up to a half-gallon of fuel per hour. It may seem small, but at a large scale, it can add up quickly.
• Use a fleet of fuel-efficient vehicles. Hybrid and electric vehicles are becoming more common every year, and for good reason. You can drastically reduce the amount you spend on fuel by switching your delivery vehicles to an electric alternative.
• Regularly maintain your fleet. Keeping your vehicles properly maintained, especially the engines, can lead to an average gas mileage increase of 4%. (FuelEconomy.gov) Again, it may seem small, but if maintained regularly it can and will save you a lot in the long term.

To remove the stress of fuel costs outsourcing your fleet may be the best option, but when should you outsource your fleet?

2. Lack of planning and forecasting

A lack of planning and forecasting can lead to an organizational nightmare. Without taking the appropriate steps and leveraging modern technology, companies are unable to predict demand or anticipate potential roadblocks. This can lead to disruptions in the supply chain and increased costs.

Implement effective planning and forecasting tools, and make sure that everyone in your company is using them. Utilize any data you have to your advantage, and always be prepared for the worst.

By planning ahead, and preparing your team for the potential challenges of the future, you’ll always be operating from a well-informed position. And will have the upper hand against your competition.

3. Inefficient employee management

In the logistics industry, you are constantly managing different teams in order to get the job done. This can be difficult, as you need to make sure that everyone is on the same page and working together efficiently.

There are a few things that you can do in order to overcome this challenge:

• Make sure that you have a well-defined process that everyone can follow. This will help to ensure that everyone is on the same page, and knows what their responsibilities are.
• Delegate tasks effectively. Not everyone is good at every task, so it’s important to delegate to the right individuals to keep things moving efficiently.
• Train your employees properly. This will help them to understand their responsibilities, and how to best work with the rest of the team.
• Communicate effectively. This is perhaps the most important thing that you can do in order to manage a team efficiently. Make sure that everyone is aware of what’s going on, and be clear about what your expectations are.

If you can effectively manage your employees, it will go a long way in overcoming logistical challenges.

How does Dropoff ensure efficient courier management?

4. Rising fleet maintenance costs

The cost of maintaining a fleet is on the rise, and this is putting pressure on logistics companies’ budgets. The average cost of maintenance per mile has increased by more than 20% in the last decade. This more than anything has contributed to the massive growth in outsourcing nationwide.

Here are a few ways to combat growing fleet maintenance costs:

• Invest in preventive maintenance: This will help catch small problems before they turn into big ones.
• Use telematics: Telematics can help you track your fleet’s performance and identify issues before they become a problem.
• Optimize your driving routes: This will help reduce wear and tear on your vehicles.
• Switch to synthetic oil: Synthetic oil lasts longer than a traditional oil, which means you’ll need to change it less often.
• Replace older vehicles: Older vehicles are more expensive to maintain and operate.

If you can effectively manage your fleet maintenance costs, you’ll be in a much better position to succeed in the logistics industry.

5. Poor communication between the customer and courier

Another common problem in the logistics industry is a lack of communication between the customer and courier. This can result in delays, miscommunications, and lost or damaged items.

To overcome this problem, it is important to have a clear and concise communication system in place. This could include a tracking system for shipments, regular updates from the courier, and clear delivery instructions from the customer.

Another way to overcome this problem is by building a relationship of trust with the customer. The courier should be able to communicate effectively and efficiently and be available when the customer needs them.

By establishing trust and communication, both parties can work together to resolve any issues that may arise.

6. Damaged goods during transit

Logistical problems most commonly arise when goods are being transported.

Transporting goods always comes with the risk of them getting damaged during transit, which can cause all sorts of headaches for companies on both sides of the process.

Here are a few ways to try and prevent damaged packages during transit:

• Use sturdy boxes and packaging that will protect the items during transport.
• Have a good system in place for checking the condition of goods when they arrive. If anything is damaged, it needs to be addressed as quickly as possible so that the customer isn’t affected.
• Make sure that your insurance is up to date and that you have a plan in place for dealing with damaged goods. When these unfortunate circumstances happen, being in a position to quickly address the issue ensures that you still create the best outcome for both sender and receiver.

7. Poor coordination for multiple deliveries

If your company is responsible for multiple deliveries, it’s important to have a system in place that allows you to keep track of all the moving parts. Poor coordination can lead to delays, missed deadlines, and unhappy customers.

One way to overcome this challenge is by using software that helps you manage your deliveries. Dropoff’s Logistics Management Platform is a great option for companies that need help coordinating their deliveries.

With our platform, you can view all your upcoming deliveries in one place, track the status of each delivery, and receive real-time updates if there are any changes. Having this level of visibility will help you stay organized and on schedule, which will keep your customers happy.

In a competitive logistics industry, it’s important to have a clear understanding of the most common problems companies face. By addressing these issues head-on, you can put yourself in a much better position for success.

8. Inaccurate inventory reporting

Another common logistical problem is inaccurate inventory reporting. This can be caused by a number of factors, including human error, outdated information, and system malfunctions. The consequences can be serious, leading to missed opportunities and lost profits.

Fortunately, there are steps that you can take to minimize the likelihood of inaccurate inventory reports.

First, ensure that your team is well-trained and familiar with the processes involved in documenting inventory in the first place.

Second, use accurate and up-to-date technology to streamline the process, there are hundreds of options out there to choose from, but having none is sure to set you behind the competition.

Finally, perform regular audits to check for any discrepancies. It never hurts to double-check your system and is the best way to be sure that any errors are found and corrected quickly.

If you’re struggling with inaccurate inventory reports, don’t despair. Follow these tips and you’ll be on your way to improved accuracy and efficiency.

9. Late or incorrect deliveries

If you’re in the business of delivering goods, then obviously timely and accurate deliveries are key. Logistical issues can often lead to late or incorrect deliveries, and that can be a huge problem for businesses – especially if time-sensitive items are involved.

If you’re experiencing late or incorrect deliveries, the first step is to identify the root of the problem. Maybe your drivers are being sent out without proper route planning, or your tracking system isn’t updated in real-time.

Once you’ve pinpointed the issue, you can start making changes to correct it.

In some cases, late or incorrect deliveries may be due to factors outside of your control. For example, if you’re shipping items by truck and there’s a traffic jam on the highway, that’s going to cause delays.

In situations like this, good communication is key. Let your customers know that there may be delays and give them updates along the way.

Quick tip: Make sure your delivery drivers are familiar with the route they’re taking, and always plan for contingencies. If there’s a traffic jam, have a backup plan in place to ensure that deliveries still get made on time.

10. Unclear tracking and visibility into the status of shipments

One of the most frustrating things about logistics is not knowing where your shipment is or when it will arrive. This can be a huge problem if you’re dealing with time-sensitive shipments, like medical supplies or food.

The good news is that there are now many tools available that can help you track your shipments and get visibility into the status of your delivery.

Tools like Dropoff’s shipment tracking feature give you real-time updates on the status of your package, so you can rest assured that your shipment is on track. With visibility into the status of your package, you’ll be able to plan for potential delays and avoid any costly surprises.

If you’re looking for a way to improve your logistical operations, use a shipment tracking tool. There are many available at this point, but choosing the right one can make a world of difference in the efficiency of your delivery process.

Dropoff has been working hard to overcome all the logistical problems and challenges faced by companies today.

We are committed to providing our customers with the best possible service, and our team of experts is always looking for new ways to improve things.

If you’re facing any logistical problem or challenge, Dropoff can help.

The post 10 Most Common Problems in the Logistics Industry, and How to Overcome Them appeared first on Dropoff.

So, what’s the difference? And more importantly, which one is right for your business?

In this article, we’ll break down everything you need to know about same-day vs next-day delivery. Plus, we’ll give you some examples of businesses that are already using each type of service successfully!

What is same-day delivery?

Same-day delivery is a type of shipping that allows customers to receive their orders on the same day that they are placed. This service is typically only available in major metropolitan areas and is often the most expensive shipping option.

Why is same-day delivery good for business?

There are a lot of reasons your business might want to offer same-day delivery.

Here are just some of the benefits of same-day delivery:

• Increased customer satisfaction: Same-day delivery can help to increase customer satisfaction as it allows them to receive their orders much faster than with other shipping options.
• Reduced shipping costs: Same-day delivery can also help to reduce shipping costs as it eliminates the need for overnight shipping.
• Increased sales: Same-day delivery can also lead to increased sales as customers are more likely to purchase items that they know they will receive quickly. 49% of consumers say that same-day delivery makes them more likely to shop online. (Invesp)
• Increased revenue per order: You can often charge higher fees for same-day delivery which can help you to increase your profit margins. In fact, 61% of consumers say they are willing to pay more for same-day delivery. (Invesp)

The benefits may be clear, but it can be intimidating to start offering same-day delivery both for small brands and for large enterprises.

Some businesses might opt to manage this process entirely on their own, and that may work. The reality is, you need to know when outsourcing is the right choice for your business.

Even if you do decide to outsource the work, it can be equally as challenging to choose the right third-party logistics partner for your needs.

No matter how you choose to tackle same-day delivery, you want to do plenty of research on the common issues involved, and how to overcome them.

What are the best use-cases for same-day delivery?

A few situations where you might benefit from implementing same-day delivery are:

• When you need to get something to your customer quickly, such as a document or product prototype.
• When you want to show your customer that you value their time and business by getting them their purchase ASAP.
• When speedy delivery is part of what your brands’ promise, such as with many flower delivery brands, bakeries, and other gift-based businesses.

Who’s succeeding with same-day delivery?

More businesses than ever are offering same-day delivery to their customers, it’s especially common in the eCommerce industry.

For large-scale businesses like the ones listed below, it’s important to work with national couriers who can manage your delivery process coast to coast.

Some businesses that offer same-day delivery include:

• Amazon: Amazon offers same-day delivery on a variety of items in select metropolitan areas.
• Walmart: Walmart also offers same-day delivery on a variety of items in select metropolitan areas.
• Target: Target offers same-day delivery on a variety of items in select metropolitan areas.
• NowRx: A digital pharmacy that offers same-day medicine delivery for free, or even within the hour for a $5 fee.

Not sure if outsourcing is the right call for your business?

Check out the advantages of outsourcing logistics.

What is next-day delivery?

Next-day delivery is when an item is delivered the day after it is ordered.

This type of delivery is often used for items that are not as time-sensitive as same-day delivery. But, for customers who still want the convenience of speedy delivery, it is generally a more affordable option.

Why is next-day delivery good for business?

Offering next-day delivery can have many benefits for businesses, such as:

• Increased customer satisfaction: Next-day delivery can lead to increased customer satisfaction as they receive their orders faster. 95% of consumers consider next-day delivery to be “fast”. (Conveyco)
• Improved inventory management: Offering next-day delivery can improve inventory management as businesses can better predict when orders will be placed and can plan accordingly.
• Increased revenue per order: Customers are often willing to pay a little extra for the convenience of next-day delivery.

Many of the benefits from same-day delivery carry over into next-day delivery. Since both services offer faster than normal delivery times, and higher costs to the consumer, your business benefits in similar ways.

Not sure how to start offering same-day or next-day delivery for your business? Talk with one of our Dropoff experts, we’ll help you every step of the way.

What are the best use cases for next-day delivery?

Some of the most common business models that use next-day delivery are eCommerce retailers, food and beverage companies, and medicines.

eCommerce: Many eCommerce businesses use next-day delivery to get their products to customers as quickly as possible. This is especially important for items that are needed urgently, such as clothes for a last-minute event or a birthday present.

Food and Beverage: Next-day delivery is also common in the food and beverage industry, as many companies need to get their products to customers quickly and efficiently. This is especially important for items that are perishable, such as dairy products or seafood.

Medicine: medicine companies often use next-day delivery to ensure that their products are delivered to customers in a timely manner. This is especially important for medications that are time-sensitive, such as those that need to be taken at a certain time of day or those that have a short shelf life.

Who’s succeeding with next-day delivery?

The obvious example is Amazon, but next-day delivery isn’t just for eCommerce companies. In the age of instant gratification, customers expect to receive their purchases quickly – and that includes items they buy in brick-and-mortar stores.

Businesses that are succeeding with next-day delivery are those that are able to meet this customer’s expectation without sacrificing quality or service.

Here are a few examples of businesses winning with next-day delivery:

• A clothing retailer that offers next-day delivery on in-stock items like Macy’s.
• A grocery store that offers next-day delivery for online orders like Aldi’s.
• A furniture store that offers next-day delivery on select items like Big Lots.

While next-day delivery may not be possible for all businesses, it’s important to consider what your customers’ expectations are and whether you’re capable of meeting them. If you can, you’ll be well on your way to success.

Even if you don’t feel capable of implementing next-day delivery, you may be surprised by the capabilities of outsourced logistics teams.

Next-Day Delivery vs Same-Day Delivery

Now that you know the differences between the two, how do you choose which one is right for you, or can you handle both?

Here are some key questions you should ask yourself:

• What is your product?
• What are your delivery areas/radius?
• Does your product need to be shipped quickly?
• How much can you afford to spend on shipping?
• How much does speed matter to your customer?

Answering these questions will help you better understand which type of service will work best for your business.

If you’re not sure if you can afford to offer same-day or next-day delivery to your customers, talk with one of our experts, they can break down everything you should expect, and work with brands from every industry all across the nation.

If you decide to offer same-day delivery, make sure you have a reliable shipping partner who can get your products to your customers on time.

The post Same-Day vs Next-Day Delivery – What’s Best for Your Business? appeared first on Dropoff.

If your business is currently partnered with FedEx for this service, we’ve gathered a comprehensive blueprint for your next steps! But first, let’s look at the most up-to-date information regarding this change. 

The Shutdown of FedEx Same Day City Delivery Service 

FedEx is retiring its SameDay City delivery service on March 31st, ending a decade of operation. The company is prioritizing “other growth opportunities” and will eliminate all positions supporting the service. 

SameDay City offered door-to-door delivery of critical supplies to businesses and residences within hours in over 30 US cities. It served the healthcare and automotive industries, among many others. 

“FedEx Office remains committed to giving small and medium business owners, large commercial customers, and consumers convenient access to expert printing and packing, as well as shipping and returns provided by FedEx Ground and FedEx Express.”

FedEx spokesperson

Further, FedEx is making cuts across its operations due to declining volumes and poor economic conditions. The company announced a reduction of 10% of its officers and directors to become more efficient and agile.

8 Steps For Shippers That Are Transitioning From Using FedEx Same Day Delivery Services

In line with the end of SameDay City Courier FedEx service, businesses must consider other delivery options. Undoubtedly, this is an inconvenience for businesses that rely on the service for their operations. However, this change could allow companies to review and improve their logistics processes. 

Here, we take a closer look at your next steps to ensure a seamless transition from using the FedEx Same Day pickup service to a new service.

1. Assess Your Pending Deliveries

The first step is to assess any pending deliveries you still have with FedEx. This means checking how many deliveries you have left, the delivery dates, and what items are being delivered. 

When assessing your pending deliveries, don’t forget to consider the following:

1. Delivery dates: Check the dates your deliveries are scheduled for and see if you need to make any changes. If the deliveries are set for after March 31st, you’ll need to find another delivery option.
2. Delivery items: Take a look at what items are being delivered. Is there anything time-sensitive or critical to your business operations? If so, you’ll need to find a way to deliver these items as soon as possible.
3. Delivery quantity: How many deliveries do you still have with FedEx? If you have plenty of deliveries left, you’ll need to find a new courier to handle the volume.

Once you assess your pending deliveries, you’ll know how to ensure your deliveries arrive on time without any hiccups. 

2. Ensure Your Deliveries Are Being Handled Properly

After assessing your pending deliveries with FedEx, ensure everything related to delivery operations is handled properly. 

Here’s what you should do:

1. Review your current delivery agreements: Check your current agreements with FedEx to ensure that all your pending deliveries will still be fulfilled.
2. Confirm delivery dates and times: Double-check the delivery dates and times for your pending deliveries to avoid delays.
3. Monitor delivery progress: Keep an eye on all your pending deliveries so you can address any issues quickly. Use FedEx’s tracking tool.
4. Make sure the delivery addresses are correct: Make sure all the delivery addresses for your pending deliveries are correct.
5. Communicate with FedEx: If you have concerns about handling your deliveries, communicate directly with FedEx. 

3. Have a Transition Plan in Place

Now, it’s time to start thinking about transitioning from FedEx to a new logistics provider. You need to have a plan to ensure a smooth transition and minimize disruptions.

Here are a few things to consider when making a transition plan:

1. Identify your needs: Determine what delivery services you require. Do you need same-day delivery, next-day delivery, or international delivery? You will narrow down your options more easily.
2. Research providers: Do your due diligence and research different logistics providers. Don’t forget to compare prices, delivery times, and services offered. Choosing a provider you feel confident can handle your deliveries is essential.
3. Make a budget: Make sure you have a budget for the transition and any ongoing costs associated with a new logistics provider. Choosing a provider with more services may result in higher prices. But it could also offer more benefits in the long run.
4. Negotiate contracts: After choosing a provider, it’s time to negotiate the terms of your agreement. Communicate your delivery needs and any special requirements you have clearly. This is a good time to discuss any potential discounts or promotions they might offer.
5. Test run: Before fully transitioning to your new logistics provider, do a test run to ensure everything runs smoothly. You can address any issues or make changes before fully committing to the new provider.

These steps will help make the transition from FedEx to a new logistics provider smooth. It’s never too early to make a plan, so don’t hesitate to start the process.

Here’s everything you need to know about FedEx rate increases in 2023. 

With rate increases, we dive deep into what a general rate increase is in shipping.  

4. Assess All Previous Integrations 

Many businesses forget to consider the integration aspect when hiring a new courier. Look at how the previous delivery service was integrated into the business’s operations. This includes APIs, e-commerce platforms, internal systems, and more. 

The transition will be a major headache if these integrations are not correctly handled. As a result, delays happen, and the customer experience takes a hit. 

One thing to consider is ensuring all data related to the previous delivery service is transferred correctly to the new provider. Like order information, delivery schedules, and any relevant data the business has accumulated over time. 

Evaluate the new provider’s integrations and see if they are compatible with your company’s current systems.

If your business relied on the FedEx Same Day City delivery service for quick delivery, your new provider shouldn’t offer longer delivery times. That said, inform your customers about the changes, so they know what to expect moving forward.

5. Start Evaluating Alternative Delivery Solutions

Evaluating alternatives and choosing a new logistics provider is critical to ensure your deliveries continue to run smoothly. With the shutdown of FedEx Same Day City delivery service, businesses are trying to find a suitable replacement fast.

One way to go about this is to make a list of potential new providers. Start scheduling calls with them to learn more about their services. Ask for quotes, compare prices, and get a feel for their customer service.

When evaluating alternatives, consider the available delivery options and how they meet your business needs. Some providers offer only next-day delivery, while others have a wider range of options. Additionally, look at the geographical coverage provided by each provider.

It’s also important to ask about the delivery tracking process and the level of transparency each provider offers. Your goal is to choose a provider that offers a seamless transition with the same reliability, speed, and service quality as FedEx. 

6. Choose a Nationwide Courier with Delivery Consolidation Capabilities

Now, it’s time to decide on the best courier for your business. To summarize the steps above, factors like cost, delivery time, coverage area, customer service, technology, and integrations offered by each courier, are all important to consider.

Find a courier that fits your needs and budget. By taking your time and thoroughly evaluating your options, you’ll know you are making the right decision. Remember, this is a big change!

Check out this breakdown of last-mile delivery costs and how to reduce them.

7. Maintain an Excellent Customer Experience 

​​Once you have chosen a new courier, the next step is to ensure they offer an even better customer experience than the Same Day delivery FedEx services within cities. You want your customers to be happy with the change and continue to receive high-quality delivery services.

To do this, take note of the following points:

• Track record of on-time deliveries: Does your new courier have a proven track record of delivering packages on time and in good condition? You will not compromise the reputation of your business by partnering with an unreliable courier.
• Availability of real-time delivery tracking: Customers today expect to track their packages in real time. This gives your customers peace of mind and helps you keep track of deliveries at all times.
• Customer service: You want to work with a courier that has a responsive and helpful 24/7 customer service team. If any issues arise, customers know they will get the help they need, no matter the time of day.
• Flexible delivery options: Does your new courier offer a range of flexible delivery options customizable to your business needs? Whether it’s same-day, next-day, or even weekend deliveries, the courier you choose must accommodate your needs.

Moreover, your customers will appreciate the change and continue to trust you for their delivery needs.

8. Start Onboarding Your New Courier Partner 

The final step is to onboard your new delivery partner. This step is crucial, as it marks the transition from the planning and preparation stages to the actual delivery operations. Onboarding a new courier involves several steps to ensure a seamless transition and delivery process.

One of the best practices in setting up a new courier quickly is giving them all the necessary information, like your business details, delivery addresses, and other relevant information. So your new courier can deliver your packages to the right place, at the right time, and with the right information.

Next, you’ll want to review and establish the processes, procedures, and guidelines your new courier will follow. This includes pickup and delivery times, packing and labeling requirements, and the delivery process. As we mentioned before, make sure your new courier has a robust tracking system in place.

Our technology makes it easy to follow your deliveries in real-time, from pickup to drop-off, on a live map, with accurate ETAs. You get instant delivery confirmations based on your needs. Plus, our couriers can verify package delivery via photo, signature, email, text, or any courier action you prefer.

In addition, be sure to monitor your new courier’s performance and gather feedback from your customers. That is how you’ll improve your delivery process for maximum efficiency and customer satisfaction.

In conclusion, onboarding a new courier requires careful planning, communication, and monitoring. But, with the right steps and preparation, it will be seamless, efficient, and deliver an even better customer experience.

Learn more about how to minimize delivery rate increases.

Top 4 Courier Service Alternatives to SameDay FedEx

Here are our top picks for courier service alternatives to FedEx and UPS:

1. Dropoff 

Dropoff is an innovative last-mile logistics provider that offers same-day delivery. We focus on convenience, reliability, and customer service while providing businesses with an easy-to-use platform to streamline their deliveries. Our services offer easy web and mobile ordering, flexible delivery options, real-time tracking, and transparent pricing. 

If you’re looking for reliable last-mile shipping companies like FedEx, look no further than Dropoff.

2. UPS

UPS is a leading international delivery company that offers same-day city delivery services. With its operations across 220+ countries, UPS makes billions of deliveries yearly and strongly focuses on improving its services for businesses of all sizes. With over $97 billion in revenue, UPS is a great FedEx alternative for your delivery needs.

3. DHL

DHL is a global leader in the courier industry, providing delivery services in over 220 countries with over 1.5 billion deliveries annually. With services like Express, Post and Packet, Freight, Global Forwarding, eCommerce, and Supply Chain, DHL offers more solutions than FedEx, which only provides Express, Ground, Freight, and IT-based logistics services. 

Despite FedEx being the leading courier in North America, DHL may be a great alternative to FedEx and UPS.

4. XPO Logistics 

XPO Logistics is another great alternative to FedEx, offering comprehensive logistics solutions for businesses of all sizes. It comes with XPO Connect, a platform that matches shippers with available transportation. This company serves over 50,000 customers in 32 countries, and its broad range of services, including trucking and brokerage, make it a reliable option for businesses. 

Want more options? Here are the top 8 last-mile companies and startups in the US.

How Dropoff Can Help with Same-Day Delivery

Following FedEx’s announcement to end Same Day FedEx City delivery service, shippers are now searching for a reliable alternative. Dropoff can help fill this gap with our last-mile delivery solutions. 

We offer a customized same-day delivery solution suited to your nationwide business needs. Our user-friendly software lets you place and track orders in real-time, giving complete transparency throughout the delivery process.

Additionally, our trackable digital chain of custody provides added security and peace of mind. Our couriers will verify package delivery through any method of your choice, including photo, signature, email, text, or any other courier action.

Our customizable options and easy-to-use software make us a top choice for businesses needing fast, reliable deliveries nationwide.

Get in touch with a Dropoff expert today and tell us more about your unique logistical needs. 

FAQs on FedEx SameDay City Delivery Service 

The post FedEx Shuts Down Same-Day Delivery: What to Expect appeared first on Dropoff.

It’s important to remember that this is nothing new. FedEx has been raising rates little by little for the past few years, so this latest increase shouldn’t be too much of a shock.

This blog post will explain everything you need to know about the upcoming FedEx rate increase and how businesses handled the increases in 2022.

2022 FedEx Rate Increase Analysis 

On January 4, 2022, FedEx announced that it would raise its shipping rates for FedEx Express (Domestic, U.S. Export, and U.S. Import), FedEx Ground, and FedEx Home Delivery by an average of 5.9%.

This is the first time in over six years that the rate increase was greater than 4.9%. The company said the rate hike was due to “the significant increases in transportation costs, including vehicle fuel and maintenance expenses.”

The percentage of increase depended on the weight of the package and where it was going. Customers began seeing a bigger shipping bill as early as February 2022.

FedEx 2022 surcharges exceeded the announced 5.9% for more high-frequency items.

However, FedEx introduced a new pricing structure for certain shipments, letting customers save up to 20%.

What Is a General Rate Increase (GRI)?

General Rate Increase (GRI) refers to a percentage increase in the rates charged by a shipping carrier. 

The Impact of FedEx GRI on Shippers

When it comes to shipping, there are a few things to keep in mind. 

First, you must have a strong relationship and level of communication with your carrier. Second, you need to know your shipping profile inside and out to see how the rate increase will affect your bottom line. And last but not least, having the right technology tools is key to finding the most efficient and cost-effective shipping option.

Other than carriers increasing their shipping rates, learn more about other common logistical issues.

2023 FedEx Rate Increases: What We Can Expect

FedEx will raise Ground, Home Delivery, and Express shipping rates by an average of 6.9% in 2023. Freight rates will also increase by an average of 6.9% to 7.9%.

FedEx blames the weak global economy for raising prices, as demand for package deliveries worldwide went down. This comes after the company’s shares plunged 21% in late September of 2022 after warning that it would fall $500 million short of its revenue target. 

So if you use FedEx for your shipping needs, be prepared to pay a little bit more starting next year.

Adding to shippers’ problems, it is “extremely likely” that UPS will increase its rates by 6.9%, just like FedEx did. If UPS charges lower rates than FedEx, a lot of FedEx’s customers might switch to UPS, crowding their network.

Caleb Nelson, Chief Growth Officer at Sifted

Want to learn more about different shipping services? Start with same-day and next-day delivery.

1. Additional Surcharges 

There will be changes to shipping surcharges and fees that could affect your total shipping rate.

For a detailed chart on additional FedEx surcharges and fees, click here.

2. Delivery Area Surcharges

A new Delivery Area Surcharge of $13.25 per package will be applied to domestic shipments within the contiguous U.S., starting January 30, 2023, for select ZIP codes considered as remote.

Here is a detailed chart on the Delivery Area Surcharge ZIP code changes.

3. FedEx Express, Home Delivery, and Ground Rates

For businesses that rely on FedEx Express for shipping, it’s time to start budgeting. 

The delivery minimum net charge will increase by 4.45% next year, from $65.14 to $68.04. That might not seem like much, but the cost can add up quickly for customers who ship multiple packages daily. 

Similarly, the FedEx Ground and Home Delivery minimum net charge will also increase. The 2023 FedEx rate for the minimum net charge will go from $9.36 to $10.10. This is an increase of 7.91%. In contrast, the 2021 increase was just 6.44%, and the 2022 increase was 6.85%.

Here is a PDF with all FedEx standard list rates for 2023.

FedEx Home Delivery offers the same rates as FedEx Ground packages, with an additional $5.15 residential surcharge. This extra charge is for the final delivery to a residence. Home Delivery packages are billed as if they were Ground packages, so the surcharge is applied to the total rate. The total rate for a Home Delivery package would be calculated by adding the base rate and the residential surcharge. 

For example, if the base rate for a Ground package is $10.00, the total rate for a Home Delivery package would be $15.15 ($10.00 + $5.15). 

4. Other 2023 FedEx Rate Increase Changes

• FedEx will increase the late payment fee to 8% for invoices that are paid late.
• Oversized packages will incur an additional charge of $135 – $200.

If you run a medical business, it would be best to check out the latest medical courier service rates! 

How Businesses Will Respond to FedEx Rate Increases

It’s no secret that shipping costs have been on the rise in recent years.

With big names like FedEx increasing their rates, businesses that rely on last-mile delivery services will feel the pinch. This is especially true for healthcare, industrial, and retail companies, where shipments are often time-sensitive and expensive. 

Some businesses have absorbed the higher shipping costs, while others were forced to pass those costs on to their customers. In some cases, sales decreased, and customer complaints became more common.

Healthcare companies rely on timely medical supplies and equipment deliveries, so any delays due to higher shipping rates will affect patient care. Retailers are also concerned that the higher costs will eat into their profits, especially during the holiday shopping season. And industrial companies worry that the higher rates will make shipping raw materials and finished products more expensive.

How should businesses deal with general rate increases?

“Knowing your costs is the best way to deal with general rate increases. Analyze your shipping invoices in detail, and make sure you understand every line item. What is the price now, and what will it be in January? Some surcharges will go up by double digits, while others will only increase slightly.

After that, look for the best provider of local services in your area. Sometimes it’s cheaper and offers a higher quality level of service to use an alternative provider like Dropoff. For example, Dropoff provides customized service with excellent customer care 24/7, led by our teams of specialists and cutting-edge technology.”

Millie Tarallo, Chief Revenue Officer at Dropoff

Check out our top picks of the best last-mile delivery companies. 

How Dropoff Can Help

If you’re currently partnered with FedEx, you might be having second thoughts considering the upcoming rate increase. Or maybe you’re considering partnering with a third-party logistics provider for the first time. 

At Dropoff, we become an extension of your company. We address and tackle all your logistical pain points so you can focus on what you do best: running your business. Our platform allows you to easily schedule and customize pick-up from anywhere with to-the-minute ETAs. 

Our logistics experts are available 24/7 to answer any questions or help with any issues that may arise.

Talk with a Dropoff expert, and let us build a custom logistics solution for your business.

FAQs for FedEx’s 2023 Rate Increase

The post FedEx Rate Increase 2022-2023 | The Truth appeared first on Dropoff.

This blog post will discuss the factors that affect the operational costs of last-mile delivery and offer some tips for reducing them.

What Is Last Mile Delivery?

Last-mile delivery refers to the final leg of the delivery process when a package is transported from a distribution hub to the customer’s doorstep. The goal is to do it as quickly, accurately, and affordably as possible.

To give you a better picture of how important (and expensive) last-mile delivery is, it accounts for more than 53% of the total shipping costs. That’s why optimizing the process is crucial! Inefficiencies will quickly lead to sky-high fees that cut into business profits.

The average cost per last-mile delivery in 2018 was $10, with the last-mile delivery market size estimated to reach $424.3 billion in 2030.

Unless managed well, the factors driving these costs will be hard to control. So before we examine the cost factors, let’s look at the last-mile delivery issue.

What Is the Last Mile Delivery Issue?

The last-mile delivery problem is a challenge that has long plagued many businesses. The issue is that the last mile is usually the most expensive part of the process.

Right off the bat, it is a tricky process because there are many stops and unique routes during delivery. You may even have to offer inside delivery for some products. These steps mean more time on the road and a massive fleet of delivery vehicles and drivers.

How Much Does Last-Mile Delivery Cost?

Before we give you the last-mile delivery cost breakdown, here are a few interesting statistics:

• Three-fourths of customers will spend more and be loyal to brands that offer an excellent last-mile experience. (Capgemini)
• The last mile accounts for 53% of total shipping costs. (Insider Intelligence)
• Last-mile delivery services account for 41% of all supply chain costs worldwide. (Statista)
• The average last mile cost per delivery for a small package to a high-density area is $10. The average last-mile cost per delivery for a large package to a low-density area is $50. (SupplyChainDrive)
• Most delivery drivers earn $16 to $24 per hour. (Salary.com)
• If you do not optimize how much it costs to deliver your product and there is a sudden increase in online sales, your profits could decrease by 26% over three years. (Leigh-David)

Breaking Down Last-Mile Delivery Costs

As we show you the cost breakdown for last-mile delivery, there are six things to consider:

1. Labor Cost
2. Fuel Cost
3. Delivery Equipment Cost
4. Delivery Management Software Cost
5. Reverse Logistics Costs
6. Miscellaneous Costs

1. Labor Costs (50%)

Labor costs account for around 50 percent of last-mile delivery expenses. Out of all the labor costs, couriers are the most expensive. They play an important role in supply chain and logistics operations, which is why businesses are willing to spend so much on them. 

Additional data from the United States Bureau of Labor showed that the wage rate of delivery truck drivers ranges between $9.43 to $29.39 per hour, with an average hourly rate of $15.12. Likewise, local delivery couriers average $16.74 per hour. The costs are higher when businesses offer express delivery teams, which charge around $25.10 per hour.

2. Fuel Costs (10%)

The fuel bill accounts for 10 percent of last-mile delivery expenses. It might seem like a tiny percentage increase, but businesses can certainly feel the pinch. Take, for example, Amazon’s change of prime membership prices in 2018. Due to rising fuel costs, the eCommerce giant had to increase prime membership prices from $99 to $119.

Fuel costs also significantly peak when businesses grow since extra fuel is required to cover more geographic markets. As fuel prices increase, so do delivery costs. Simply put, fuel is volatile and difficult to predict.

The growing popularity of next-day and same-day delivery hasn’t helped either. More retailers are offering these services without properly planning a good last-mile delivery business model to support them.

As a result, drivers go out on delivery runs with only one or two parcels or packages at a time. This is wasteful in terms of fuel consumption. Not to mention how much more carbon emissions it produces.

Here’s everything you need to know about last-mile fulfillment.

A. Idling and Downtime

Driving in cities is a challenge. There are plenty of vehicles, unfamiliar streets, and traffic lights. Hence, drivers often find themselves idling more than they’d like. And while idling may not seem like a big deal, it significantly affects fuel consumption.

Delivery trucks use an average of 0.84 gallons of fuel per hour when idling, which quickly adds up over time.

B. Out-of-Route Miles

Drivers tend to lose track of their dispatchers’ route plans, given the high number of individual stops they make. Especially when the routes aren’t easy to refer back to. Unfortunately, this increases mileage as drivers take detours or make mistakes.

Out-of-route miles usually account for 10 percent of the delivery fleet’s mileage. This is a significant problem for shippers, who pay more for fuel and labor costs.

3. Delivery Equipment Costs (10%)

Delivery equipment costs account for 10 percent of last-mile delivery expenses. That’s because you need the right equipment to deliver a product safely to the customer’s doorstep. For instance, a food delivery business will need coolers, freeze-dried ice, crates, and more to serve fresh food. And that doesn’t even include packaging costs!

Some deliveries need special arrangements, like a vaccine that needs a temperature-controlled environment. These necessities add up, making delivery equipment expensive for last-mile delivery services.

4. Delivery Management Software Costs (10%)

It’s no secret that technology is a significant expense for businesses. But it doesn’t have to be a burden. The key is ensuring your technology spending is an investment in future cost reductions.

Delivery management software will get costly if not planned and optimized. It accounts for 10 percent of the total cost of last-mile delivery.

Take, for example, an Artificial Intelligence (AI)-based feature of an eCommerce app that automatically assigns orders to delivery drivers nearest to the location. Integration of such technology will come at a high cost.

Aside from automatic assignment and dispatching, these solutions help optimize last-mile delivery routes, which lets companies cut down on major delivery-related expenses.

Check out our guide on everything you need to know about omnichannel third-party logistics.

5. Reverse Logistics Costs (10%)

Returns and failed deliveries are both costly for e-commerce businesses.

Returns mean the company has to spend money for the product to return to the warehouse. Then they have to spend more money storing the product. Failed deliveries happen when the delivery driver has to return to the same recipient to ensure the proper delivery of the package.

The company will likely have to pay twice for the same product. These expenses negatively affect a company’s bottom line.

6. Miscellaneous Costs (10%)

In addition to labor, fuel, software, and equipment costs, there are unexpected expenses, such as replacement costs, rescheduling costs, and vehicle maintenance expenses. 

Why Is Last-Mile Delivery So Expensive?

The following are several reasons why last-mile delivery is costly.

1. High Customer Expectations

Technology is constantly changing, and businesses have to evolve with it if they want to stay competitive.

For example, the rise of the Internet of Things (IoT) and 5G networks has led to customers demanding more real-time tracking of their deliveries. Hence, businesses must invest in big technology and infrastructure to create those features.

2. Free Shipping Options

Today, free shipping has become the norm in online shopping. And while it’s great for businesses to offer this perk to their customers, it is also expensive. Managing the last-mile delivery budget is challenging when companies bear the shipping cost.

3. Delivery-Related Issues

Failed deliveries and errors are too common, leading to additional costs. Whether it’s product replacements, returns, or failure of delivery attempts, the cost of last-mile delivery is constantly increasing.

7 Tips on How to Reduce Last-Mile Delivery Costs

“One way businesses can reduce cash flow pressures is by looking for ways to cut costs. It involves negotiating better rates with suppliers, cutting down on labor costs, or finding more efficient ways to operate.”

Catherine Schwartz, Finance Editor of Crediful

Here are practical ways you can implement in your business to reduce last-mile delivery costs.

1. Plan Ahead and Understand Your Needs

One of the best ways to reduce costs in last-mile logistics is to plan. Understand your business’s cash flow needs and ensure that you have the funds available to cover these needs, especially during peak periods.

“The best way to manage any cash flow pressure is to plan for it by having a buffer in your business checking account or line of credit. This will help you cover unexpected costs and keep your business running smoothly.”

Andrew Gonzales, President of Business Loans

Let’s take a closer look at planning by determining the speed of delivery.

A. Determine the Speed of Delivery

It’s essential to understand the urgency of each delivery. It will help you prioritize and make the work management process easier. For businesses that require time-bound deliveries, like food, flowers, and groceries, use same-day delivery. The customer will receive the package while it’s fresh for consumption or use.

2. Optimize Routing and Dispatching

Optimizing the loading and dispatching process will make the delivery process faster.

Here’s how:

• Make a list of the orders from most urgent to least urgent.
• Download the orders onto the delivery vehicle according to the list.
• Keep the orders delivered to the nearest locations close to the door. 
• Give the list to the delivery driver so they can deliver the correct packages to the right places.

Loading the parcels properly will reduce any chance of chaos. Once the loading is complete, the management team should focus on finding the most efficient routes. Choosing a multi-stop route to make multiple deliveries will be more efficient than making one trip with all the items. Ensure you update the route with real-time ETA information to avoid traffic delays.

A. Use AI-Powered Route Planning

Services that use intelligent software to automate route planning are a game-changer for companies that need to plan multi-stop routes.

These smart algorithms quickly map out the most efficient routes using data points such as distance, time, location, driver capacity, and traffic.

Such software will help save time and money by eliminating inefficient routes and avoiding costly delays.

Moreover, with highly efficient delivery routes, companies can dispatch delivery tasks within seconds, further improving efficiency and helping to keep costs down.

In today’s competitive business landscape, anything giving a company an edge is worth considering. And taking advantage of intelligent routing software is certainly one way to do that.

Related: 9 Must-Have Features In Last-Mile Delivery Solutions

B. Use Automated Dispatching

In the old days, when a delivery truck got behind schedule, a human dispatcher would contact the driver directly to adjust the route. A time-consuming process that often led to errors. Today, tech-powered platforms do this automatically and immediately update routes.

The application unifies a company’s fleet under a single system, which makes dispatching a breeze and reduces the high costs of last-mile deliveries.

3. Use Delivery Optimization Software 

Benefits of last-mile delivery software include:

• Record of vehicle maintenance costs
• Calculation of supply chain costs
• Customer feedback
• Online payments
• Management of delivery fleet
• Increased delivery efficiency
• Managing high-density delivery
• Reduced rescheduling costs

The last-mile delivery optimization software is more cost-effective and likely to improve the customer experience.

When it comes to receiving packages, many customers value convenience over speed. A recent study found that 73% of customers said that a convenient time slot for delivery is more important than fast delivery. This is because people’s schedules are unpredictable, and they may not be available to receive a package when it is delivered.

As a result, they may have to waste time picking up the package from a delivery location or waiting for another delivery attempt. For businesses, this leads to increased last-mile delivery costs as drivers waste time making unsuccessful attempts or waiting for customers to show up.

Your business should offer multiple shipping options that include same-day and next-day delivery. Customers will have more freedom in choosing the option that best fits their schedule.

4. Offer More Flexibility to The Customer

No matter what they sell, any business needs satisfied customers to succeed. If customers are unhappy with their purchase or service, they likely won’t recommend your company.

The key is to offer more convenience. This may be in the form of real-time updates on their order or letting them track their package when it is out for delivery. As a result, the customer knows what is happening with their purchase and can ensure they are available to receive it. 

To avoid failed deliveries, give customers a clear way to track their packages and estimate their ETAs. You will improve your brand value and gain customers’ trust.

A. Offer Real-Time Delivery Tracking

Last-mile delivery tracking allows companies to track the location of their delivery vehicles in real time. This visibility shows customers where their package is at all times and solves any internal delivery issues faced by the company.

Communicating critical information to guide the delivery fleet efficiently would help avoid delays due to traffic or weather conditions. With real-time tracking, companies can automatically provide the ETA to customers via web or mobile applications.

Companies can even monitor the efficiency and performance of drivers.

5. Offer Proof of Delivery

A company should be able to maintain proper records of their dispatch and delivery. This includes proof of the goods’ condition, the customer’s non-availability status, and payment details.

These proofs are electronically captured through notes, pictures, or videos and uploaded immediately into the system. Having the ability to maintain data in real time will help in resolving customer queries quickly.

Electronic proofs also eliminate unnecessary paperwork and reduce physical storage space in an office.

6. Do Your Research and Negotiate Better Rates

Always try and negotiate better rates with your suppliers. This could involve asking for longer payment terms or exploring bulk discount opportunities.

Remember that you don’t have to accept the first offer. If you feel like getting a better deal, don’t hesitate to try and negotiate.

While it may be daunting to haggle with suppliers, it’s always worth a shot. After all, even a tiny decrease in expenses will make a big difference to your bottom line.

“One way businesses can reduce cash flow pressures is by negotiating better terms with their suppliers. This could involve asking for longer payment terms or bulk discounts.”

Jeff Zhou, CEO of Fig Loans

7. Be Flexible

Sometimes, despite your best efforts in running your business, you still face cash flow pressures. It’s essential to be flexible to keep your business afloat.

For example, if you’re regularly experiencing cash flow shortages, you should re-evaluate your pricing strategy or delivery methods. Alternatively, if you find that you have extra cash, you could use this money to invest in new vehicles or technology.

No matter what, it’s essential to adapt and make changes as needed to manage your cash flow better.

The Overall Effect of Decreased Last-Mile Delivery Costs on Your Business

The overall effect of last-mile delivery costs on a business can be significant.

With lower delivery costs, businesses have more room to allocate toward marketing efforts. An increased marketing budget will lead to higher brand awareness and customer acquisition.

In addition, businesses may also choose to pass on some of the cost savings to end customers in the form of lower prices. This makes the company more competitive and attractive to potential customers.

Finally, lower delivery costs will also lead to more efficient operations as businesses look to streamline their supply chain and minimize waste.

Real-World Examples of Businesses That Have Mastered Last-Mile Logistics

Let’s take a closer look at some real examples of businesses that have mastered last-mile logistics.

Eldum Rétt – Food Delivery Service

Eldum rétt, a meal kit delivery company, based in Iceland, was having trouble with last-mile delivery when their business began to scale and receive more than 1,000 orders per week.

They tried using a combination of manual transportation dispatching and GPS tracking, but it didn’t work. It took too much time and was not scalable.

OptimoRoute has allowed Eldum rétt to quickly process thousands of orders at a time while also considering service areas, delivery windows, vehicle capacities, and more.

“A supplier error meant there were a whole lot of deliveries that went out one day with the wrong amount of ingredients. We realized the mistake and had to reoptimize really fast, prepare the replacement products and the drivers, and within a day, we delivered the correct amount to all customers that had been affected. OptimoRoute lets us be this responsive and flexible.”

Kristófer Leifsson, Founder, Eldum rétt

Evolution Rx – Pharmacy Delivery Service

Based in Houston, Texas, Evolution Rx is an independently owned pharmacy with a delivery area spanning more than 10,000 square miles.

With their old process, delivery drivers often had to call managers to confirm customer information or report on their order progress.

But with OptimoRoute’s mobile app, that is not a problem anymore. All the information is there, and they can quickly check the status of an order with a single click.

The Continual Increase of Last-Mile Delivery Costs in the Future

In the next few years, we can expect to find more innovative solutions to the last-mile delivery challenge. This will include using autonomous vehicles for local deliveries, partnering with local businesses to serve as “mini-fulfillment centers,” and offering subscription-based delivery services.

Last-mile delivery costs will likely continue to rise. The continued growth of e-commerce and the increasing demand for same-day and next-day delivery options will drive this.

Speaking of delivery options, learn more about door-to-door delivery.

How Dropoff Can Help with Last-Mile Delivery

Delivering packages on time and in good condition is crucial for any business. But it is challenging to coordinate multiple deliveries while keeping track of each package.

If you’re looking for a reliable and affordable delivery solution for your business, look no further than Dropoff. We offer a variety of solutions ready to be customized to fit your specific needs. From same-day delivery to white-glove services, we have a solution that will work for you.

With our easy-to-use software, you can place and track orders in real-time, keeping tabs on your deliveries from pick-up to dropoff. Plus, our trackable digital chain of custody provides peace of mind and compliance documentation.

Our couriers will verify package delivery via photo, signature, email, text, or any courier action you prefer.

Talk with a Dropoff expert today to streamline your last-mile delivery operations.

FAQs on Last-Mile Delivery

The post A Breakdown of Last-Mile Delivery Costs and How to Reduce Them appeared first on Dropoff.

But what if we told you there are ways to minimize these delivery costs and keep your customers happy?

Here are five tips to help you do just that.

An Overview of Delivery Rate Increases 2022

We can expect delivery rates to go up again in 2023. FedEx and UPS have announced that they will raise prices by 6.9% next year after increasing rates by 5.9% this year. This is the first time in eight years that either company has had an annual increase above 4.9%.

As we enter 2022’s Christmas shopping season, many logistics providers announced higher delivery fees. It is no surprise, as demand for goods and services is typically higher during this time of year.

USPS again requests a temporary price increase on certain mail services for the holiday season. The price increases will range from 25 cents to $6 per package and will go into effect on October 2, 2022, for anyone sending Priority Mail, Priority Mail Express, and First-Class Package Service. The price hike will last through January 22, 2023.

FedEx Express, FedEx Ground, FedEx Ground® Economy, and FedEx Freight rates all increased in January 2022. In addition, there were changes to shipping surcharges and fees that affected your total shipping rate.

In early 2022, UPS announced that the Air Fuel Surcharge would continue to be based on the National Average U.S. Gulf Coast Jet Fuel Price and adjusted weekly. The Ground Fuel Surcharge will continue to be based on the National U.S. Average On-Highway Diesel Fuel Price and will be changed weekly.

Check out our guide on efficient logistics planning.

5 Ways to Minimize Delivery Rate Increases

Before we get into the different ways to minimize delivery fee increases, let’s break down the factors that affect delivery costs.

Factors that affect the delivery fee:

• Size and weight of goods
• Dimensional weight
• Delivery distance
• Taxes and duties
• Delivery times
• Surcharges

1. Place Your Inventory Closer to Customers

Anyone who’s ever ordered something online knows that the delivery process is a guessing game. Will my package arrive on time? And if it’s coming from halfway across the country, how much will it cost to get it here? For eCommerce businesses, these questions are crucial because the delivery cost directly impacts the bottom line.

One way to minimize delivery costs is to place inventory closer to customers. Businesses reduce transit times and offset delivery costs by distributing products to multiple warehouses.

Additionally, focusing marketing efforts on areas near existing warehouses will help to attract new customers and grow the business.

For large eCommerce enterprises, a zone-skipping strategy may be the best option. It involves moving packages by bulk freight to a post office near their final destinations.

2. Reduce Package Weight and Dimensions

When it comes to delivering packages to customers, weight is money. The heavier the actual or dimensional weight, the more it will cost to deliver.

Suppose you’re considering two different box sizes from a packaging supplier. One box is strong and lightweight, and it costs $4 each. The other box is heavy and bulky, but it only costs $3.50 each. Before you choose the less expensive option, you need to consider how it will impact your package’s overall weight and dimensions.

To illustrate this point, let’s look at USPS’s 2022 Christmas rate hikes. A box that weighs exactly 10 pounds will cost 30 cents more than usual. But a box that weighs 10 pounds and 1 ounce headed to the same address would cost 95 cents more. So just 1 ounce of extra packaging could increase the delivery cost by 65 cents.

As you can see, when it comes to delivering packages, every ounce counts. That’s why it’s so important to choose packaging that will minimize the weight and dimensions of your final product.

Some ways to reduce package weight include:

• Use corrugated packaging: Corrugated boxes are more robust and lighter than regular cardboard boxes. They have rows of tiny air-filled grooves between the inner and outer layers of the box.
• Use lightweight packing material: Air pillows, packing paper, bubble wrap, foam inserts, Versa Pak wadding rolls, and excelsior.
• Customize your own packaging: The less packing material you use, the better. If your container is the right size and shape for your product, you won’t need to use as much packing material. If you have a product that sells in high volume, it might be worth it to spend money on a custom container.

Choose the Right-Sized Packaging

It’s easy to save money on packaging without skimping quality or protection. If you’re paying for your packaging, some research could save you money.

Many carriers give away free packaging. For example, USPS offers packaging of various sizes for free when you pay for shipping under specific mail classes. UPS and DHL Express also offer free packaging.

Whether you’re getting your packaging for free or ordering custom packaging, knowing what types and sizes of packages you use most often will also save you money. Customizing your packaging to fit your product better will reduce wasted space and material, saving you money in the long run.

3. Use Flat-Rate Shipping

With shipping costs on the rise, online brands are constantly looking for ways to minimize delivery costs. One way is by using flat-rate shipping.

Flat-rate shipping means the cost is a single rate, regardless of the item’s weight, shape, or size—a great way to save on delivery costs, especially if you have many things to deliver.

Another benefit of flat-rate shipping is that it helps to convert variable costs into fixed costs. So if you know you need to deliver ten items, you can budget for the exact amount it will cost in advance.

Create flat shipping rates for specific order sizes or weights. For example, you could set a flat rate of $5 for orders under $50 and another flat rate of $3 for orders over $50. This gives you more control over what your customers are charged at checkout.

4. Offer Last-Mile Local Delivery and Pickup

A recent trend coming out of the COVID-19 pandemic is people shopping through local, independent businesses.

As an online store, local last-mile delivery lets customers buy your products online and have you deliver them to their homes. You could also allow customers to come and pick up their online orders from your store.

Local delivery and pickup are alternatives to delivery with a third-party logistics provider and will save you money. Not only that, but customers often prefer these methods because they want to avoid busy delivery hubs and get their purchases more quickly.

Offering local delivery helps you:

• Connect with the local community 
• Enhance the customer experience 
• Increase sales and revenue

Here is everything you need to know about in-house fleet management.

5. Compare the Rates Between Carriers

Most businesses don’t realize that they can haggle with their delivery providers. Logistics companies usually give better rates to customers delivering higher volumes. Simply put, the more you ship, the cheaper per package. 

You should become familiar with your package’s dimensions, weight, and where it’s coming from and going. This way, you have some negotiating power when you talk to different providers. Some delivery services also offer eCommerce payment processing deals, so it’s worth inquiring about them. 

In short, don’t just settle for the first delivery company you come across. A little bit of research and haggling could save you a lot of money in the long run.

How to Prepare for Delivery Price Increases

To prepare for delivery fee increases, you must look at what your current shipping strategy uses for pricing: free, flat-rate, or calculated shipping rates.

1. Free Shipping

If you offer free shipping:

• Do nothing: Keep giving free shipping; you will have to pay the new, higher shipping cost yourself.
• Raise your products’ prices: If you raise your product prices to cover the extra cost of shipping, your margins will stay the same. But some customers may notice the price increase, which could make them buy from you less often.
• Offer free shipping minimums: An excellent way to make people spend more money is to have a free shipping minimum. So if people want their order to be shipped for free, they need to pay a certain amount.

2. Flat-Rate Shipping

If you offer flat-rate shipping:

• Do nothing: Keep offering flat-rate shipping; you will need to pay for the extra cost when the rates go up.
• Adjust your order value ranges: You do not have to charge the exact shipping price every time. Charge more for smaller orders and less for larger orders. If you already charge different fees for shipping, you may change the ranges to match the new, higher shipping cost.
• Raise your products’ prices: If you keep your shipping price the same and increase your product prices, you will make the same amount per product.
• Raise your flat-rate shipping price: If you increase the shipping cost, it may have the same effect as if you raised your product prices. You will probably see this in the number of people who abandon their carts. One of the most common reasons people do not finish buying something is because of shipping costs.

3. Calculated Shipping

If you offer calculated shipping:

• Do nothing: You need to remember that shipping costs are one of the main reasons people do not finish their purchases or abandon their carts. If shipping costs go up, more people might leave their carts.
• Lower your products’ prices: If you lower your product prices, your shipping rates will automatically decrease too. This could help keep costs the same for customers. But before doing so, make sure it makes sense for your business. For example, if you have a premium product, you want people to know that it is high quality and worth the price.

How Dropoff Can Help

At Dropoff, we understand that the success of your business depends on the efficiency of your delivery operations. That’s why we offer a wide range of delivery and logistical services to meet your needs.

Whether you need occasional deliveries or are dependent on logistics, we want to ensure your day-to-day operations run smoothly. We adapt to your unique needs and scale to meet the demands of your growing business.

Our highly competitive rates ensure you get the best possible value for your money.

If you’re unhappy with delivery rate increases announced by your current logistics provider or simply looking for a better way to manage your deliveries, talk with a Dropoff expert today.

FAQs on Delivery Price Increases

The post 5 Ways To Minimize Delivery Rate Increases appeared first on Dropoff.

This blog post will discuss tips on dealing with shipping rate increases in 2023. By following these tips, you will keep your shipping costs under control and maintain healthy profits for your business.

Shipping Rates Continued to Rise in 2022

2022 was an expensive year for shippers who weren’t prepared for higher annual rate increases. This year, a 5.9% general rate hike was common across U.S. carriers, higher than the 4.9% increase many applied in 2021.

1. USPS Shipping Rate Increase 2022

The USPS filed a notice with the Postal Regulatory Commission regarding a temporary price adjustment for essential package products during the 2022 peak holiday season.

The planned rates would affect commercial and retail domestic competitive parcels, including Priority Mail Express (PME), Priority Mail (PM), First-Class Package Service (FCPS), Parcel Select, and USPS Retail Ground. International products would not be affected. The temporary rates went into effect on October 2 and will remain in place until January 22, 2023.

A brief outline of the USPS rate changes in 2022:

Domestic Shipping Rates (Commercial Base Pricing):

• Priority Mail Express rates increased by an average of 4.3%.
• Priority Mail rates increased by an average of 2.7%.
• First-Class Package Service rates increased by an average of 7.4%.
• Parcel Select Ground rates decreased by an average of 12.1%.
• Media Mail rates on average increased by an average of 12.1%.

International Shipping Rates (Commercial Base Pricing):

• Priority Mail Express International rates increased by an average of 3.2%.
• Priority Mail International rates increased by an average of 3.7%.
• First-Class Package International Service rates increased by an average of 4.2%.

A quick read: The Ultimate Guide to Logistics Optimization.

2. FedEx Shipping Rate Increase 2022

FedEx also responded to rising demands, higher labor rates, and spiking fuel costs by raising their rates.

Effective January 2022:

• FedEx Express, FedEx Ground, FedEx Ground® Economy, and FedEx Freight rates increased.
• New shipping surcharges and fees were applied to customers’ total shipping rates.
• There were updates to the Delivery Area Surcharge ZIP code lists for FedEx Express and FedEx Ground. 
• FedEx Freight imposed a “No Shipment Tendered” surcharge for pickups where no shipment is given to the carrier.
• A Delivery and Returns Surcharge will be assessed on delivered or returned packages using FedEx Ground Economy services.
• The Additional Handling Surcharge and Oversize Charge rates for U.S. Express Package Services and U.S. Ground Services will be based on the shipment’s zone.

3. UPS Shipping Rate Increase 2022

Similarly, UPS adjusted its rates to help pay for improvements and expansions.

Effective January 2022:

• The Air Fuel Surcharge will be based on the National Average U.S. Gulf Coast Jet Fuel Price and adjusted weekly.
• The Ground Fuel Surcharge will be based on the National U.S. Average On-Highway Diesel Fuel Price and adjusted weekly.
• The list of Zip Codes to which Area Surcharges apply was updated.

Shipping Rate Increases in 2023: What to Expect

What shipping rate increases should you look out for in the coming year of 2023? Let’s discuss a few potential spikes below.

1. FedEx versus UPS

UPS and FedEx have been increasing their rates by 4.9% annually for nearly a decade, but they broke that trend for 2022 and announced a 5.9% increase. This increase shocked the industry, especially considering their customers’ struggles due to the pandemic and UPS’s already record-setting profits.

“The similarities of base price increases between the two aren’t a coincidence. If one of the carriers decided to implement lower rate hikes than its competitor, its network would be overwhelmed by a surge in demand that would hurt service levels. They will always be pretty similar, because right now, one of them can’t absorb significantly more customers than the other one can.”

Kevin Miller, Vice President of Data Insights at Sifted

2. DHL Express Follows Suit

Following behind, DHL Express announced price adjustments that will take effect on January 1, 2023. The average increase in Australia will be 7.9% compared to 2022.

“With the annual price adjustment, we are able to invest in our infrastructure and technology to ensure resilient, sustainable, and world-class customer solutions. It includes state-of-the-art aircraft and vehicles, expanding our hubs and gateways to meet increasing customer demand, and investing in green and more sustainable solutions, such as Sustainable Aviation Fuel and electric vehicles.”

Gary Edstein, CEO & Senior Vice President at DHL Express Australia

The Impact of GRI Announcements

What is surprising is that carriers are not using GRI announcements as a way to get customers. Instead of using it to attract new business, they use rate hikes to offset volume declines and ensure revenue growth goals are met.

Check out our guide on third-party and in-house fleet management!

4 Reasons Why Global Shipping Rates Will Continue to Rise

Let’s break down the four main reasons why shipping rates increase.

1. E-Commerce Keeps Growing

Lockdowns led to more online shopping, even among baby boomers. This change in spending habits made the demand for container space shoot through the roof. For instance, in December 2020, US-inbound cargo volumes were up 23% from the year before, leaving carriers struggling to keep up with the demand.

In addition, global shipping volume is predicted to reach 200 billion parcels by 2025. So it’s safe to say logistics professionals are trying to prepare for a future in which eCommerce is the norm.

2. Labor Shortages

Ports, warehouses, and manufacturing hubs are genuinely struggling to find workers.

The pandemic made people not want to return to the workforce, despite safety measures. With fewer staff, companies have to work at a lower capacity and raise prices.

3. Random Outbreaks and Closures

The current state of the shipping industry is a perfect example of how interconnected the global economy is. A delay in one part of the world will quickly lead to issues in other parts of the world.

In this case, the inconsistent access to key ports delays the delivery of goods, which impacts the manufacturing output. Think ripple effect!

In January 2021, a Los Angeles port saw 42 ships anchored offshore – yet every warehouse within 60 miles was already full. They had to wait until space was available without anywhere to transfer the cargo, and these delays came at a cost.

4. Shipping Container Shortages

Simply put, most empty containers were stuck in understaffed, congested, or locked-down ports.

Fewer containers are available for a return trip to Asia or Europe when fewer ships arrive at US ports. So then, what happens next? Massive pileups of goods in stateside warehouses and port terminals, causing delivery times to slow overall.

6 Tips on How to Deal with Shipping Rate Increases

“The best practice for working through general rate increases going into effect in January, know your costs. Analyze your shipping invoices in detail. Ensure a clear understanding of each line item on the invoice. What is the price now, and what is the price in January? Some surcharges will go up double digits, others smaller amounts. Then search for the final mile provider in your market.

Sometimes it’s more cost-efficient and higher levels of service to work with an alternative provider like Dropoff. Dropoff offers a customized final mile service with a superior recipient experience, all driven by our 24/7 customer service teams and industry-leading technology.”

Millie Tarallo, Chief Revenue Officer at Dropoff

Every business owner should know what to do when their carrier raises their rates. Here are six tips on how to approach shipping rate increases.

1. Change Inventory Location

Shipping costs are a real pain for eCommerce businesses, but there are a few ways to offset those costs. One way is to put products closer to most customers by distributing inventory to multiple warehouses or focusing marketing efforts on areas near existing warehouses.

Another option is a zone-skipping strategy, where packages are moved by bulk freight to a post office near their final destinations. It takes extra effort but should pay off in the long run.

2. Reduce Package Weight and Dimensions 

Weight is a significant factor in determining shipping costs. The heavier the box, the more it will cost to ship.

For example, a box that weighs 10 pounds will cost 30 cents more to ship than usual during USPS’s 2022 Christmas rate hikes. However, if that same box weighs just one ounce more, the shipping cost will increase by 95 cents. So just a slight increase in weight will have a major impact on shipping costs.

Ways to reduce the weight of your package:

• Use corrugated packaging
• Use lightweight packing material
• Customize your shipping package

A few simple tweaks to your packaging process could save you a few ounces each shipment, leading to bigger gains in your profit margins over time.

Speaking of cheap shipping, here’s everything you need to know about economy shipping.

3. Find Cheaper Rates

It pays to do your homework if you want to save money on shipping. Always compare rates from different carriers; don’t be afraid to search for discounts. You may negotiate a better rate, especially if you’re a frequent shipper.

4. Use Flat-Rate Shipping

The size and price of shipping containers are constantly changing, which makes it challenging to keep up with the latest prices.

Examples of rate changes driven by package size in 2021:

• UPS increased rates by an average of 4.9%, with higher costs for oversized and heavy packages.
• USPS increased rates by 2% to 4.95%, depending on the item’s size.
• FedEx raised the amount it charges for shipping freight from $0.10 to $0.35

Today, online brands are turning to flat-rate shipping to lower shipping costs. With flat-rate shipping, the shipping cost is the same regardless of the weight or size of the item. This makes it much easier for customers to budget shipping costs, encouraging them to make larger purchases.

5. Stay Up-To-Date with Rate Changes

As a business owner, stay on top of pricing changes so they don’t cut into your bottom line. Shipping carriers review their annual pricing and adjust rates due to higher costs like labor and fuel. New prices become effective every January and even during the year. To stay ahead, sign up for carrier rate updates and check their websites regularly.

6. Offer Local Pickup and Delivery

A recent trend is people shopping through small, independently-owned businesses. According to Shopify’s customer trends data, almost a third of buyers say they’ve ordered something online and opted for local deliveries only since the pandemic started.

Local delivery lets customers buy your products online and have you deliver them to their homes. Customers can even pick up their online orders from your store.

Benefits of offering local delivery services:

• Connect with your local community
• Improve customer experience
• Increase sales

How Dropoff Can Help

We can perform the ultimate custom logistics solution this holiday season that meets your unique needs.

Logistics is a complex and time-consuming process. From managing inventory to coordinating shipments, there are many moving parts to keep track of. We offer a comprehensive suite of logistics services that helps you focus on other areas of your thriving business.

In addition, we have a team of experienced professionals who are available 24/7 to answer any questions you may have. So whether you’re looking for a one-time solution or a long-term partner, we’re here to help.

Talk with a Dropoff expert today and watch your logistics operation streamline itself.

FAQs on Shipping Rate Increases

The post 6 Tips on How to Deal with Shipping Rate Increases in 2023 appeared first on Dropoff.

If you make even one tiny mistake when planning routes, you’ll have missed deliveries, unhappy customers, and lost revenue. Delivery routing software takes all of the guesswork out of route planning.

Keep reading, and you’ll find out how a delivery route optimization system makes all the difference.

What Is Delivery Route Optimization?

Route planning optimization finds the best way for delivery drivers to deliver products to their destinations. But it doesn’t just mean finding the shortest route.

Route optimization considers different factors, including:

• Driver proximity and hub location
• The distance between each stop
• Delivery time windows
• Vehicle load capacity
• Traffic congestion
• Driver schedule
• Road accidents

Check out our guide on the best tips we have for logistics planning!

Why Is Delivery Route Optimization Important?

When finding the best route, humans can’t compete with GPS.

We don’t have the mental capacity to calculate the different factors affecting a route. Even if we could, it wouldn’t be accurate. You’ll also risk increasing your operating costs because you’re overbooking vehicles and using too much fuel.

The Role of Route Planning Optimization Software

Luckily, there’s a way to make all your deliveries on time by using delivery route optimization software.

Delivery route software will use machine learning algorithms and predictive intelligence to suggest the best routes. It will consider real-time location, weather, and traffic updates to perform on-time deliveries. This makes life easier for the drivers. Plus, it offers real-time tracking and automated updates for both the driver and your customers.

It creates a plan for your driver, tells them the order of deliveries, and provides a fixed route. This cuts down delivery turnaround time and makes operations profitable by reducing miles per delivery. In addition, the software considers real-time weather and traffic updates when planning routes.

5 Common Challenges Facing Manual Route Delivery Planning

There are challenges with using traditional route planning methods:

1. Expensive and reliant on manual intervention
2. Unable to scale delivery operations
3. Lack of real-time visibility
4. Unable to analyze in-depth data
5. Poor productivity

Find out how omnichannel logistics can help scale your delivery operations.

5 Ways to Optimize Your Delivery Routes

The most optimal routing sequences will consider the most efficient use of time and resources.

1. Plan Delivery Routes According to the Delivery Type

There are a few different types of package delivery:

• Curbside delivery: the driver will drop the package off at your doorstep.
• Threshold delivery: the driver will bring the package inside your home.
• White glove delivery: the driver will bring the package into your home and set it up for you.
• Contactless delivery: the driver will leave the package at your front door and notify you that it has been delivered.

2. Plan Delivery Routes Using Customers’ Shipping Addresses

Using a route planner, you can upload addresses from a spreadsheet or copy and paste them into the route planner. Importing them from your CRM system is also possible.

A route planner with eCommerce integration will generate delivery orders with customers’ shipping addresses from their online purchases. This is handy when you sell on platforms like Shopify, Magento, WooCommerce, or BigCommerce.

3. Sequence Multi-Stop Delivery Routes

Here’s where your delivery routing software will do all the work.

You deliver more packages with fewer fleets by sequencing your shipping addresses into the most efficient order. It’s helpful when there are many delivery drivers and fleet vehicles, where route planning optimization gets tricky.

That’s why using a delivery route optimizer makes your life easier.

Having trouble coordinating your vehicles? Learn how to manage your internal fleets.

4. Optimize Delivery Routes Based on Fleet Vehicle Capacity

When mapping out your delivery routes, don’t forget to consider the capacity your vehicle can carry. You should also consider business rules like delivery time windows and customer availability.

These tips help you increase fleet efficiency and make sure you’re using your assets to their full potential.

5. Analyze Routing Data and Track Logistics KPIs

After optimizing your delivery routes, don’t forget to track your drivers and vehicles as they make their deliveries. This way, you’re in the loop of whether each package is delivered on time and to the correct address. It’s easier to spot any potential delays and take action immediately.

Plus, the built-in analytics and reporting tools will help you improve your logistics KPIs.

Advantages of Delivery Route Optimization Software

Businesses and delivery drivers benefit the most from automating route optimization.

The benefits of route optimization software for businesses are:

• Efficient route planning
• Profitable deliveries
• Shorter delivery turnaround time
• Optimized routes
• Reduced cost per miles
• Better customer experience
• Enhanced KPI benchmarking
• Greater productivity
• Automated work allocation
• Risk mitigation

The benefits of delivery route optimization software for drivers are:

• Reduced chances of human error
• Higher number of on-time deliveries
• Employee retention

14 Features to Look for in Your Route Optimization Software

There are many types of route planning software today, each with unique features.

Features you should look for in delivery route optimization software:

1. Mobile and smart device integration
2. Ability for routes to be manually adjusted
3. Traffic avoidance
4. Comparison of ways driven with routes planned
5. Notes field for customer buyer delivery information
6. Real-time GPS vehicle tracking
7. Both one-way and round-trip routing
8. Up-to-date mapping API integration
9. Offline capability‍
10. B2B eCommerce platform integration
11. Very few or no stop limitations
12. Updated ETAs in real time
13. Ability to juggle multiple routes or trips
14. Ability to print paper routes

Like route planning, logistics optimization is just as crucial for your business.

5 Best Delivery Route Optimization Software

We explore five delivery route planning solutions to see what they offer drivers and businesses.

1. Circuit

Circuit began as route optimization software for delivery teams. The goal was to make it easy to plan routes with multiple stops.

There are two ways to input stops into Circuit:

• Using the auto-complete address feature
• Uploading large routes via a CSV or Excel file

Either way, the delivery route optimization feature works the same way. Circuit simulates thousands of different route combinations until it finds the best route, which only takes a few minutes.

2. Dropoff

We use a combination of custom optimization tools and white-glove account management services when providing the best routes. What makes our software unique is that it is people-powered with 24/7 customer service. Essentially, behind every customer is a human powering the delivery route optimization software.

Ryan Kennedy, Director of Product

Our features include the ability to upload large files via CSV or Excel file, route monitoring, customer updates, and more. We give customers the freedom to choose any courier action when delivering. These include age verification, specific customer signature, and barcode scan.

There is no tiered pricing in what our software offers, allowing all our customers to enjoy every single feature.

3. Routific

If you’re looking for an all-in-one platform, then Routific is worth checking out. It offers route monitoring, customer updates, and proof of delivery.

With Routific, you can optimize delivery routes for either time or distance and select which stops are the highest priority. So if delivery is running late, Routific will make sure prioritized stops are still completed on time.

4. RouteXL

RouteXL is the most basic service on our list, but it’s still pretty handy.

You can enter up to 20 addresses for no charge, and it will find the quickest route. This is helpful if you deal with many old, wrong, or incomplete addresses. It uses geocoding to help with this issue.

Geocoding turns addresses into geographic coordinates. It’ll pinpoint each address on a map to find the best route between them.

It offers two types of geocoding: free and premium.

The free version uses third-party geocoding services, like Bing, Here, Mapbox, MapQuest, Nominatim, or Photon. But if you have the budget for their premium pricing, your addresses will use Google’s geocoding API.

5. Route4Me

Route4Me offers a long list of add-ons and personalization options. Its pricing tiers include a level for single-person routes and a level for multi-person routes.

Plus, Route4Me lets you optimize within specific constraints, such as avoiding highways or tolls. Once a route is made, dispatch can manually move customers across routes and change the previously optimized route.

Their best features include route optimization, monitoring, customer updates, and proof of delivery.

Route Optimization Use-Cases for Your Industry and Real-World Examples

Let’s take a closer look at how route optimization can help your business specifically.

1. Healthcare Industry

Packages must arrive on time to make the most of healthcare delivery scheduling.

Industry challenges:

• Urgent appointments
• Customers expect real-time updates
• Requirements unique to each patient

How route planning optimization addresses these challenges:

• Deliveries are on time with accurate expected arrival times
• Customers receive ETA notifications by email or SMS
• Appointments automatically made with the right medical professional
• Optimization of routes between one patient location to another

2. Retail Industry

Delivery turnaround times will make or break a customer’s experience with your company.

Industry challenges:

• Customers expect real-time updates
• Last-mile delivery issues

How route planning optimization addresses these challenges:

• Real-time order tracking and notifications keep customers updated
• Efficiently deliver to multiple depots/distribution centers with order-based route planning

3. Inspection and Maintenance Industry

Even though driving is a small part of service jobs, last-mile delivery route optimization will make it easier.

Industry challenges:

• Drivers waiting around
• Last-minute changes

How route planning optimization addresses these challenges:

• Dynamic replanning helps adjust to cancellations and last-minute orders
• Advanced weekly planning adjusts for required breaks

Real-World Example: Telgian

Telgian is a worldwide provider of fire protection, safety, and security services. They have seventy field inspectors based in thirty-five states who are often on the road for extended periods.

They used to plan routes and schedules manually because of all the unique order constraints, like state regulations and licensing requirements. On average, it took three people 13 days to plan a month’s worth of inspections.

Telgian needed a better way to plan their routes.

How OptimoRoute transformed their planning process:

• Planners can easily import large volumes of orders using a CSV file.
• Planners can set week-long plans, including overnight routes with a different starting/end location every day.
• OptimoRoute automatically assigns orders to drivers based on capacity and skill requirements for each order.
• OptimoRoute plans the delivery route and schedule for each technician to service their customers.

The outcome:

• They got by with less staff for planning and actual inspections and achieved 19% year-on-year growth.
• A 256-hour reduction in monthly planning time, reducing the number of dispatch staff while increasing capacity by 70%.

4. Food Industry

For a food supply or delivery company, delivering on time is vital to keep goods fresh.

Industry challenges:

• Customers expect real-time updates
• Last-minute changes
• Large order volumes

How route planning optimization addresses these challenges:

• Real-time order tracking and notifications
• Dynamic replanning distributes last-minute orders or sick drivers’ shifts evenly across fleets
• Ability to plan routes for large order volumes within seconds

Real-World Example: Imperfect Foods

Imperfect Foods is an affordable grocery delivery service. They started working with Onfleet in 2017, when they first piloted a program in Portland, Oregon.

The pilot was so successful that they rolled out the program to new customers and markets. Onfleet’s route optimization technology has helped coordinate the pack centers, drivers, and customers in a hub and spoke model.

The outcome:

Onfleet’s software allowed Imperfect Foods to coordinate hundreds of drivers and routes, and serve over 400,000 customers in 38 states.

How Dropoff Can Help with Route Optimization Services

Customers have certainly seen efficiencies in cost savings from having an in-house fleet. So when they hire Dropoff for our route optimization services, it allows them to focus on other areas of their business. Our Dropoff portal is designed to give our customers ease when placing route orders.

Charles Barrow, Director of Strategic Accounts

We offer route optimization services that save you time and money. Our exclusive software considers various factors, such as traffic patterns and delivery locations, to create the most efficient route possible.

And because we handle the delivery ourselves, your items will arrive on time and in good condition. Whether you’re running a restaurant or a retail store, Dropoff will optimize your delivery operations.

Talk with a Dropoff expert today.

FAQs:

The post 5 Best Tips to Optimize Your Delivery Routes appeared first on Dropoff.

Buyers will look into your business with a magnifying glass, so they know exactly what to expect before acquiring your company.

This article outlines the critical components of a logistics company’s due diligence process.

What Is the Due Diligence Process?

Due diligence means thoroughly looking into a company and its financial records before getting involved.

Who Needs a Due Diligence Check?

When a company is interested in merging with or acquiring another, they’ll do research beforehand. They’ll look into the company’s business partners and suppliers to make sure they’re up to compliance standards.

The buyer in an M&A deal usually hires experts to perform due diligence. This includes accountants, investment bankers, and lawyers.

Here’s how Dropoff successfully acquired Rightaway Delivery, Inc.

Why Is It Necessary?

It’s mostly done so companies can protect themselves. For instance, it helps them comply with sanctions and legislation on money laundering, bribery, and corruption.

Three primary benefits of the due diligence process:

• It prevents corruption and money laundering
• It prevents unnecessary financial risks
• It prevents creating bad reputations

How Is the Due Diligence Process Different for Logistics and Courier Companies?

The due diligence process is especially crucial for logistics and last-mile delivery companies. These businesses deal with so many high-value shipments. So all the parties involved must be legitimatized and on the same page.

The process involves many activities, from reviewing financial records to conducting background checks.

A Comprehensive Due Diligence Checklist

Legal Due Diligence Acquisition Checklist

Collecting legal due diligence is a thorough process. The buyer wants information on your company’s legitimacy and potential. They want to know about lawsuits, permits, licenses, and agreements.

Corporate Structure

• Organizational chart showing the different parts of the company.
• Joint ventures, partnerships, and other agreements where two or more people share the profits.
• All information about the board, shareholder, and member gatherings.

Management

• Any transactions between related parties, including the procedures for reviewing and approving those transactions.
• Professional biography for each team member and all key employees.
• Professional biography for each board member.

Capital Structure

• Analysis showing the number of outstanding shares.
• Information regarding every private equity offering.
• A summary of any warrants, convertible notes, and rights that give the holder equity.
• Copies of any debt instruments that are outstanding.

Legal

• A summary of material litigation.
• A list of all required permits, licenses, and other authorizations and any necessary export control permissions.
• Copies of legal documents that limit or burden ownership of assets.
• Agreements with terms such as covenants and insurance.
• A brief description of the last-mile delivery company’s compliance program and copies of all policies, procedures, and other related documentation.

Real Estate

• A list of addresses and descriptions of each property development, office, warehouse, or other facility operated or maintained by the business.
• A summary of all the deeds done for the real estate owned by the business, including copies of any related title papers, title insurance policies, appraisals, and surveys.

Commercial Due Diligence Acquisition Checklist

This part of due diligence helps the potential buyer understand how commercially sound your logistics company is. It looks at how appealing your company is to customers and competitors. This report should include top customers, competitors, and commercial policies.

Suppliers

• A list of the top 15 vendors for the past three years.
• A summary of the policies and procedures created when dealing with a new supplier or contractor.

Marketing

• Any strategic plans, marketing materials, or advertisements that’s ever been created for the business.
• A summary of anticipated new goods and product improvements.
• Copies of advertising and marketing materials, including brochures, presentations, and sales sheets.
• A comprehensive list of marketing risks and opportunities.

Commercial Policies

• Copies of policies and procedures for pricing, credits, returns, warranties, etc.

Customers

• A list of the top 25 customers for the past three years.
• A list of customers that are no longer doing business with the company.
• All customer contracts are in an easy-to-access format.
• All material contracts with terms remaining longer than one year.

Financial Due Diligence Acquisition Checklist

When doing due diligence in mergers and acquisitions, financial information is so important. The buyer wants to know your company’s financial stability and performance in the market. This helps them decide if your courier business is worth buying.

Accounting

• A clear explanation of any off-balance sheet items, liabilities, or obligations.
• Any incidents not disclosed or referred to in the financial statements.
• An itemized list of all prepaid expenses and deposits.
• Unaudited financial statements.

Finance

• A list of any cash management controls and procedures.
• Investment policies.
• Hedge policies, as well as copies of any related contracts or instruments.
• Documentation explaining the company’s inventory costing system and other procedures and policies connected to inventory.
• Debts, agreements, or arrangements that are expected to result in a loss for the company.
• Copies of most recent bank settlements and bank statements.

Operations

• A summary of all capital expenditure projects.
• A summary of all planned capital expenditures in the next 12 months.
• A list of all equipment and assets and a copy of the latest physical inventory.

Insurance

• A general overview of every current insurance coverage and copies of all related policy papers.
• A rundown of all claims made against any insurance policy.

Human Resources Due Diligence Acquisition Checklist

During mergers and acquisitions, the two companies’ cultures must blend well. The acquired shipping company should provide information on current employees and policies. This will help create a new company plan to merge the two cultures effectively.

A business acquisition due diligence checklist within HR typically looks into employee contracts, agreements, and a summary of current recruitment initiatives.

Human Resources Agreements

• Copies of all employment and severance agreements showing which employees are affected by the transaction.
• Copies of any consulting agreements.
• Copies of compensation agreements.
• Copies of non-competition, nondisclosure, or similar agreements.
• A description of any current recruiting efforts.

Benefits

• A comprehensive list of all benefits and a company’s compensation policy copy.
• Information on bonus or other profit-driven schemes and details of beneficiaries/participants.
• A summary of incentive stock options plans.
• Outstanding stock options and corresponding documentation.

General HR

• A list of all lawsuits brought against the company by current or former employees.
• Evidence or current documentation of an employee dispute resolved in court.
• Documentation of disciplinary proceedings taken against an employee or grievance filed by an employee.
• A summary of any legal investigations and processes involving employment issues.

HR Policies

• Copies of all employee handbooks and rules.
• The company’s hiring practices, including background checks and immigration status records.
• A detailed description of any changes in HR policies.
• A list of all loans and their respective balances.

Intellectual Property Due Diligence Acquisition Checklist

This part of due diligence creates a lot of value for the deal. Checking patents, trademarks, and digital domains makes sure the deal goes well.

Registrations

• A summary of the company’s registered trademarks and patents.
• A list of all websites and domains owned, including their creation date.

Contracts

• Agreements in which the acquired company is given the right to utilize IP owned by a third party.
• A detailed description of any IP not solely controlled by the acquired company.

Litigation

• A summary of occasions someone has infringed on the company’s IP.

Development

• A summary of the steps involved in generating, recognizing, capturing, and safeguarding IP assets.

Information Technology Due Diligence Acquisition Checklist

An IT audit tells a lot about your courier company’s key projects. You’ll discover policies, practices, and any security threats.

IT Administration

• A list of any current or upcoming IT projects.
• A list of the most critical IT resources.
• Policies and procedures for software purchases and maintenance.
• Diagram of technical architecture with servers, storage devices, operating systems, and databases.  
• A summary of the annual maintenance costs for IT hardware, including new hardware and replacements.

Security

• A detailed summary of the vital security protocols.
• A description of backup and disaster recovery strategies and procedures.
• A detailed outline of data privacy policies and procedures.
• A summary of all personal and sensitive information.
• A list of any concerns, including the loss of sensitive information, destructive content, etc.

Environmental, Health, and Safety (EHS) Due Diligence Acquisition Checklist

Don’t forget about looking into environmental risks. Buyers use this information to make sure the company is environmentally conscious.

Environmental

• Any environmental investigation, citation, or notification of violation.
• Information on all stages of producing, treating, storing, and disposing of potentially harmful substances.
• A detailed description of any material financial losses.
• Copies of environmental studies, assessments, and surveys in respect of land.
• Any physical letters or emails exchanged with an environmental protection organization.

Health and Safety

• All citations or notices of violation concerning employee health and human services.
• All policies and procedures that are related to emergency response.
• All health and safety audit results, including findings resolutions.
• A summary of all workers’ compensation and health care costs.

Tax Due Diligence Checklist

Has your courier business been paying taxes properly? Buyers will look into this. If your company has any activities overseas, buyers want to know if those activities are legal and legitimate.

Tax Summary

• Results of all audits completed in the previous five years.
• Any agreements related to tax sharing or allocation between companies.
• A deferred tax assets and valuation allowances report.
• A comprehensive report on all current tax policies, including facts and figures regarding transfer pricing and audits.

Returns

• Copies of all federal, state, and local tax returns.
• Copies of all written communications and arrangements with any taxing authority.

How Dropoff Can Help

Due diligence is a must for any company looking to acquire another. Buyers can fully assess the acquired company regarding its financials, operations, and other vital areas.

Dropoff has a strong track record in acquiring smaller courier companies. We run due diligence very well, carefully assessing all parts of your courier business before moving forward with the acquisition.

If you’re interested in selling your logistics company, you should speak with Jason Burns the Director of Corporate Development at Dropoff.

FAQs on Due Diligence

1. What is the M&A due diligence process?

Due diligence means examining a company and its financial records carefully before getting involved.

2. Why do logistics and courier companies need a due diligence check?

Due diligence is essential for courier businesses because it helps protect their interests. For instance, it helps companies during mergers and acquisitions.

3. Who helps companies with the check?

The acquired company can call on trained staff or outside advisors to do a due diligence check. Typically, buyers will hire external experts.

4. What is a due diligence report?

A due diligence report is a detailed summary of the checks that were done. It also records how the process went. The scope of the report is different from case to case.

5. Can I change requests in this checklist or add new ones?

There is no one-size-fits-all approach when it comes to due diligence processes. We recommend personalizing your checklists by adding other things unique to your needs.

6. Does this checklist have all the necessary mergers and acquisitions due diligence information?

This logistics due diligence checklist is a great starting point but is not complete. Overall, every deal is different and may need more information.

The post Due Diligence Checklist for Logistics Companies appeared first on Dropoff.

In this blog post, we’ll outline tips on preparing your business for sale. Follow these tips, and you’ll be one step closer to finding a buyer for your business.

Why You Should Consider Selling Your Local Courier Service

With the courier industry booming right now, here are three reasons to consider putting your courier service business up for acquisition.

1. Highly Competitive Industry

It’s not surprising that many business owners are considering selling their local delivery company. In a highly competitive industry like this, it can be tough to survive competing with big players that have bigger networks and access to advanced technology compared to smaller companies.

So if you’re thinking about selling, do your research and find the right buyer.

2. Ever-Changing Market Demands

You need to understand your market and what customers want as a business owner. With the ever-changing landscape of technology and the way people consume media, it’s hard to keep up.

For businesses struggling to keep up, being acquired by an established player can be a catalyst for success.

3. Increased Staffing Needs

As the demand for courier services continues to grow, so does a company’s need for staff. Courier companies have to increase headcount to meet this ever-growing need and keep their customers happy.

The workload gets especially high during peak seasons or when a client has a spike in shipment needs. And yet hiring more people will only increase your expenses. This growing cost is another good reason you might consider selling your local courier business.

Looking for some of the big players?

Here are our top picks for US last-mile delivery companies and startups.

9 Tips on How to Prepare Your Local Courier Service for Sale

Before you put your business on the market, there are a few things you need to do to prepare.

1. Ensure You Have a Solid Plan and Have Your Operations In Good Order

That means making sure your operations are running smoothly and that you have a solid acquisition plan.

A clear plan shows potential buyers that you know what you’re doing. Sure, it’s a long process, but it’s all in the details. These details give your buyers more confidence during the purchase.

Doing an internal audit is a good way to identify any issues before you start making offers. Treat the audit as a chance to fix any issues, so your business is in tip-top shape when it comes time to sell.

2. Sort Any Legal and Tax Issues Beforehand

Before selling your company, make sure you’ve gotten rid of all legal and tax issues. This ensures there are no surprises during the due diligence portion of the process and potential buyers are more likely to commit.

It’s best to take care of any outstanding issues before putting your business on the market.

3. Analyze Your Current Financial Situation

Our next tip is to check your business’s financial situation. Companies often approach acquiring another business quickly before they even get a chance to review their books. Buyers like businesses that have their books in order. They expect the business to be settled and an accurate figure that shows its current financial position, with information on financial reports, taxes, cash flow, bank records, and debts.

Remember, this does not mean changing your company’s figures to look better. Buyers need to know the actual financial standing of your business any discrepancies will cause issues down the line.

4. Gather All Customer Data

Another tip is to make sure that all customer data and customer relationships are in good order. When a company is thinking about buying your business, the last thing they want is for your major customers to leave. So it’s important to let your customers be in the loop of what’s happening and secure them in coordination with the buyers’ expectations.

5. Ensure Your Company’s Technology Is Ready for Transfer

The goal is to set your company’s technology up for a smooth transition. Whether it’s putting all your data in a format that can be easily transferred or making sure any specialized software you use is transferrable, remember to be thorough.

You’ll also want to have all the licenses and permissions in order. If any processes or functions are difficult to transfer, now is the time to document them so the new owners will know what to do.

Speaking of logistical technology, check out our article on current logistics innovations and industry trends!

6. Discuss and Negotiate with the Right Stakeholders

You need to deal with the right people. You want to find buyers who are a good fit for your business and smart enough to take it to the next level. If you’re working with brokers, make sure that they have excellent knowledge of the courier industry and are pros at negotiating prices.

7. Understand the Valuation and Due Diligence Process

One of the most essential tips is understanding the valuation and due diligence process potential buyers must go through. We know that valuing a business is not an exact science, but there are methods that buyers will use to determine your company’s worth.

Buyers will typically look at your company’s historical financial information, including sales, profitability, and assets. They want to see a solid growth plan for the future, including proof of past growth and an achievable plan for continued growth. Lastly, they’ll also consider intangible factors like your company’s reputation and brand equity.

Due diligence is when buyers investigate your business before going through with the purchase. They want to confirm that everything you’ve told them about your business is true and that there are no hidden liabilities or risks. This process takes a while but be prepared for it.

Interested in learning more about courier services? Here’s how Dropoff has navigated through the last-mile delivery industry.

8. Plan the Transition of Your Employees and Managers Post-Sale

Don’t forget to plan the transition of your employees and managers. Ideally, you get to sell your business to a buyer who agrees to keep on most or all of your current staff. But even in this case, there will definitely be some changes in management structure and responsibility.

Tell your employees about the sale in advance to ensure a good transition. Let them know what the plans are and what, if anything, will be changing for them. That way, there won’t be any surprises, and everyone will be on the same page.

9. Learn How Your Business Will Operate After the Sale

Take the time to learn what will happen after purchasing your courier service business and how it will operate. This seems like a no-brainer, but you’d be surprised how many people don’t do this. They assume that everything will just go back to normal after the sale, but that’s not always the case.

Sometimes the new owner will want to change things up. So take some time to sit down and process that you’re not in control anymore. If possible, talk to the new owner and get a feel for their plans.

How Dropoff Has Acquired Small Courier Service Businesses Successfully

At Dropoff, we’re always looking for opportunities to grow our business. One way we do this is by acquiring local courier services. We get to expand our reach and provide even better customer service. The acquisition process is quite complex, but we have a team of experienced professionals skilled in negotiating and completing these transactions.

Learn more about when Dropoff acquired Rightaway Delivery, Inc. after 23 years of success in Michigan.

We’re confident in our ability to identify and acquire businesses that will be a good fit for our company. We are committed to providing the best possible service to our customers.

If you’re interested in seeing if your business is a good fit for being acquired by Dropoff, reach out to our Director of Corporate Development at jburns@dropoff.com

FAQs on Preparing a Courier Service Business for Sale

1. How to prepare for the sale of your courier service business?

Steps to take when selling your local courier service:

1. Ensure you have a solid plan and have your operations in good order.
2. Sort any legal and tax issues beforehand.
3. Analyze your current financial situation.
4. Gather all customer data.
5. Ensure your company’s technology is ready for transfer.
6. Discuss and negotiate with the right stakeholders.
7. Understand the valuation and due diligence process.
8. Plan the transition of your employees and managers post-sale.
9. Learn how your business will operate after the sale.

2. How do I determine the worth of my local courier service business?

The formula for figuring out how much a business is worth is straightforward. You take the assets of your company and subtract any liabilities that it has.

3. Why should you consider selling your local delivery service company?

Reasons you should sell your courier business:

1. You’re already competing in a highly competitive industry.
2. It’s difficult keeping up with changing market demands.
3. You can’t keep up with increased staffing needs.

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