Jerry M. Hempstead is a 32 year air express industry veteran and consultant. He is President of Hempstead Consulting based in Orlando, FL. Jerry is a contributing author to freightdawg.com and may be contacted by email at gmhempstead@aol.com
As a presenter at a recent shippers conference, I was asked what I thought was the best value in the market for air parcel shipments. I didn’t even have to think about it! I know the person who asked the question was surprised by my answer.
The reason is that parcel carriers usually don’t advertise what I described. Most carrier salespeople don’t like to promote products where they either don’t get sales credit or may only get partial compensation. Parcel consulting firms also don’t like to talk about this little secret because under most current compensation models they don’t make any money either!
"I'm talking about pre-purchased options!"
If you think of traditional air express, the carrier bills you for the transportation and gives you the packaging for free. In the pre-purchased world you buy the packaging and the transportation is free. A key attribute for the Parcel carrier is that they get their money up front. They don’t have to send an invoice, chase past due amounts, write off unpaid bills and in most cases many of the pre-purchased items never get used, so they get some “free money”.
Option 1: The United States Postal Service
The US Postal Service has two pre-purchased options, Flat Rate Priority Mail Envelope and Flat rate Priority Mail Box. The Envelope is $4.05 and the Box is $8.10. (Those prices are subject to change in May 2007). The cost is for what the USPS says is 2 to 3 day service. My experience however, has been that ever since the USPS subcontracted the air portion of Priority Mail to FedEx, the service is very consistent and the vast majority of shipments arrive in two days! Most people don’t realize how good and how consistent the USPS Priority Mail product is.
The Flat Rate Priority Mail envelope is a standard cardboard Letter container (12 1/2" X 9 1/2"). You can pre-purchase these with the postage already affixed and with prepaid and preprinted options for additional services like signature or delivery confirmation. The price is for everything you can stuff in the container.
The USPS has 2 different sized Flat Rate Boxes. (11-7/8" x 3-3/8" x 13-5/8" & 11" X 8.5" X 5.5”) There is no fuel surcharge, no pickup fee, no delivery area surcharge, no residential surcharge, no address correction fee. The Post Office delivers to every address in the country 6 days a week. There are no extra charges to ship to Alaska, Hawaii and Puerto Rico, and if its undeliverable they will return the package back to you for free. Of course one thing the USPS does that the private carriers don’t do is that if the consignee has left a forwarding address the USPS will send the piece onto your customer – for free. The Postal Service can also deliver a shipment to a P.O. Box, which the private carriers, at this point in time, can’t.
I suspect if you have a large enough “buy” the USPS could agree to custom printing or co-branding the outside of the package.
Option 2: DHL Ship Ready
The next option is the DHL family of Ship Ready Products. Like the USPS products you purchase a container and the shipping is free. The packaging difference is DHL only has “flats”. They have a Letter size like the USPS, a longer legal size (15" x 9½") and a Pack (16" x 12"). The service is next morning delivery to the morning delivery zips with a guarantee by Noon vs. the 2 to 3 days of the USPS. The price is elastic based on the number of prepaid packages you order.
The price is all you are going to pay. The Ship Ready products never expire. They can be a hedge against future price increases or increasing fuel surcharges. There are no extra charges for DHL Ship Ready, however there is no Saturday nor can Ship Ready be used for off shore shipments.
Option 3: FedEx Prepaid Stamp
The most efficient product on the market is the FedEx Prepaid Stamp. You can buy the stamps depending on the service level you need. It is available for FedEx Priority Overnight®, FedEx Standard Overnight® and FedEx 2Day. You buy the stamp at your corporate rate for use up to a maximum weight you specify. So for example you can by 2 day 5 pound stamps for your Region (zone) 5, 5 pound rate. My experience has been that FedEx does not send a balance due bill if you go over the weight you purchased the stamp for, but they could remedy that issue at any time, so Caveat Emptor. They also reserve the right to charge a pick up fee, if the package is picked up at a regularly scheduled pick up point. This too I have never seen done but FedEx reserves the right to charge it. I did a test once to enter into FedEx every imaginable exception to the rules to see if I ever received a bill for a balance due. I never have. It just may not be worth their while to chance to balance due.
There is great peace of mind knowing what a shipment is actually going to cost. There can also be some great savings if used properly. I would send every two-day rural, residential shipment that I could fit in the pre-purchased box with the USPS. It may be impractical, but I’ll bet just about every shipper would save money on those shipments. There are also ways of getting reduced prices on the DHL and or the FedEx programs depending on what kind of program and discount you have with the carrier. I have recently seen discounted DHL Ship Ready products on eBay.
If this subject is of interest to you, just e-mail me at gmhempstead@aol.com. I can share how to take advantage of prepaid shipping. The potential savings can be great. I’ll ask a few questions and depending on your discount level, I can determine if you can find a lower price.
I’m here to serve.
Jerry
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