New International Shipping Document Requirements Mandatory for October 1, 2008

Back in June, we wrote about an upcoming change effective July 2, 2008, that the Census Bureau would require mandatory filing of export information through the Automated Export System (AES) or AESDirect. This is for all shipments where a Shipper’s Export Declaration (SED) is required. Beginning October 1, 2008, the "adjustment period" is over and there are fines and potentially prison time if these filings are not filed accurately and on time. The fines and prison time are significant - up to $10,000 and 5 years per shipment.

Some history-

The changes are in the Foreign Trade Regulations (FTR) that affect the Shipper’s Export Declaration (SED) (now known as Electronic Export Information - EEI) procedures. The new Regulations became effective July 2, 2008. By October 1, 2008, if EEI is required for a U.S. export, the EEI must be electronically filed to the Automated Export System (AES) by the U.S. Principal Party in Interest (USPPI) (normally this is the exporter) or their designated agent.

There are more rules about when EEI is required than can be covered well here. UPS, FedEx and the USPS want different information about EEI, some of the exemption numbers have changed, and there are many other requirements. Be sure to contact your carrier(s) so they can advise you about how to comply with this new requirement. The USPPI can file for themselves directly with AESDirect. You may also find that the carriers offer other filing method options.

You will find additional information about this at the U.S. Census Bureau web site.

Handling Carrier Strikes and Other Service Disruptions

Recently, the 12,000 member Teamsters Local 705 in metro Chicago authorized a strike against one of the major carriers. Although an agreement was reached just hours before deliveries stopped, it reminded me that there is another important aspect of a multiple carrier shipping system - carrier choice. Sure, carrier choice in your shipping system gives you the best price for each package and more negotiating power with the carriers at contract time. But "best pricing" is in second place compared to making sure your packages get shipped.

Labor problems are not the only reason a carrier may stop picking up your packages. What about weather like hurricanes and winter storms? If a carrier stops picking up your packages, whatever the reason, you need to do something immediately. If packages aren't flowing out, then money is not flowing in. Even a one day interruption is disruptive, and you never know when it will be over until it's over (with apologies to Yogi!). If you miss just one shipping day, you could be facing expensive service upgrades when you ship the next day to you meet promised delivery times.

When an interruption becomes extended, history tells us other carriers may not even accept new customers to prevent overloading and poor service to their current customers. Even if you have selected a "primary" carrier, consider giving another carrier some packages each week so you have an alternate carrier available if the worst happens. As an example, with the CPS shipping software, you simply change the three carrier initials and you are immediately shipping with your alternate carrier, printing carrier accepted labels and sending them accurate data for billing and tracking.

Strikes, weather, etc. are "worst case" situations, and a shipping system with carrier choice can do more than just save money, it could save your business.

UPS® Has Issued a New Sustainability Report

One day after our Blog posting on “How You Can Save Oil”, UPS released its sixth annual Corporate Sustainability Report with progress reports on the company's economic, social and environmental performance. The report is posted at sustainability.ups.com.

Of special interest to those that are looking at their shipping impact on foreign oil use visit the Environmental Section (PDF).

How You Ship Can Save Oil

I find it very interesting that T. Boone Pickens, an oil man, is promoting alternate energy sources. I am sure there is a hidden profit motive, like drilling for and selling natural gas, but I will have to admit that he makes some very valid points. The PickensPlan can be seen at his site located at http://pickensplan.com/. Some of Mr. Pickens points include the fact that in 1970 we imported 24% of our oil, but today that figure is 70% and growing! He also points out that our use of oil amounts to $700 billion dollars leaving our country this year alone. That's four times the annual cost of the Iraq war. This is a huge loss of wealth and we contribute to this problem every time we ship something!

In making his argument for change, Mr. Pickens offers some interesting ideas that we think can even be applied to parcel shipping. As you promote your products and ship parcels every day, you can help by directing customers to make the right choice. For example, promoting ground shipping over air shipping decreases our use of foreign oil.

Choosing carriers and services within your chosen carrier’s portfolio of offerings can also make a difference in how much oil you use to ship your parcels. Many carriers have already started to make changes. For example UPS has announced the deployment of 167 compressed natural gas trucks which supports Mr. Pickens plan. And USPS is moving to E85, biofuels and fuel cell vehicles for their delivery vehicles, all of which decreases our dependence on foreign oil.

These are great beginnings but as a parcel shipper you need to fully think about and offer shipping methods that truly help us stop the drain on US wealth by the use of foreign oil, even when shipping domestically. Some solutions will help. Others solutions like E85 and biofuel have caused other issues that you need to take into consideration.

If you would like to learn more about this subject so you can do your part, I recommend you visit the sites below:

PickensPlan
http://pickensplan.com/

UPS
http://www.community.ups.com/environment/main.html

FedEx
http://about.fedex.designcdt.com/corporate_responsibility/the_environment

USPS
http://www.usps.com/green/eco.htm

EPA SmartWay
http://www.epa.gov/smartway/

GreenBiz.com
http://www.greenbiz.com/

Treehugger.com
http://www.treehugger.com/

A Reliable Shipping System Must Include a Good UPS

How can you give your shipping system an additional "edge" to be as reliable as possible? Use a battery backup (or UPS - uninterruptible power supply) so that temporary power interruptions do not affect your shipping.

Our CPS(TM) shipping software is very reliable (with great “Economic Stimulus" pricing through 8/29 - a shameless "plug") but a power problem in the middle of shipping a package can create problems, including an unnecessary system crash. A battery backup gives you time to shut down your computer properly. Better battery backups also provide line conditioning to correct line sags as well as reduce an over voltage on the line.

Ideally, using a good UPS with line conditioning abilities is the way to go. Use it when you need maximum reliability and up time for any computer, including servers, networking devices, and Internet modems and routers.

Choose a good UPS and protect the business's data and make sure that service to customers isn't interrupted. Brand names include MaxPower Corp., APC, Minuteman, Tripp Lite, Liebert, and Best Power.

The right UPS will take the panic out of a power interruption.

Are you selling nationally or locally? Are you sure? (Part 2)

Forecasts say that online sales will grow in 2008, even in the current economy. Are you going to get your share? Eliminating as much cart abandonment as possible will definitely help. As you plan for the season, your shipping system can give you the information you need to make your final price right for your customers. Make them click "Buy" instead of "Bye".

For the same order, do you charge different amounts for shipping depending on the package destination? That makes your price different according to where your customer lives. If you visit you local Sears store, they don’t ask for your ZIP code before you get the price. Yes, that's a little different situation, but no one likes to know they are paying more than someone else for the same item. That's a key factor that creates abandoned shopping carts.

It's clear that flat rate shipping, strategically mixed with "free" shipping offers, combats this problem. It has been found by a number of experts and Internet entrepreneurs that it is very important to display shipping charges before checking out to avoid shopping cart abandonment. Now, how to do this?

Of course, free shipping is very easy to calculate. Figuring out the right amount for flat-rate shipping is easy but takes a little more effort. The easiest way is to use your actual carrier rates in your shipping system, then use historical reporting directly from the shipping system. As an example, the CPS shipping software can use actual carrier rates, including contract specific rates that reflect the fuel surcharge. CPS provides a report (Click here to see a sample CPS Flat Rate Shipping Charge Report…) showing average shipping cost per package and average shipping cost per pound. These costs are also then split into next day, 2 day, 3 day, ground and international services. With just a few mouse clicks you can keep tabs on your shipping costs for any period of time by carrier and service to accurately manage your flat rate shipping offer.

Of course you can get these same numbers from the carrier bills, but its so much easier if you can just "Click" and see them. The example above is for CPS, but look for similar reporting in your shipping system. Monitor your costs at least monthly and make adjustments for changes in average charges. When using flat rate charges you can offer free shipping for special times of the year like holidays when competing for consumer dollars.

When you look at customer satisfaction and shopping cart abandonment issues, one might conclude that free shipping is the only way to go. This may not be the best approach for a couple of reasons, especially for the bottom line. Using flat rate shipping charges for low volume orders, then using free shipping to increase the order amount are effective ways to increase sales, decrease shopping cart abandonment and increase your return customer rate. When done properly, this leads to increased profits. In addition, if you offer only free shipping you have to build the shipping cost into the item cost. This means you have to change item costs on a regular basis to offset the shipping price increases brought about by fuel surcharges - inconvenient for you and confusing for your customers.

Use your shipping history reporting tool to monitor your average shipping costs and you can successfully use flat-rate or flat-rate and free shipping. Quick, easily available reporting from your shipping system lets you make sure you are making enough to break even for total shipping charges either way.

Are you selling nationally or locally? Are you sure? (Part 1)

Do you think you are selling nationally but most sales are local?

A recent caller from the New York City area suddenly realized this. He brought up his 50-60% cart abandonment rate. He also said he charges his exact shipping amount to his customers so he does not "screw" people (gotta love NYC!) by charging them more than the actual cost to ship the package.

I asked him if he wanted to sell his products in Florida. He said "Yes!" "California?" "Yes!" He knows his shipping costs are higher to ship to me in Florida vs. a customer in New York. The way he charges for shipping means that he charges more for his products to customers who are further away. So if I shop at his site, I will quickly realize this and recognize that it's cheaper for me to buy from a competitor of his in Florida. It dawned on him that, by doing this, he makes his products more expensive nationally than locally. That effectively limits his market and leads to abandoned carts. Now, who's getting screwed? He is, of course, and he doesn't like it.

"How do I get around this?" he asked. I suggested that he offer flat rate shipping for ground and air service to make his prices look competitive nationally. Then he should monitor his average charges on a weekly and monthly basis to determine if he needs to adjust his flat rate prices. Besides increasing his national sales since shipping costs will be the same for all, he also thought that it would be much easier to maintain shipping prices at his web site. Are you where he is?

Next time, part 2 - an easy way to discover the right "flat rate" price to charge for your shipping.