Embracing Change in 2025: Key Moves to Enhance eCommerce Supply Chain Success

Glenn Gooding [00:00:02]:

You need to look at making a wholesale change, what that might look like and where your volume fits in this kind of diversified 2025 carrier market. Between lightweight, less than a pound one to nine pounds heavier weight. Do you have regional concentrations? Do you have operations that align advantageously with a particular regional carrier? Are there other gig solutions you want to look at? And you need to consider things like what is your desired customer experience and how do you provide a cohesive customer experience nationally with multiple carriers? A lot of complex things to consider, but things you need to contemplate ahead of the time if you really want to go about trying to improve your position in the 2025 market. Welcome to Parcel Perspectives, the podcast dedicated to small parcel shippers. I'm Glenn Gooding and each episode we dive into insights, best practices and strategies to help you navigate this complex, costly market. Join me as we explore ways to strengthen your long term partnerships with your chosen carriers and stay competitively aligned. This is Glenn Gooding with iDrive Logistics, I'm the President. I have a very very meaty subject to try to share with you.

‍

Glenn Gooding [00:01:26]:

I hope you get something out of this. It's really mastering 2025's shipping landscape and boy people is it an interesting landscape that could be laden with minefields. I like to be a glass is half full kind of guy though, and so we're going to talk about challenges, changes and opportunities. Obviously, given the depth and breadth of a subject like this, I will not be able to dive into every nook and cranny. Also, I would also say that with many of you as unique shippers with unique business models and unique geographies and unique business needs. Not everything that I will talk about may apply to you specifically, but hopefully I will cover enough in this breadth to offer some nuggets for you and always open myself up for you for further discussion if you would find value in doing so. Along with that, if you have any questions I would welcome you to submit those. So at the end I will take any written questions and do my best to answer those for you within our given time constraint.

‍

Glenn Gooding [00:02:38]:

Also, so everyone knows this discussion this presentation is being recorded will be available for everyone. We'll also provide a copy of this presentation deck to all attendees. So humbling slide for me about my background. But I will tell you first of all iDrive's mission is to empower e commerce businesses to succeed on a global scale, intelligence driven, technology enabled and a proven track record. Where I get a little humbled is when I look at my years of experience I'm getting long in the tooth. I've been in this space now for 39 years, which feels even weird to share that with you in the group. I tell you, I cut my teeth and built my foundational understanding of this space. I think at one of the best companies from a legacy perspective in the world.

‍

Glenn Gooding [00:03:29]:

I'm thankful for that experience. And that was 21 years at UPS. Specifically on that background, I will tell you that I was an operator, I was an industrial engineer and I was a revenue manager. And through my progression, my career path, I finished in UPS's world headquarters where I managed pricing at the very highest levels for the largest, most complex shippers in the world. I do my very best to bring that perspective to bear in the marketplace. Now in an ever changing, ever more complex, ever more expensive, small parcel supply chain market, 2025 is truly a new shipping environment. If we rolled back the clock 10 years, just 10 years, we would have really three carriers we'd be talking about. We'd be talking about the USPS firmly cemented with first Class mail, followed by Parcel select and Priority Mail in the marketplace.

‍

Glenn Gooding [00:04:25]:

UPS and FedEx a little bit on, I would say local regionalized carriers, but that would really be it. And we would know that the USPS played a very niche role in that space. And it was really, for lack of a better term, a duopoly. Fast forward to 2025. I think for about the first time we're moving to a point where I just don't think duopoly is particularly appropriate anymore. Amazon through prime. The Prime Channel. The need to have available delivery capacity to grow.

‍

Glenn Gooding [00:04:59]:

The Prime Channel effectively has very effectively built out a national delivery network that is very valuable in the space and offers an option for two to five day delivery experience out there. A lot of pros on the side of an Amazon solution and a couple cons, but they have effectively entered the marketplace and I would say for lack of a better term would be considered a potential third carrier in the mix. We have the always present ups and FedEx kind of duking it out, continuing to wage a bit of a price war. But they're attempting to manage yields through a lot of interesting rate actions, some of those being quite covert. And then we have the United States Postal Service which is trying to deliver for America. That is Louis Dejoy's mantra on trying to right the USPS financial ship which is forecast to lose $6.9 billion in fiscal year 2025. And he has done a lot of things in the space to disrupt this space. In 2025.

‍

Glenn Gooding [00:06:11]:

So more complex, more expensive than ever before. It's a lot of great technology out there and that's fantastic. But I would challenge all of that with you need to have a captain steering the ship. You cannot purely allow technology to attempt to address your issues out there. More on that USPS and their operational shifts. DFA Delivering for America that has enacted significant changes in 2025 and I want to try to give you some broad brushstrokes on what's so impactful there. Historically, the USPS has offered what's called a workshare program. In essence, in layman's terms, what that has effectively meant is if you want to do some of the work for the Post Office and you want to hand packages off to them at some point in their network, then they will provide you a better postal rate.

‍

Glenn Gooding [00:07:14]:

So the more work you do, the better the rate you get. What that had done is built up, I think, a very robust e commerce solution for lightweight deliveries. Lightweight being defined as per ounce, something like a golf shirt being delivered to consignee all the way up to probably about £9. All residential built up, a real solid consolidator market. Companies that aggregate volume, bring it together, sort it and induct it to the post office as deeply into the postal network as the postal rules allow and that they can do economically. All doing that for a price that it was historically cost competitive to first class or priority mail. First Class has now been rebranded as Ground Advantage with this Delivering for America previously stated $6.9 billion projected loss for fiscal year 2025. Louis DeJoy wants to help or get the Post Office to be financially independent, not rely on taxpayer subsidy.

‍

Glenn Gooding [00:08:21]:

It's a noble charge. One of the perspectives he has is he's put down a lot of work to build out a pickup and sortation network. And scratching his head looking at everything, being inducted at the local post office level, or what's called the DDU destination delivery unit for any of you small parcel geeks out there and saying why are we doing that? Why can't I fill up this and increase revenues? So his perspective has been to change that, to challenge that market, which he has effectively done. And what that has really forced in the 2025 market now is a massive change to lessen a pound, a substantial change to one to nine pounds and what I would coin as kind of a hyperinflation in the lightweight e commerce marketplace. In essence, USPS no longer wants to be the final mile solution. They want to have direct relationships with the brands that they can through aggressive negotiated services agreements and using ground advantage for traditional pickup sortation and transport through the USPS network, similar to what a UPS or FedEx would do. As a result, massive challenges to the postal consolidators that I'll talk about in a minute. Now, in addition to that, some major carrier adjustments with the historic duopoly of FedEx and UPS, I would tell you that in 2025 there appears to be a greater shift in focus on secondary charges, otherwise known as accessorials and surcharges and fuel surcharge applications.

‍

Glenn Gooding [00:10:15]:

So when you read a press release and you see a 5.9% general rate increase, sounds great, but it's kind of like the CBO announcing progressive tax rates. It's supposed to look kind of palatable, but when you start to peek behind the curtain you realize it could be much more impactful given your shipping Characteristics. UPS and FedEx continue to attack what I would call heavyweight large type of parcels, things that categorically fall in the additional handling or the oversize type of category. They continue to redefine what qualifies there. They continue to very subtly and covertly manipulate their fuel surcharge tables. As a matter of fact, if you track it like IDRIVE does, you would note that over the last three and a half years the effective ground fuel surcharges in a static fuel market, meaning no fluctuation in fuel cost, have taken a 900 basis point increase, which contingent on where you're looking at a fuel surcharge table, is well over a 100% increase. So massive revenue uptick there. There are some subtleties that make difference for both carriers when applied across their massive base of revenue.

‍

Glenn Gooding [00:11:37]:

And another hugely impactful thing that kind of falls in line with consolidators is the UPS USPS partnership has changed dramatically. Let's talk about the impact of sub pound pricing. Less than a pound pricing. I have an illustrative chart that shows the publicly available workshare program rates for parcel select on 4, 8 and 12 ounce parcels at the various induction points DDU, Dhub, Dscf and DNDC prior to 2025. For the most part, talking about generalizations here across E Commerce, the holy grail of induction was the DDU where you would get the best postal rate possible. So in January 2024 if you and I wanted to start our own postal consolidation company and we wanted to sort a bunch of 12 ounce parcels and induct them at the local DDU, we would pay a DDU rate of $2.79 per parcel. Now, parcel consolidators enter into NSAs or negotiated services agreements with the USPS. All of those operate on different calendar cycles or different contract terms.

‍

Glenn Gooding [00:13:06]:

But in July the USPS imposed some massive increases and then in January some additional increases in July. Most of those increases weren't felt because the parcel consolidators for the most part were protected by their NSAs. However, effective January, all of those NSAs had run their course and the consolidators were forced into entering into a new NSA or new discussion with the Post Office regarding the workshare program. For the record, the type of companies I'm talking about primarily affected by this less than a pound are those of dhl, E Commerce, ups, Mail Innovations, Pitney Bowes. If you can recall them, about four or five months ago they shut down their consolidated division as a result of this. OSM is another notable one that's out there. There are many other that are entering the marketplace now as well. Now when we look comparatively between what the market was allowing for in January of 2024 to now, what is being imposed in January 2025, you can't go apples to apples.

‍

Glenn Gooding [00:14:15]:

You can't compare DDU to DDU. You now have to take DDU from 2024 and compare it to D Hub January of 2025 because that is as far as you're allowed to induct in the Post Office under the newly enacted Delivering for America operating plant. So what was 279 for a 12 ounce parcel is now $5.10 83% increase. Much worse if you're looking at an 8 ounce 262 to the same price of 510. I don't know what your definition of hyperinflation is, but this certainly seems to meet it based off of my rudimentary economic background. Now, if you're a company that happens to produce custom printed T shirts, golf apparel, workout apparel, apparel of any sort, it's a very good chance that a large portion of your shipments weigh less than a pound. Could you afford an 83% increase to your transportation expense? It's a bit of a rhetorical question. I would assume not.

‍

Glenn Gooding [00:15:21]:

So it leaves you to ask what in the world can be done to handle this? Now, in addition, if I back up a second, you remember when I made that mention UPS USPS partnership has changed. Well, UPS and upsmi, UPSMI being the traditional postal consolidator, entered into discussions and were not able to enter into another nsa. So it's important for you to note that UPSMI is facing this $5.10 bogey. Very difficult to be relevant in 2025 under that type of rate structure. Additionally, a very popular mode for both FedEx and UPS in the E commerce market is ups SurePost or FedEx's ground economy. So happens that UPS Surepost, hence the name post in the back of the name, was heavily reliant on the USPS for final mile delivery. Unless a second package was destined for the same consignee on that given day, then it would be redirected and the UPS driver would deliver both packages together to the local consignee at their doorstep. So brilliant move by UPS to mitigate expense, improve delivery density from 1 to 2.

‍

Glenn Gooding [00:16:44]:

But in today's world now effective January 1st, they can no longer do that. So now 100% of UPS Surepost is now delivered final mile by their traditional uniformed UPS driver. I want you to imagine the impact to a network like that. Imagine an average residential delivery route. Say they had 130 delivery stops for a nine hour day. Within that package car on a daily basis were, let's say on average 30 parcels that were all sure post destined for individual consignee deliveries. Under the old rules of USPS induction, those 30 parcels would be one commercial delivery, 30 packages to the post office where the post office would then handle the final mile delivery either later that day or the following day. Overnight those 30 parcels, the one commercial delivery got converted to 30 additional residential deliveries.

‍

Glenn Gooding [00:17:51]:

Traditionally lightweight and traditionally lower revenue than other modes within the ups environment. That 130 stop route that was planned at nine hours is now 160 stop route and probably in the range of 11 or 12 hour day. That's not sustainable. The UPS driver is the highest paid in the industry and there's also some protective language protecting drivers from getting over dispatched and getting working mandatory overtime more than three times in a given week. Ultimately UPS is going to have to do something with that. So Talked about the GRI. We talked about publicly announced 5.9 actual impact. Based off of the clients that I have the privilege of giving support and value, we're seeing 10% or greater major contributors to that delta between the 5, 9 and the 10% are attributed to surcharges, fee changes, fuel and billing methodologies.

‍

Glenn Gooding [00:19:00]:

Some of the highlights of the ones that seem to be popping up with the greatest financial effect in 2025 additional handling, oversized and large package surcharges contingent on which carrier we're referring to and how they name it ups or FedEx as well as additional handling, minimum billable weight. So for example, additional handling has always been referenced for a parcel that was traditionally viewed as not conveyable, too heavy, too wide, too long or not safe. Things like a trailer hitch, a five gallon bucket of paint, a fishing rod, a rolled up carpet. Those are some great examples of additional handling qualifying well in the range of dimensions. Now, if you're affected by a additional handling dimension, meaning the largest size, 48 inches or greater, not only are you going to get the additional handling surcharge, which went up in excess of 20% in 2025, but you will also be assessed a minimum billable weight of 40 pounds. Imagine you're a fishing rod manufacturer, don't know of many 40 pound fishing rods. So hugely impactful to the transportation expense for someone like that. We spent some time talking about fuel surcharge and the 900 basis points that UPS and FedEx have imposed over the last three and a half years covertly so that fuel has effectively more than doubled.

‍

Glenn Gooding [00:20:32]:

They've also done some very interesting things to how that fuel surcharge scales or ranges. So if fuel costs as measured by the government get cheaper, the impact, the relative impact of fuel will go up even higher. And they've also done some things in a rising fuel market as well to help them. Both carriers have also taken fairly liberal approach to what we call peak demand fees. Peak has been rebranded as demand surcharge. That allows for a more creative application of that for times outside of the normal holiday season. And many of you are feeling the brunt of that as well. One of the particular questions that I'm often asked is, well, how the heck do I improve commercial terms in my pricing agreements with the carriers at a very high level? The advice I would offer you would be, number one, you need to focus on your holistic spend.

‍

Glenn Gooding [00:21:27]:

What do I mean by that? I mean you need to look at in its entirety what you're paying a particular carrier for the year. Everything. Weekly service charges, fuel accessorial surcharges, base transportation, everything. And now that you understand that, hopefully with technology you'll have a solid understanding of how that pie is sliced up. Where is most of the money going? And then you have to have some rudimentary knowledge of the impact of some other levers, such as things like the impact of dim or dimensional billing. What does that mean to you financially? What is additional handling as a big mover, fuel surcharge expense and trends. My best advice once you get to this point is not to get emotionally attached to any specific Charge. So I'd like everyone to kind of view their total holistic spend as a balloon.

‍

Glenn Gooding [00:22:21]:

If you get emotionally attached to two or three of those elements, you get hyper focused on those in your discussions with a carrier, they'll be more than happy to placate you on those two or three requests. But imagine taking two or three fingers and poking them into this balloon your spend. Invariably the remainder of the balloon will expand in other areas. And so I always advocate for a strategy that looks to try to compress the spend holistically without getting emotionally attached to any particular element. But you must understand what the value of each element means to you. Now prioritize those asks to maximize a financial return and compress that balloon from all angles. And another very important one that I think presents an important opportunity. In 2025, it's time to get prepared to embrace change.

‍

Glenn Gooding [00:23:13]:

Which means starting to really look at carrier diversification strategies. Hard to believe, but in 2025 there are still a lot of businesses out there, great businesses, that are almost solely reliable on one of the two historic legacy small parcel carriers in this duopoly. And those carriers are more than happy to provide service for you, which they do a very nice job of, and have commercial terms and conditions that effectively tie your hands as a company. Tie your hands from diverting business. Because your discounts are predicated on a 52 week spend, certain average daily volume requirement, the pricing agreements are made to be very challenging to diversify. So how do you effectively do that? Well, for starters, what I would recommend is if you really are ready to embrace change. Let's just walk through a hypothetical example for a moment. Let's say that you for the last 10 years have sourced solely with FedEx, they've done a nice job for you, and you have an agreement that you're held accountable, meaning you have to give just about every bit of your small personal business to FedEx to achieve your desired discount levels.

‍

Glenn Gooding [00:24:34]:

It's going to be very hard for you to go to your incumbent carrier, FedEx in this case and say, I know I've given you all my business in the past, but I'd like to take 30% away and give it to another carrier, say a regional carrier or gig economy solution, variety of things. What's the likelihood that FedEx will be amenable to that request and still offer you terms that meet your similar discount levels or even improve them? Not too likely. So you have to pre choreograph and think about what you want to accomplish here in today's market. If in fact, you do want to make a potential change. You need to look at making a wholesale change, what that might look like and where your volume fits in this kind of diversified 2025 carrier market. Between lightweight, less than a pound one to nine pounds heavier weight. Do you have regional concentrations? Do you have operations that align advantageously with a particular regional carrier? Are there other gig solutions you want to look at? And you need to consider things like what is your desired customer experience and how do you provide a cohesive customer experience nationally with multiple carriers. A lot of complex things to consider, but things you need to contemplate ahead of the time if you really want to go about trying to improve your position in a 2025 market.

‍

Glenn Gooding [00:26:00]:

I'm going to shift gears and talk just a little bit more about about the final mile sector and the less than a pound side as well. Inevitably in that side of things you probably have a little more flexibility from sourcing. Meaning don't have a lot of the punitive terms and conditions that are contained in a lot of the legacy small parcel pricing agreements that are out there. A lot of options for you in this one is I would tell you the USPS would be more than happy to have a conversation with you, present you with a negotiated services agreement for ground advantage rates where you can source directly with them and have the USPS make the pickup and the final mile delivery that could be an option for you. The question is at what price? There's a ton of innovation in this space. There's a number of independent asset light carriers out there now. Many of them are two or three years old. A lot of them are driven by robust technology solutions and get a lot of VC dollars to fund them and there could be opportunity in that.

‍

Glenn Gooding [00:27:02]:

Invariably they have a tendency to operate in very specific geographies and if you begin to look at those, it doesn't change the fact that you are still going to have to contemplate a national door to door delivery solution for all the remaining volume. So tread into those waters eyes wide open. There are gig economy solutions. Again, you have to ask yourself what the delivery experience might be like. What is the delivery reliability? Heck, what is the liability of using a gig solution versus a uniformed asset based delivery provider in the event of any nefarious activity? Amazon Delivery is now the number two small parcel carrier in the nation. They have expressed a desire to go out and enter into direct relationships with a lot of brands to offer a true door to door delivery service that could be a viable option. I don't know of A human in the United States that doesn't know who Amazon is or familiar with their vehicles going up your driveway or to your doorstep. It's a high degree of acceptance in the marketplace of Amazon delivery.

‍

Glenn Gooding [00:28:09]:

They do some other neat things. They offer seven day a week pickup. If you so need it, they offer seven day a week delivery, they take a picture of every delivery. So there's a lot of neat things they do. If you're looking for a robust national two day delivery commitment for a prime badge, they're not your company, they're a separate company and they offer right now two to five day reliable delivery. So they could be a viable third party for you out there. As you look at all of these things, there's always hidden aspects, other surcharges, dimensional billing. You need to make sure you understand what those are and analyze the impact of those on your delivery costs and the service quality.

‍

Glenn Gooding [00:28:57]:

I think innovation is going to be critical for success in this space. If you as a brand can put together a 2025 Robust Multi Carrier delivery strategy that allows you to be as competitive as possible in the lightweight sector, I believe you're going to have a competitive advantage in this marketplace and allow to grow your brand profitably out there. There's going to be a lot of cost sensitivity. I think it's going to put a lot of challenges to subsidized shipping programs. I think it's going to be interesting how brands manage that. Do they maintain the subsidized shipping program and raise the purchase price of the product in a price sensitive market? There's a lot of unanswered questions on that front. So at a broad level, what kind of actionable strategies can you take from all of this mess that I'm talking about today in 2025 and beyond to align your company for success? I think number one, you have to get the organization to begin to embrace the need for change. That's a harder thing than a lot of folks really consider.

‍

Glenn Gooding [00:30:05]:

It's not just about getting the VP of supply chain or the Chief operating officer aligned for this. It's getting the CEO aligned, it's getting the Chief Marketing Officer aligned, it's getting the customer Experience officer aligned. So many sectors of this you have to get aligned. Do you have technology that can execute in this space? Do you have a robust TMS that can bring in multiple carriers and perform a true robust rate shop and time in transit comparison so that you can choose the right service for that customer demographic? Do you have operations that allow for pickup of multiple carriers? Do you have space to accommodate that? Do you have doors for equipment to back up and handle that? Do you have operations geographically that alignment more effectively with certain regional solutions at the shopping cart and at the website level? When you're out there, what are you marketing for a customer experience? Many brands market a specific carrier could be a challenge if you want to move to a multi carrier environment. Do you align your subsidized shipping and shipping options with a delivery experience next day today 2 to 5 day, 5 to 8 day and associated tossed? All these things need to be aligned. Once you have organizational buy in, you need to have the analytics and the understanding that the ship needs a captain and you need to choreograph these negotiating stages and the potential trades of where you're going to land. You need to have an ability to pre choreography. Here's what we look like today.

‍

Glenn Gooding [00:31:50]:

I'd like to look something like this in the future when I go from one carrier to three carriers. But in order to accommodate three carriers, how do I go about doing that in a way that makes the three carriers happy with the piece of business they have with me And I have market leading rates. Another very viable option for you. There are some very good 3PL operators out here in this space and a good 3PL operator will have multiple carrier solutions to align with your desired cx. So you could hand it off to a professional that will manage your inventory, that will deliver on your SLA and will align a shipping solution, a transportation solution with your desired CX and you can outsource that. That's another excellent viable opportunity for you. So things to consider on that front. So I know it's high level, it's designed to speak to a broad and general audience.

‍

Glenn Gooding [00:32:52]:

I would tell you that there's a lot of nuance in this space today and it applies differently to different businesses and different business models and different geographies. I'd welcome the opportunity to have a specific conversation with one of you if you so desire. But I don't want to forget that there were some questions that came through that I'd like to address. A couple here, one here that came through. How significant is the impact of sub pound pricing on a shipper's overall strategy, especially for those frequently shipping lightweight packages? I would say it's more impactful than any other single change I've seen in a given year's rate change. I can't think of a time in my 39 years that a particular mode or weight has been impacted by 83% in cost increase that can be a really big deal for you. I hope you realize that these parcel consolidators that are still in business are working very very hard to try to offer good solutions in this marketplace. But they still have that reliance of final mile delivery in many cases on the post office.

‍

Glenn Gooding [00:34:02]:

And so the days of what you see is 5, 9 in a lightweight environment might be 23, 25, 35, 45, 50% increases in that space. You're going to need to look to USPS directly. You could look to solutions like an Amazon delivery. You could potentially look to some gig solutions or some other startup asset light type of technologies that allow for some unique final mile delivery strategies. You just have to ensure that you can execute on those and you maintain the right type of customer experience. Here's another question that's high level. I think I'll close with this one for the group from my perspective Asking from your perspective Glenn, what are the top three strategic moves shippers should make in 2025 to stay ahead in the industry? It's an interesting question. Number one, strategic move.

‍

Glenn Gooding [00:34:58]:

Get your organization from the top down to have an appetite to embrace change in this space to be ready to change sourcing to accommodate this very changing market. That's number one. Number two, find a partner that can help you truly understand your total small parcel supply chain expense. Some great technology products out there. Those technology products are only as good as the person that is reading the results and understands it. So make sure you have someone on staff or access to an expert in the space that can help you understand what that presents, what opportunities there are from that. And the third move, work very hard in today's market to break your complete reliance on the duopoly. There are other viable solutions out there.

‍

Glenn Gooding [00:35:52]:

I predict that Amazon Delivery will eclipse USPS as the greatest small parcel carrier by average daily volume in 2025. At some point need to begin to look outside of the brown and the purple solution to try to align your company for future success in nimbleness. So once again as a wrap up, I sincerely thank you for your time. We will provide a copy of this deck for you afterward. I really appreciate you attending and I offer myself as a resource for you if you'd like to have a conversation specific to your case. Thanks again and have a wonderful day. Thanks for listening to Parcel Perspectives hosted by me, Glenn Gooding. I've been in the small parcel space for 37 years.

‍

Glenn Gooding [00:36:45]:

Starting with a deep and broad background working for one of the major carriers as an operator and industrial engineer, later managing pricing at the highest level for the largest, most complex shippers in the world. Since then, I've been a national thought leader and worked to help drive strategy for clients from Fortune 50 companies companies to start up ecommerce businesses, helping them more competitively align in this complex and expensive market. If you enjoyed the show, please subscribe and share with friends. Join us next time for more expert advice and strategies to stay ahead of the shipping game.

‍