All I want for Christmas is Assessorial feesNovember 9, 2022
When I was young this is about the time of year, I created my Christmas list and like most kids made sure I was being a very good boy to ensure I optimized my gift count! I did not want coal in my stockings. But coal is exactly what many small package shippers are getting this year.
Now I am grown up and working in the logistics field – this changed my Christmas list-making. Today, I give more gifts than receive and after approximately 20 years at UPS, I know what it takes to get packages from one city to another. During my time at UPS, there were consistent but unwritten rules. One was the 4.9% rule – This meant every year General Rate Increase (GRI) was 4.9%. I knew it, my customers knew it, and believe it or not the competitors knew this as well. The other was fees. There are fees for fuel surcharges, residential and so many others.
I knew my customers needed a different approach that was focused on ensuring fast 2-day time and transit while providing customer service and ensuring small package shippers are focused on their customers not the rates from the large established delivery partners. It was amazing to me that customers just accepted the 4.9% yearly increase. But that changed; in 2022 it went to 5.9% and in 2023 it will be an increase in GRI of 6.9%. I guess some rules were meant to be broken.
Breaking the rules or the status quo is why I am here at SmartKargo. I believe that there should be an agreement on a price that price. All the assessorial fees mean that a price is not really, the final price. Many of the main delivery partners let the assessorial fees drive their margins and to add additional complexities, they may spring the changes on a customer with only a few days before they are life. It is impossible to plan and ensure SVPs, VPs, and Directors of logistics can be within their budget. Moreover, if you pass these fees onto your customers, it impacts sales or at least margins. I know all these logistics leaders are focused on cost but also on being the strategic last part of the customer journey.
I work at SmartKargo because it is an ‘Alternative Delivery Network.’ What is that? Well, it means we do everything the big guys do but with advantageous pricing and 2-day time and transit across the United States. We do not have a list of assessorial fees that we publish or use as “Levers” to drive more revenue. We want to help you meet your SLAs. Be within budget and make 2-day delivery a reality across the US. A bonus for me is we are also sustainable. Because we use an airline partner we are using “belly space” on passenger airlines. With over 800 flights a day, these passenger planes fly no matter what, and using this space does not increase fuel consumption and optimizes the flight for its carbon impact.
When you look at Uber, Airbnb, and other innovative companies they saw an opportunity to upset the status quo. That is exactly what we are doing here. Let’s disrupt the status quo together.