Andrew Lynch

Stocked up on merchandise in response to red-hot consumer demand throughout the COVID-19 pandemic, big box retailers are drowning in insane amounts of overstock as demand for goods like electronics and home goods has dropped significantly. Consumers are reverting back to their pre-pandemic buying patterns, leaving retail giants buried in merchandise and declining sales. Fused with U.S. inflation rates at their highest since 1981 and the price of diesel reaching record prices, retailers have been forced to get creative to offset the costs. Cut to new pickup, fuel, and late fees. The Increasing Cost of CPU Suppliers in business with big box retailers are now at the mercy of paying more for pickup, fuel, and late fees. Shipments will be fined if they are subpar, like defective or miscounted products, and received late. Vendors are also being charged a fuel surcharge based on daily fuel price changes that are matched against the location and shipment, and a “collect pickup charge” calculated as a percentage of the cost of goods received. Now, manufacturers and brands who have already entered into product order agreements must shift their own budget to account for these unforeseen charges. But is a customer pickup (CPU) service the only option for shippers? No. Nor is it the best. Suppliers opt into a CPU service initially thinking they’ve escaped the headache that comes with coordinating shipping and logistics. However, that’s not the case. CPU arrangements mean brands surrender control over logistics operations, lose visibility over freight that can cause service failures and incur extra fines and fees. These partnerships that are supposed to help alleviate stressors can actually tank a brand’s gross profit. Why CPU Arrangements Don’t Benefit CPG Brands In a CPU arrangement with big retailers, service is bound to fail. Pickups are scheduled according to the convenience of their own transportation network, not necessarily what works for the brand. Without brands being able to set the appointment themselves, they lose the ability to set and monitor when a truck will arrive for their order. This can cause a chain of unfortunate events: not having enough lead time to prepare a smooth delivery could force the carrier to leave the product and require a reschedule, resulting in missed appointment times. These appointment misfires are always the vendor’s responsibility when working with a distributor, even in CPU arrangements. Companies will be fined by the distributor as well as tasked with finding a delivery alternative. Consistently missing appointments, even as a result of poorly coordinated customer pickups, can also jeopardize a brand’s shelf space on store shelves. Consider the direct hit a brand’s gross margin takes when their product is out-of-stock and replaced by a competitor. On top of that, brands will need to pay for warehousing space while waiting for a new pickup. This can sometimes take weeks or even months before a new pickup is arranged, which can throw production facilities and supply chain flow into misalignment. How to Preserve and Improve Relationships With Retail Partners It’s important to strategize for the inevitable: fees upon fees will continue to increase as long as big box retailers have the upper hand. To set your brand up for success and avoid ruining retail relationships and losing contracts, consider the following options to own your logistics efforts and get your product on the shelves efficiently: · Work with a third-party logistics (3PL) provider that specializes in retail logistics solutions and consumer packaged goods (CPG) brand shipping exclusively · Deliver on schedule for must-arrive-by-dates (MABDs) and appointments · Over-communicate with any partners in your supply chain of command · Meet retail compliance expectations Why a 3PL? In today’s world, forward-thinking retailers and brands need to look at optimizing their supply chains differently. No longer can logistics be looked at as an expense. Vendors that view logistics as an investment, on which they can eventually see a return, stand to fare better. They can expect to improve organizational performance and subsequently their retail relationships, which can be vital in unlocking untapped growth. Brands need to consider logistics providers that take a consultative approach to service. This looks like locating improvement areas and making suggestions that can increase performance, lowering costs in the process. With a deep understanding of complex supply chain functions and specialized industry knowledge, the best providers can help enterprises better understand how their operation needs to perform to meet customer demand and cut costs in the process. A logistics provider equipped with the latest shipping technology can make distribution network suggestions that can reduce overall spending and improve on-time percentages, like consolidation programs or warehouse reconfigurations. As the retail industry continues to evolve and react to economic issues, it’s important that brands and manufacturers evolve and react alongside it. Taking ownership of logistics means companies can eliminate unnecessary fines, lost shelf space and sweeping reactionary changes, and shift their focus to continue driving results and accelerating growth. Dominate Your Category with Zipline Logistics Looking for a logistics partner to help you do that? Look no further. Zipline is here to help you take your logistics strategy to the next level. Our stats: · 15 years exclusively serving CPG brands · 95 percent on-time in-full (OTIF) average for appointment · 97 percent of our shipments are destined to land on a retail shelf · Customer satisfaction score ranking 5x the industry average · Top shipping locations: Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy This article was originally published on Supply & Demand Chain Executive. GIVE ZIPLINE A TRY Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.

What a whirlwind the 2022 Freight Market was – we saw inflation, fuel prices, and freight rates hit record highs. As we begin the first quarter of the new year, the market is softening and offering shippers relief. Economic Factors Inflation According to Forbes, many inflated costs finally began declining in November 2022 like the price of energy, medical costs, airfares, and used cars. The U.S. inflation rate is sitting at 7.1 percent as we close out Q4 — which is quite an improvement from the peak 9.1% we faced in June of 2022. Fuel Prices Prices were up and down throughout Q4, peaking at $5.341 towards the end of October. As of December 26, 2022, the average price of diesel is $4.537, the lowest since February 2022. COVID-19 Following November protests against strict COVID-19 policies, the Chinese government relaxed many of its restrictions like mass testing, quarantining in state-sanctioned facilities, and electronic contact tracing and surveillance. Now there is a giant wave of a COVID subvariant sweeping China. Experts predict hundreds of millions are infected and more than one million have died. China is the world’s largest producer and exporter of consumer goods. Disruptions across the Chinese manufacturing sector are likely to impact the global supply chain of goods and the world’s economy. Russian-Ukrainian War The Russian-Ukrainian War continues to rage on 10 months later. American businesses depend on Russia and Ukraine for a plethora of commodities. According to data from the Observatory of Economic Complexity, four critical commodities — neon gas, palladium, platinum, and pig iron — are in short supply. An analysis by SupplyChainBrain estimates these shortages will have a direct impact on approximately 12% of the U.S. economy. Freight Market California’s AB5 AB5 has the potential to destabilize the trucking market in California, which can create a variety of issues for shippers moving freight in and out of the state. Capacity could suffer a blow if a significant number of truckers decide to leave California. Rates could also rise if carrier expenses increase to compensate drivers as full-time employees. Most recently, a federal district court in California announced it won’t hold a hearing to block AB5 until May. In other words, enforcement of AB5 will remain in effect until then. Learn more. NMFC Changes The NMFTA issued several NMFC changes in August 2022. It’s super important to communicate NMFC updates with your organization and prepare accordingly, as these changes affect your shipping class and therefore, your less-than-truckload (LTL) rates. Learn more. Railroad Strike For the last several months, large railroad labor unions were poised to go on strike in order to be granted better quality of life conditions, mainly more time off. Some railroads use a points-based attendance system that puts workers on call for 12 hours a day and penalizes them for sick or vacation days. A rail strike could have frozen almost 30% of U.S. cargo shipments by weight, stoked already surging inflation, cost the American economy as much as $2 billion per day, and stranded millions of rail passengers. On December 2, 2022, President Biden signed a bill that blocked a strike from happening. Ports Ocean shipping rates have cooled from record highs hit during the pandemic. At its peak in mid-September 2021, the average rate to secure a container on a ship from Asia to the U.S. West Coast reached $20,586. By contrast, the average price for a freight container in mid-December 2022 was $2,127. LTL Carriers will be soon be releasing their first general rate increases (GRIs) of the year. This means they will apply an even percentage uplift to blanket rates to match their increased operating costs. Zipline experts predict GRIs will not be significant as last year’s increases due to the market softening. Volumes, Rejections, and Rates As volumes decline leading up to the holidays, carriers are rejecting less tenders in order to keep freight moving before much of the industry shuts their doors for Christmas and the New Year. The charts above depict national average outbound tender volumes and rejections in the United States. Derived from FreightWaves SONAR. Both dry van spot rates and contract rates seem to have stabilized after a turbulent year. Closing out 2022, dry van spot rates are sitting right below $2.50 per mile and contract rates are just above $3.00 per mile. The chart above depicts national average line haul rates and fuel surcharges for vans in the past 13 months. Derived from DAT RateView. We’re seeing a similar story with reefer rates. Closing out 2022, reefer spot rates are sitting right below $3.00 per mile and contract rates are just above $3.00 per mile. The chart above depicts national average line haul rates and fuel surcharges for reefers in the past 13 months. Derived from DAT RateView. Retailers Out-of-Stocks Based on IRI data, the beverage industry was out-of-stock on average 11 percent in December 2022. In just one category – we’ll use juice as an example – that equates to $52.76 Million in revenue opportunity cost left on the shelf in just ONE week. Similarly, the packaged food industry was out-of-stock on average 18% in December 2022. In just one category – we’ll use candy as an example – that equates to $618.58 Million in revenue opportunity cost left on the shelf in just ONE week. Learn more. Retail Buyer Data Even in a soft freight market, retailers are being picky with the brands they choose to work with. In a survey of retail buyers, 90 percent said a supplier’s ability to deliver on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues. Learn more. Navigating the Freight Market Regardless of an always changing freight market, CPG suppliers focused on logistics partnerships rather than freight transactions will be the real winners in 2023. Believe it or not, there are still many aspects of your supply chain that you can control with industry experts on your side. At Zipline Logistics, we care about each CPG brand’s unique business needs and tailor strategies to reduce overall logistics spend, optimize retail performance, and beat out the competition for shelf space. Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands shipping into retail. We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. 97 percent of our orders end up on retailer’s shelves such as Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy. Don’t Miss the Next Freight Market Update Want the inside scoop on breaking news and trends? Sign up for Zipline’s monthly e-newsletter so you don’t miss the next freight market update! SIGN UP NOW Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.

It’s the most wonderful time of the year! . . . But maybe not always for shippers. During the holiday season, we usually see tighter capacity and slightly higher rates as shipping volumes increase. This can lead to service failures, lost sales, and retailer chargebacks. Service Failures Abound During Holiday Shipping Heading into this holiday season, consumer demand has softened and inventory levels are higher than they’ve been in years. However, many consumers have cash to spend and are eager to splurge, despite their concerns about inflation. McKinsey’s latest Consumer Pulse Survey indicates 55 percent of Americans are excited to shop for the holidays and that 56 percent already started shopping in October. Many consumer-packaged goods (CPG) brands rely on the holiday season for a decent chunk of their revenue. In turn, most ramp up their production and supply efforts during this time of year, meaning more freight orders will need to be fulfilled. Because carriers limit their hours to accommodate drivers and families around the holidays, they must complete more hauls with less available service days. Most are also closed for Thanksgiving and operate on reduced hours the day before and after. The same goes for Christmas, which noticeably shrinks available capacity for your freight. To complicate the situation further, increased demand for freight services and increased orders during peak means carriers often overcommit. This can lead to service failures as they scramble to cover the increased volume, which equals freight left on the dock, missed deliveries, lost sales, and retailer chargebacks. This is rather problematic when it comes to fulfilling POs, particularly during the busiest shopping season of the year. Prepare Your Supply Chain for the Holidays To combat peak disruption, we’ve put together six ways to prepare your supply chain for peak holiday disruption. 1. Overcommunicate This is a major key to thriving during the holiday season. Understand your freight needs and determine the amount of freight you plan to ship. Then share that information with your transportation partners far in advance. This will allow you to lock in capacity and properly schedule freight pickups and deliveries. 2. Build in Extra Time Waiting until the last minute is never a sound decision in the world of logistics, but it’s an even worse one during a holiday season facing limited capacity, weather delays, carrier issues, and other unforeseen seasonal events. There’s nothing worse than having empty shelves leading up to Christmas. Zipline’s less-than-truckload experts recommend building in an additional two days of transit around your key dates in the holiday season. This provides an adequate buffer for problem-solving, if needed. Additionally, if you fail to give your transportation partner ample lead time, you are bound to pay for it. Urgent holiday deliveries come with a substantial spike in rates and scarce capacity. Working ahead is one of the most important things you can do to keep costs down and hit delivery standards. 3. Know Carrier Holiday Service Schedules Every carrier sets their own holiday schedule. Don’t get caught assuming a carrier is up and running when they may be taking time off. Many have limited operations leading up to and following a major holiday, meaning they may perform minimal line-haul services and very limited pickup and delivery services. A 3PL partner should help gather and share these operational deadlines on your behalf. 4. Prepare for Known Holiday Surcharges Because of increased volumes and demand for quick turnaround, many parcel carriers automatically increase their rates during the holidays. This is particularly true for UPS and FedEx, who add peak charges from October to January. Budget for slightly higher parcel shipping costs to match the influx of holiday demand. Or like many shippers choose to do, move your larger volumes prior to the holiday peak. If you have enough volume, you can also opt to move your parcel shipments over to LTL during holiday peak and surpass the increase in rates. Depending on your minimum order quantities, this could help you lock in savings. 5. Ensure Order Visibility Track your shipments so you always know where your orders are during the hectic holiday shipping season. Luckily, in today’s technology rich freight environment, you have numerous options: · Add a pallet tracker to your shipments and follow along with updates. · Request that drivers use GPS tracking. · Ask your 3PL partner what visibility tools they have available. Zipline Logistics’ Summit platform shows you real-time updates from GPS trackers and communication with carriers. 6. Work with Retail Logistics Experts Partnering with a logistics firm that understands the complex, nuanced world of retail shipping will drastically improve your chances of success during the holidays. A retail-specialized transportation partner can pair your freight with a vast network of preferred carriers that understand the delivery needs of the nation’s most challenging receivers. Trusting Zipline Logistics = Holiday Shipping Success Zipline Logistics is comprised of retail logistics experts who help CPG shippers master transportation into retail locations during the holidays. Our retail-trained operations teams and people-first culture help CPG shippers hit on-time delivery standards and achieve optimal outcomes. Need help with your holiday shipping? Win The Holidays With Zipline Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.

Another dynamic quarter in the freight market has come and gone. In Q3, CPG brands and their supply chains have been impacted by an extremely inflated economy, newly implemented bills and freight regulations, and shifts in retailer requirements. Here’s a recap of the quarter broken down by these factors and what shippers should expect in the final quarter of 2022. Economic Factors Inflation The U.S. inflation rate is ever-so-slowly starting to fall after it reached a record high of 9.1 percent at the end of Q2. Now closing out Q3, the rate is sitting at 8.3 percent. The OECD predicts inflation may fall to as low as 4.4 percent by 2023. Fuel Prices The average price of diesel in the U.S. peaked in June 2022 at $5.750 per gallon. At the time of writing, it is sitting around $4.889/gal. COVID-19 Experts estimate that nearly the entire U.S. population now has at least some immunity through vaccination, previous infection, or both. In turn, the CDC has ended social distancing and quarantine recommendations. Although we’ve said goodbye to these precautions (hopefully) for good, there are still lasting effects on the global supply chain. While there has certainly been improvement in each area, neither labor force shortages, nor port backlogs, nor inflation have returned to pre-pandemic levels. Russian-Ukrainian War As the war continues to rage on nearly 7 months in, the latest update is that Russia is losing heavily and unexpectedly. Ukrainian forces have recaptured 6,000 square kilometers in the country’s south and east. The big concern is that Russia recently threatened to use nuclear weapons in the fight. At the beginning of the war, the global economy suffered a knee-jerk reaction that impeded the flow of goods, fueling dramatic cost increases and product shortages. Today, those initial effects are subsiding greatly in the U.S. Freight Market California’s AB5 AB5 has the potential to destabilize the trucking market in California, which can create a variety of issues for shippers moving freight in and out of the state. Capacity could suffer a blow if a significant number of truckers decide to leave California. Rates could also rise if carrier expenses increase to compensate drivers as full-time employees. There were owner-operator protests against AB5 in early July, which halted operations at the ports of Los Angeles and Long Beach. There is a strong likelihood that protests of this nature will continue and cause additional supply chain disruptions in the future. Some experts predict that the major, lasting effects of AB5 will become more apparent in early 2023. Learn more. NMFC Changes The NMFTA has issued several NMFC changes that went into effect on August 13, 2022. It’s super important to communicate NMFC updates with your organization and prepare accordingly, as these changes affect your shipping class and therefore, your less-than-truckload (LTL) rates. Learn more. Railroad Strike Large railroad labor unions were poised to go on strike in order to be granted better quality of life conditions, mainly more time off. Some railroads use a points-based attendance system that puts workers on call for 12 hours a day and penalizes them for sick or vacation days. A strike would have shut down 7,000 daily trains and cause shortages, shutdowns, and price hikes across sectors. This would ultimately cost the economy about $2 billion per day. At the time of writing, the strike has been held at bay after a five-year deal was announced. Under these terms, which is retroactive to 2020, workers will receive a 24 percent pay increase and $5,000 in bonuses. Railroads also promised to ease scheduling policies, but have not offered paid sick leave or more time off. Ports Ocean shipping rates on major trade routes have fallen by more than half since the beginning of 2022. This is a potential sign of easing inflation pressures and alleviated supply chain backlogs. Hurricane Season Hurricanes are another thing that can affect your supply chain this quarter, especially now as we enter peak months of the Atlantic Hurricane Season. Although the season was originally off to a slow start, major hurricanes are now beginning to roll in. Hurricane Fiona recently wreaked havoc in the Caribbean, namely in Puerto Rico and the Dominican Republic. Not long after, Hurricane Ian hit Cuba and mandatory evacuations took place in Florida. Regardless of what happens next, it’s critical to explore how you can prepare your supply chain to brace for incoming hurricanes. Learn more. Volumes, Rejections, and Rates Volumes and rejections are both down year over year. Dry van spot rates are flat month over month but down 22 percent year over year. Volumes are near 2018 levels, which is the lowest they have been since they shot up in 2020 due to the pandemic. Due to strong inventories and a lack of demand, volume is predicted to fall another 5-10 percent in Q4. The average rate per mile (RPM) peaked in early 2022 and has been steadily declining since. Heading into Q4, the dry van RPM is sitting around $2.62 and the reefer RPM is about $3.06. Hot markets include SoCal, the Northeast, and Central Ohio. As Christmas tree season approaches, inbound rates in Washington and Oregon will likely go down as outbound rates go up. Retailers Out-of-Stocks Based on IRI data, the beverage industry was out of stock an average of 12 percent in August 2022. In just one category– we’ll use carbonated beverages as an example–that equates to $340.41 Million in revenue opportunity cost left on the shelf in just ONE week. Similarly, the packaged food industry was out of stock an average of 10 percent in August. In just one category–we’ll use candy as an example–that equates to $343.65 Million in revenue opportunity cost left on the shelf in just ONE week. Learn more. New Walmart Customer Pick-Up (CPU) Fees Walmart recently began charging some suppliers new pickup and fuel fees, starting August 1, 2022. Some shippers who already have product order agreements in place with Walmart are frustrated by this change. However, the good news is that CPU is not the only (nor the best) option for shippers anyway. Switching to delivered pricing will be the lowest effort and highest return adjustment you make in 2022. Learn more. Retail Buyers & Holiday Shopping Especially as the holiday season is approaching, retailers are being picky with the brands they choose to work with. In a survey of retail buyers, 90 percent said a supplier’s ability to deliver on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues. Learn more. Navigate the Freight Market with the Best in the Biz Regardless of an always changing freight market, CPG suppliers focused on logistics partnerships rather than freight transactions will be the real winners in 2022. Believe it or not, there are still many aspects of your supply chain that you can control with industry experts on your side. At Zipline Logistics, we care about each CPG brand’s unique business needs and tailor strategies to reduce overall logistics spend, optimize retail performance, and beat out the competition for shelf space. Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands shipping into retail. We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. 97 percent of our orders end up on retailer’s shelves such as Walmart, Costco, Bath & Body Works, Whole Foods, and Best Buy. Don’t Miss the Next Freight Market Update Want the inside scoop on breaking news and trends? Sign up for Zipline’s monthly e-newsletter so you don’t miss the next freight market update! SIGN UP NOW Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.

Scored a purchased order from Aldi? Congratulations! You must be super excited. But you may also be wondering how you’ll get the shipment there, what you can expect along the way, or how to maximize your success at this retailer. Don’t worry. We’ve outlined everything you need to know about shipping to Aldi below. Aldi is Not Your Traditional Retailer You might be enticed to shop at Aldi if you don’t mind cheaper prices, non-name brand products, and a smaller selection of goods. In order to offer savings to its customers, Aldi uses strategy and innovation to control costs. This approach also applies to its transportation and supply chain network. Whereas most retailers leave it up to suppliers to coordinate transportation with carriers, Aldi is completely different. It actually owns the relationship with third-party logistics (3PL) companies entirely and use the 3PLs in a customer pick-up (CPU) model to collect its suppliers’ shipments for them. Aldi has found this to be a cost-effective set up that ultimately gives it the most control of its supply chain. Whereas we would normally discourage a CPU arrangement with a retailer, Aldi suppliers really aren’t given a choice. Purchase Orders If Aldi decides it wants your product in its stores, they will send both you and their 3PL of choice a PO. While you’re preparing the order, the 3PL will reach out to your transportation manager (or whoever coordinates shipping) to schedule all the details of a pick-up. Aldi will usually send the PO three to five days before its preferred delivery date. We say “preferred” because it really is just a preferred date and is not set in stone. Aldi is super lenient when it comes to meeting due dates and is willing to reschedule if shippers simply cannot meet the date requested. This is extremely different from most big-box retailers who will penalize shippers for not meeting on-time in-full requirements and even cut off the relationship when suppliers can’t meet expectations. Communication With Aldi On the logistics side of things, Aldi’s 3PL partners will handle most communication with the receiver before, during, and after pickup. During transit, any issues or delays will be communicated between the 3PL and Aldi Distribution Center Coordinator. On the Aldi side of things, your brand will be given a DC Retail Buyer contact. This will be the person you can direct your non-logistics Aldi questions to. Incorrect Packaging Your Aldi contact should go over packaging expectations for your specific product when you first get an order. Whereas other retailers may not even accept freight that is damaged, late, or incorrectly packaged, Aldi will. This is not to say shippers won’t be charged for incorrectly packaged freight or pallets that need to be restacked. We’ve seen fines such as $40 per restacked pallet, but charges will vary depending on the offence. Aldi heavily relies on its 3PL partners and their carriers to make sure freight is packaged correctly upon pick-up. If it is not, the 3PL has the right to refuse pick-up or delay transit until the problem has been rectified. If it continues to be an issue and you can’t follow packaging requirements, the 3PL will inform Aldi what’s going on so they don’t take the fall for your errors. After a certain point it won’t be worth it for Aldi to work with you anymore and you will mess up your chances of getting another PO. Packaging is arguably the one thing shippers have control over when shipping to Aldi, so make sure you get this step down. All in all, Aldi has it set up so that most logistics coordination is totally not your responsibility. That’s a pretty sweet set up if you ask us. It also sounds familiar… Why Choose Zipline as Your 3PL? Most retailers do not function like Aldi does in any way, especially when it comes to logistics. If you enjoy the hands-off approach they offer shippers, you’re going to love using a 3PL for all your retail shipments. If you expand to other retailers after your start at Aldi, consider choosing Zipline Logistics as your transportation partner. You might be wondering how we know so much about retailers and how they operate. It’s because we pride ourselves in being a retail-specialized 3PL. While most logistics brokers move everything from scrap metal to machinery, we exclusively ship finished retail goods that need to meet strict delivery requirements. Like we said, other retailers aren’t as forgiving as Aldi. But don’t worry, partnering with a retail-specialized 3PL makes everything easier, way less stressful, and positions you brand to succeed. It’s like the difference between a flashlight and a laser beam. Our specialization allows us to strategically elevate and empower CPG brands to dominate their categories. Interested? LEARN MORE Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.

On June 30, 2022, the Supreme Court denied the California Trucking Association’s appeal of California’s AB5. Therefore, the two-year-long injunction will be lifted and AB5 will be law in California retroactive to January 1, 2020. What is AB5? California’s AB5 requires companies using independent contractors in California to reclassify those workers as employees. This bill was originally designed to regulate companies that hire “gig workers” in large numbers, such as Uber, Lyft, and DoorDash. The bill aims to ensure these types of workers are offered protections and benefits such as workers comp, unemployment insurance, paid sick and family leave, and health insurance. In order to be considered a true independent contractor, a worker must satisfy all three requirements of AB5’s “ABC” test: A. The person is free from the control and direction of the hiring entity, both in contract and in fact. B. The person performs work that is outside the usual course of the hiring entity’s business. C. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. With few exceptions, the relationship between independent truckers and their carriers, brokers, and shippers will be governed by the “ABC” test. What Does AB5 Mean for Truckers? An estimated 70,000 owner-operators will fail this test and be reclassified as employees instead of independent contractors. This means trucking companies may have to begin paying a base salary and benefits to employees who fail the test, rather than compensating drivers on a per load or contract basis. Keep in mind, most truck drivers are independent owner-operators who contract with trucking companies to make deliveries. They individually own their trucks, have flexibility in setting their own schedules, and function as small-business owners rather than large-business employees. Paying base salaries, benefits, and payroll tax in order to employ owner-operators is a huge cost that many businesses simply cannot afford. As for owner-operators, this set-up takes away their decision-making power over when and how often they work and the rates they will accept. Alternatives include moving their operations from California to another state or opening their own company. As most business owners know, the latter comes with much more responsibility and time dedication, which some drivers will not be willing or able to take on. A recent FreightWaves survey of carriers found some respondents view the bill as an existential threat to the way American supply chains currently function, while others feel it is a necessary legislative step to prevent companies from taking advantage of workers. Although AB5 is currently in effect, not all companies are taking necessary steps to comply with the law. Until the state begins enforcing it or misclassified employees take legal action, not much will change. How Will AB5 Affect the Freight Market? The timing of this law going into effect is not fantastic. “Gasoline has been poured on the fire that is our ongoing supply chain crisis,” said the California Trucking Association in a statement on June 30, 2022, “The impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening inflation.” Only a few months into AB5 going into effect, we are seeing a driver shortage in California. Long term, the effects may be much greater. AB5 may destabilize the trucking market in California, which can create a variety of issues for shippers moving freight in and out of the state. Capacity could suffer a blow if a significant number of truckers decide to leave California. Rates could also rise if carrier expenses increase to compensate drivers as full-time employees. California’s giant portion of the logistics industry means the entire country will likely feel its effects. There have also been owner-operator protests against AB5 in early July, which halted operations at the ports of Los Angeles and Long Beach. There is a strong likelihood that protests of this nature will continue and cause additional supply chain disruptions in the future. Some experts predict that the major, lasting effects of AB5 will become more apparent in early 2023. Keep Tabs on AB5 With Zipline While it’s currently unclear just how deeply AB5 will affect truckers, shippers, and the supply chain as we know it, Zipline Logistics experts will continue to monitor the market for real time updates and insights. We will also continue to put our best foot forward to help shippers navigate the ever-evolving supply chain. Partnering with Zipline means you’ll receive: · Consistent market updates and insights · Creative retail logistics solutions · A dedicated account team available to answer your questions 24/7 KEEP UP WITH MARKET CHANGES Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.

Shipping to Amazon? You’ve come to the right place. We’ve broken down what working with Amazon looks like for both first-party and third-party sellers (more info below) and how sellers can most effectively optimize their Amazon supply chain, and in turn, profitability with Amazon overall. Are You a 1P or 3P Amazon Seller? It is almost a “must” for any business to sell on Amazon these days. In a world where consumers log on to Amazon to buy items that were out-of-stock at the store, selling on Amazon helps companies stay competitive and win market share. Firstly, shipping into Amazon looks a little bit different depending on if you are a first party (1P) or third-party (3P) seller. 1P Sellers To be a 1P Seller, you need to be invited by Amazon directly. In this set up, Amazon acts as the retailer and the seller operates as a wholesale supplier. Sellers receive bulk purchase orders and pay a flat fee for Amazon to entirely take over the selling process. After the seller ships their product to Amazon, Amazon gains complete control of the product’s pricing and promotion. Overall, it’s a hands-off set up for the seller. 1P sellers typically ship full truckload to an Amazon distribution center. Amazon also offers customer pick-up (CPU) for 1P sellers – but more on that later. 3P Sellers 3P sellers act as the retailer and have more control of their operation overall. The seller lists and sells products directly to consumers via the Amazon marketplace, with full control over pricing and promotion. 3P sellers have a few options for how they can ship to customers, but most often use Fulfillment By Amazon (FBA). FBA is an Amazon service that provides storage, packaging, and shipping assistance to sellers. Technically, companies can act as both a 1P and 3P seller. We’ve had clients receive Amazon purchase orders (POs) for certain products while simultaneously acting as a 3P seller of their remaining inventory. Shipping to Amazon Amazon is notorious for being a challenging receiver to work with. Delivery appointments book up very quickly and can be cancelled within 24 hours of your designated delivery window, sometimes when trucks are already enroute. For information on pallet requirements or how to prep Amazon shipments for delivery in general, Amazon has detailed shipment guidelines listed on Seller Central for both Amazon Distribution Centers and FBA centers. Otherwise, here’s what you need to know about shipping to Amazon: 1. Amazon appointments book up fast. Usually, you won’t be able to get an appointment closer than five days after the booking date. This means maximizing lead time is crucial. 2. Amazon requires shippers to meet at least a 90 percent OTIF. Amazon keeps tabs on missed or late appointments. If sellers do not meet or exceed a 90 percent on-time in-full average (OTIF) rate, this gives Amazon grounds to give up their appointment to someone else or boot the seller off the portal altogether. If a carrier misses their scheduled appointment by 30 minutes or more, the freight will be refused at no cost to Amazon. In most situations, the seller will be held responsible to eat that cost. 3. Amazon charges a fine for shipments that don’t meet OTIF. For example, Amazon orders 20,000 cases of a 1P seller’s product but the seller only ships 18,000 cases. The seller will then be charged a fine for not arriving in-full. If the order shows up late or not at all, the seller will be charged an additional fine for not being on time. 4. Amazon is known to cancel appointments less than 24 hours in advance. Amazon has cancelled appointments while our carriers is already enroute to their DC. If this happens, there are two possible routes of action. First, the carrier could hold the freight for a layover fee, which is usually between $150-$500 per day. The other option is that the carrier could drop the load at their hub and another carrier would be sourced to recover it. This means the seller would then be charged the cost of two separate carriers. Neither are fantastic options, especially if you need a shipment to arrive ASAP. 5. Amazon is extremely difficult to contact. Amazon has grown into the giant that it is in a very short time. Somewhere along the way it’s become incredibly difficult to contact anyone working inside the distribution or fulfillment centers. This makes problem-solving very difficult when issues arise, which can lead to further delays and charges. 6. Amazon shipment numbers are important. When booking freight and making an appointment, sellers will receive an ASN (or PRO) number from their carrier and a confirmation number from Amazon. These numbers are what Amazon uses to track the shipment. Without them, Amazon can apply chargebacks to the shipment or even refuse to accept it once it arrives. Sellers must ensure they receive this number with each order so they can fight back against any unwarranted chargebacks. Sellers will also need to confirm this number ahead of time with Amazon. If this step is missed, it can cause inbound, processing, or stock issues, possibly resulting in extra fees sellers must pay or fight. Amazon CPU Amazon offers customer pick-up (CPU) for 1P sellers. A CPU arrangement means Amazon will pick up the seller’s freight instead of the seller outsourcing a third party. Sellers can book an Amazon-partnered carrier using Amazon’s seller portal, which will either be a truck from Amazon’s own fleet or another carrier depending on availability and pickup location. This all sounds well and good, except for one issue: Amazon-partnered carriers have been known to frequently miss pickups without any communication or warning. So, the seller’s freight is staged and ready to go, but nobody shows to pick it up. Since warehouses are already tight on space, they can’t afford to have the freight sit staged and untouched for very long. This means the shipment will have to be restacked and put back into storage – and the seller will get charged a penalty for all the extra fuss, not Amazon. This is a common theme with retailers who use CPU delivery models. At Zipline, we normally suggest avoiding these set-ups altogether for this reason. CPU arrangements sacrifice all control of shipments but still hold the seller responsible for anything that goes wrong. The outcome is usually extra fees, delays, and headaches in getting the freight moved. Make Shipping to Amazon Seamless Since Amazon isn’t exactly easy to work with when it comes to transportation, it’s important to control the controllables of your supply chain wherever you can. The good news is, with a retail-specialized third-party like Zipline Logistics, that part is made easy. Our uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximize client revenue by capturing market share through optimized, on-time in-full performance. Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands. We tailor strategies to reduce overall transportation spend, optimize logistics performance, and beat out the competition for market share. Shipping to Amazon? LET US TAKE YOU THERE Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.

A Recipe for Shelf Space Competition Mix two years of the global pandemic with constant supply chain disruptions. Then add a dash of one thriving ecommerce marketplace and a sprinkle of skyrocketing demand for consumer-packaged goods. Lastly, stir in retail buyers and compliance programs until fully combined. The result? The greatest opportunity to capture and expand retail shelf space in CPG history. Not only does this complicated concoction make it difficult for brands to get their product in stores on time, but it’s also costing retailers big money. Recent data from the National Bureau of Economic Research reported stockouts reached up to 20 percent last year, compared to an average rate of 8 percent pre-pandemic. That totaled to $82 billion in missed CPG sales during 2021. Sheesh. Brace yourself for more bad news: customer loyalty can no longer be relied upon as a fallback here. Believe it or not, 79 percent of consumers reported they have tried new brands because their preferred brand was out of stock. At Zipline, we call this involuntary sampling: a phenomenon that can be extremely detrimental to CPG brands. For retailers, losing both loyal customers and their dollars calls for drastic measures. Retailers have increased their expectations of brands’ delivery performance to combat stockouts, slamming late arrivals with fines to improve on-time and in-full delivery. Fees piling up aren’t the only problem brands face when they can’t meet expectations. One retail buyer told us, “If a supplier is out of product, it will be replaced with a competing brand.” For more takeaways revealed by our buyer survey for which Zipline Logistics worked with 900+ retail buyers, read on. 2022 Retail Buyer Insights To better understand why certain products get on shelves over others and how CPG brands can stand out in the competitive market, we asked the people who make that decision daily: retail buyers. Our connections belong to some of the biggest retailers and distributors in the game: UNFI, Costco, KeHe, Giant Eagle, and Target, to name a few. Importance of Communication and Meeting On-Time Delivery Communication and reliable fulfillment: without these two things, most buyers are saying “see ya.” In fact, 90 percent say a supplier’s ability to deliver product on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues. Delays are inevitable in logistics, but how you communicate and work through them is make or break. Retailers want to work with the brands who give them the most visibility and transparency. Ninety three percent of buyers report having anywhere from 4 to 20 product choices within a given category – so there’s nothing keeping them from booting a brand that doesn’t offer this. Impact of COVID-19 We asked our buyer network about any changes in their category out-of-stock rates, which already account for stocking alternative brands to fill empty shelf space. Seventy-six percent of buyers reported that out-of-stocks in their category increased because of the pandemic. Historically, most retail buyers were seeing average out-of-stock rates below 6 percent, but more than half of our network saw this rate jump up to 11 percent or higher throughout the pandemic. Over half also said it impacted the number of competing brands in a category. “Out-of-stocks have pushed more variety per category which forces more competition and more congestion,” one buyer said. The big themes reported in this year’s survey remain consistent with what we’ve seen in years past, but the aforementioned challenges brewing in the market have only made on-time delivery and communication that much more essential to win shelf space. Secure Shelf Space with a Trusted Logistics Partner Although the market is whipping up severe competition, it smells of opportunity. That is, if you understand how optimized supply chains create value. Successful CPG brands are those that invest in logistics and find partners that can execute against strict retail compliance requirements. Zipline Logistics has all the ingredients to help your brand meet on-time delivery, stay on retail buyers’ good side, and get your product on the shelf. Zipline Logistics is the Official Shipping Partner of the SFA. Our uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximize revenue and gross margin for consumer brands by eliminating out-of-stocks through optimized, on-time in-full performance. We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. Ninety-seven percent of our orders end up on the shelves of retailers and distributors such as Walmart, Costco, UNFI, KeHE, and Kroger. LEARN MORE Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.

Coming off an extremely oscillating previous quarter, there were many predictions floating around on how Q2 of 2022 would shake out for the shipping services market. Some experts predicted a huge market downturn and trucking bankruptcies galore. Although that hasn’t necessarily been the case, the possibility still looms. Freight Market Update Graph Source: FreightWaves SONAR Heading into Q3, carriers without dedicated contracts are struggling to find freight. Volumes and tender rejections are trending down and rates have decreased 20-25 percent since last quarter. Some small carriers have had to close up shop temporarily because they are only breaking even on loads. The less-than-truckload transportation market is also softening into Q3. Volumes and capacity are seemingly balanced right now, thanks to major labor shortages finally resolving. Zipline Logistics’ LTL experts believe current rates should remain consistent, but LTL is never perfect. Shippers should anticipate and prepare for delays regardless. These are the ripple effects of consumer mindsets shifting, combined with global events. For many Americans, disposable income is being redirected to travel and entertainment once more rather than home goods. Not only that, but everything under the sun is more expensive to buy than usual. In May 2022, U.S. inflation rates hit 8.6 percent – the highest since 1981. The price of diesel in the U.S. hit a record high average of $5.718/gallon as of June 13, 2022. It’s sitting at $6.887/gallon on the West Coast. Russia’s invasion of Ukraine has dealt an additional blow to the global economy—weakening post pandemic recovery and aggravating already-high inflation. New subvariants of COVID-19 continue to emerge. Some experts are saying these variants have the strongest transmissibility yet and are escaping immunity from past infection and the vaccine. Although major U.S. economic shutdowns seem to be a thing of the past as the virus has become our “new normal,” these variants can take out groups of people on the job at one time and create major supply chain inefficiencies. Retailers are dealing with insane amounts of overstock right now, as consumer mindsets shift away from purchasing consumer goods. But even in a soft freight market, retailers are still being picky with the brands they choose to work with. In a survey of retail buyers, 90 percent said a supplier’s ability to deliver on time impacts their purchasing behavior of that brand and 66 percent have ended relationships with suppliers over delivery issues. Brands who give retailers the most communication, visibility, and transparency will get priority on the shelf. Q3 Outlook Graph Source: FreightWaves SONAR As of July 2022, Zipline experts predict volumes and rates will continue trending down in most parts of the U.S. until October 2022 when holiday shopping begins. For the foreseeable future, experts also predict inflation rates and diesel prices will continue to climb. The good news is, the government is stepping in to help as of June 22, 2022. President Biden called on Congress to suspend the federal gas tax for three months to provide direct relief to American consumers. He is also calling on states to take similar action, whether by suspending their own gas taxes or helping consumers in other ways. Regardless of all this, produce season is in full swing. There are two separate trucking markets we will discuss below: dry van and reefer. The dry van market refers to trucks transporting dry goods, like chips or canned foods. The reefer market refers to trucks transporting goods that must be temperature controlled, like milk or meat. Congested dry van markets currently include Southern California, Texas, Louisiana, Mississippi, South Carolina, and Georgia. Congested reefer markets include the Southern border of the U.S. is super-hot as well as the majority of the Southeastern U.S. Rates picked up a bit at the beginning of the produce season but have otherwise consistently declined. At the end of Q1, the rate per mile was sitting around $3.30 and is now hovering around $2.82 at the end of Q2. Also important to note: contract rates are higher than spot rates in both the dry and reefer markets. Lean on Logistics Partners to Navigate the Freight Market Regardless of an always changing freight market, CPG suppliers focused on logistics partnerships rather than freight transactions will be the real winners in 2022. Believe it or not, there are still many aspects of your supply chain that you can control with industry experts on your side. Zipline Logistics is the Official Shipping Partner of the SFA. Our uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximize revenue and gross margin for consumer brands by eliminating out-of-stocks through optimized, on-time in-full performance. We tailor strategies to reduce overall transportation spend, optimize retail performance, and beat out the competition for shelf space. 97 percent of our orders end up on retailer’s shelves such as Walmart, Costco, UNFI, KeHE, and Kroger. LEARN MORE Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third party logistics.