This week in parcel, TransImpact releases its 2024 GRI Comparison Report as FedEx and UPS reveal their 2023 struggles.
Why FedEx and UPS’s 5.9% GRIs aren’t equal
Although UPS and FedEx both announced matching 5.9% general rate increases (GRIs), there are key differences within the details that shippers should know.
For average shippers looking for which company is generally less expensive domestically, the answer is FedEx. However, if you’re not an average shipper (which you’re likely not), this answer doesn’t apply to you.
Our 2024 GRI Comparison Report uncovers three highlights and breaks down the key differences between the two carriers.
To learn how your rates will change, download the free report.
UPS and FedEx struggled in 2023
UPS and FedEx struggled in 2023. Demand fell, labor costs increased, and customers used the turbulence to secure lower rates for themselves.
At the end of the third quarter, UPS saw a 10.8% decline in volume compared to the previous year. Even though the carrier had wrapped up negotiations with the Teamsters Union by the end of the quarter, customers had diverted volume during the negotiations.
FedEx’s decline, less than 1% year over year, was less pronounced, but this included volume diverted away from UPS.
Because of falling demand, FedEx and UPS agreed to lower pricing to maintain volume. For the first time since 2019, Ground rates declined.
Our take: It’s a serious struggle for the carriers. Both carriers, and especially UPS, have seen a decline in demand. While this is bad news for the carriers, it’s great news for shippers looking to reduce costs.
Read more here.
FedEx adjusts full-year revenue forecast after profits fall
FedEx announced it was adjusting its full-year revenue forecast after reporting a disappointing quarter. After the announcement, the company’s share price dropped nearly 10%.
With its new forecast, FedEx expects a decline in the single digits.
Its Express unit had a 60% decrease in operating income this past quarter. Part of the decline is due to the U.S. Postal Service’s strategy change, as the post office shifted more packages away from Air services.
The carrier did gain Ground share thanks to UPS’s tense negotiations with the Teamsters Union. FedEx is confident it will keep the poached customers.
Our take: As further proof to the previous article, the struggles we’ve written about for FedEx have trickled down to the company’s financials. The potential for a “Price War” between FedEx and UPS is real and an opportunity for shippers to secure better rates.
Read more here.