This week in parcel, UPS and FedEx reintroduce an old service, FedEx awaits negotiations between pilots and the USPS, and shippers scale back on carriers.
After four years, UPS and FedEx bring back 2nd Day Air morning services
On Tuesday, UPS announced it was bringing back its guaranteed 2nd Day Air AM shipping service. The carrier paused the service in 2020 thanks to the pandemic shifting orders away from business addresses.
The service guarantees a delivery time of 10:30 a.m. within two days of pickup (with limitations in some locations) to business and commercial addresses.
As shipments to business and commercial addresses have started to trend upward again, UPS saw an opening for the return of a money-back guarantee service to win over more volume that met the needs of its customers.
UPS does not plan on adding additional jobs to assist with the service.
Friday, FedEx announced it was bringing back its 2nd Day Air morning service, following it’s rival’s lead.
Our take: One of our bold predictions for 2024 was the return of money-back guarantees as a way for the carriers to gain an edge when trying to win back more volume. This appears to be coming true, and shippers should look for more of this to come… and stay diligent when it comes to auditing invoices to recover money owed for service failures.
Read more on UPS here.
Read more on FedEx here.
FedEx Express awaits negotiations between the USPS and FedEx pilots
FedEx pilots and the U.S. Postal Service are currently in tense labor negotiations. The carrier is seeking a more profitable deal with the USPS than the current agreement, which expires later this year.
The current contract between the USPS and FedEx brings in nearly $2 billion in annual revenue for FedEx.
Pilots have been negotiating since 2021 without a deadline. Additionally, FedEx executives have stated their desire to cut over 12% of currently employed pilots.
FedEx is currently the USPS’s top domestic air contractor, while the USPS provides 4% of FedEx Express revenue.
Our take: FedEx is still intertwined with the USPS more than UPS is. Any change to the FedEx/USPS partnership will have an eventual impact on service and how FedEx operates, for better or worse. So, shippers should keep an eye on this situation to determine if their costs or services may be impacted.
Read more here.
Shippers to use fewer carriers in 2024?
As carriers fight for volume, they are offering more lucrative discounts to shippers that might reduce carrier diversification in 2024.
Although carrier diversification increased this summer when UPS and Teamsters were in the middle of tense negotiations, shippers started consolidating towards the end of 2023.
With demand declining, discounts that carriers like FedEx and UPS are currently offering are taking away volume from smaller, regional carriers.
Still, alternative carriers have their upsides. For one, regional carriers provide flexibility and still offer competitive rates compared to UPS and FedEx.
Our take: The pandemic-driven trend toward parcel carrier diversification appears to be reversing course, but that does not mean using fewer carriers is the right approach for every company. Shippers should make choices about which (and how many) carriers they work with based on data and their own business needs.
Read more here.