Market demand remains low and shipping costs continue to decline. Freight shipments see an increase for the first time in five months, UPS announces a fuel charge update, and competitors plan for a potential UPS Strike. Additionally, the global shipping industry continues to struggle to cut emissions.
Will Freight Shipments Continue to Struggle?
Freight shipments were up in February for the first time in five months, but the trucking industry is still likely months away from positive improvement. The problem? Too many drivers and too little freight.
Despite the 3.8% increase in shipments from January to February, this was still a slight decline in year-over-year shipments.
Still, management teams still expect improvement towards the back half of the year. Shipments are just now beginning to stabilize.
The industry is, unsurprisingly, stronger in some areas than others. While LTL and intermodal volumes continue to decline, there was a proportional increase in truckload freight.
You can read more about this here
|TL Linehaul Index
via Freight Waves
UPS Fuel Charge Update
Ups announced the International Export Import Fuel Surcharge will now apply to Ground shipments between Mexico and the United States, effective March 27, 2023. This surcharge, which was implemented at the end of October, 2022, was initially applied to shipments to and from Canada.
FedEx has not followed suit, as its international fuel surcharge matches its ground surcharge. Overall, it gives FedEx a 3% advantage since the beginning of 2023.
You can get a full breakdown of all UPS rates here
3 Trends to Use for Last-Mile Logistics Strategy in 2023
With at least one outlet projecting a 78% growth in last-mile deliveries by the end of 2030, staying on top of trends is vital. In 2023, there are 5 trends shippers should in mind for last-mile logistics.
- Track Consumer Trends
What are your customers buying? What advertisements are they seeing? E-commerce is dominated by businesses that can satisfy customers, from the shopping cart to the front porch.
- Creatively Use Opportunities
Utilize different carriers in different situations. Why pay a $13.25 surcharge for rural deliveries when don’t have to? Don’t rush a shipment when plenty of customers want the cheapest available option, even if it takes longer to arrive.
- Use Your Data
You have data, but are you using it to its full extent? Whether it’s making real-time adjustments or using it to avoid errors that add unnecessary costs, leveraging data will keep you ahead of the competition.
Supply Chain Quarterly had a few more things you should look out for here
If you don’t have a system that can help you utilize your data, you might need TransImpact’s Business Intelligence.
[Let’s Talk Ship BI Solutions video
Are Competitors Looking to Take Advantage of Potential UPS Strike?
With a potential strike between UPS and the Teamsters union brewing, are regional carriers equipped to handle the volume?
While FedEx is certainly looking to capitalize on the potential strike, the company recognizes it can only handle so much added volume. It recommends shippers switch by March 31 to ensure the company has the capacity for the summer.
Regional carriers also recognize it doesn’t have the capacity to pick up UPS customers, especially considering limitations when it comes to international shipping.
Additionally, some UPS customers might not have another carrier to turn to without being hit with penalties, incentivizing moving carriers preemptively.
If you’re concerned about how a potential UPS strike could affect your shipping, it might be time to talk to a parcel expert.
[Parcel Spend Intelligence Just a Minute Video.]
Have Excess Inventory in Warehouses? Redistribution and Co-Warehousing Could Help
Increased consumer demand in the last two years has also brought on a new challenge for retailers: overstocked warehouses.
Considering the cost of warehouses, housing excess products can be a burden to the bottom line. Liquidating inventory is one method to free space, but what if that’s not the route you want to take?
Redistributing inventory and co-warehousing are two warehouse strategies that have helped small and medium-sized businesses. Redistributing involves moving excess inventory to areas like Nevada or Pennsylvania. These locations have lower warehouse costs and are still closer to consumers who might want the product earlier.
Co-warehousing involves sharing a warehouse with other small and medium-sized businesses in lieu of buying their own warehouse or renting warehouse space from larger retailers.
SDC Executive has more information about the two strategies here.
Global Shipping Industry Still Struggling to Cut Emissions
Despite efforts taken by the global shipping industry to cut emissions, it still has made little progress toward actual decarbonization.
The biggest issue? Alternatives to powering big ships and incentives to slow down. While many companies have begun practicing “virtual arrivals” – slowing down when it becomes clear there are no open ports to save on fuel – the actual effects have made little impact.
Currently, shipping companies will make more money by arriving at the port as fast as possible and then waiting, which burns fuel at a higher rate.
While strategies, like “virtual arrivals”, do aid in cutting emissions, the continued reliance on fossil fuels still results in pollution.
Bloomberg explains more in this article