This Week in Parcel: May 5, 2023

This week in parcel, UPS cuts costs in the air, FedEx adds to furloughs, and changes in freight demand make planning difficult (but not impossible). Online shippers and customers are getting more comfortable with slower shipping times to save money. Overnight and expedited deliveries are experiencing lower demand as the U.S. economy slows and customers look for lower-priced services.

UPS cuts Air network costs as Ground transport popularity grows

As more shippers pivot to its Ground services, UPS cuts costs with its Air network. With demand shifting, this allows the carrier to reduce aircraft block hours during its two-day shipping operations. The average Air volume has declined 16.7% in Q1 from last year, compared to its Ground daily volume decline of just 3%. The less expensive Ground service has become increasingly attractive to businesses as inflation takes its toll, especially with UPS and other carriers improving their overall delivery time on the ground. Read more on UPS’ shift away from the air here.

FedEx adds to freight furloughs, announces plans to close and consolidate 29 locations

In addition to making its third round of furloughs in the last six months, FedEx also announced plans to close and consolidate 29 locations. The carrier stated it believes its plans to consolidate operations will improve both customer service and efficiencies. The furloughs will begin on May 28, but FedEx did not specify which positions are being furloughed nor how many employees will be furloughed, but did note that all affected employees will be recalled on or before August 25. The carrier also did not disclose which locations are shutting down. This is one of several cost-cutting measures FedEx is taking as it attempts to save billions. Read more on FedEx’s changes here.

Freight demand is changing. What’s the best way to manage labor planning?

Planning labor is challenging, especially in the midst of unpredictable freight demand. However, there are six things you can do that can help you best prepare for uncertain times, Global Trade Magazine outlines. Here are our top three:

Make Data Actionable

Go beyond looking at per-hour metrics. Instead, look at performance by warehouse, activity, or shift to identify where changes need to be made.

Track Indirect Time

Indirect activities, like cleaning, admin time, and breaking down pallets, all decrease productivity on the warehouse floor but don’t necessarily show up in the company finances. By logging these activities, you can find opportunities to gain efficiency and save money.

Manage Your Budget

Look at expected hours over actual hours worked and avoid overtime errors. Managing your budget enables you to make quick and efficient adjustments to operations when the unexpected arises.