This week in parcel, FedEx, UPS, and the USPS take different routes to counteract declining revenues.
FedEx plans layoffs for over 800 employees
FedEx will lay off over 800 employees from five facilities in the coming months. The affected employees will be given opportunities within the company.
Two closing locations are FedEx Ship Centers, while the other three locations are FedEx Supply Chain facilities, which provide third-party logistics services. FedEx cited the loss of customers as the reason for the closure of the company’s supply chain facilities, while the Ship Center closings are part of FedEx’s Network 2.0 initiative, a $2 billion effort to reduce its operating costs and improve efficiency.
FedEx will continue finding ways to cut costs and optimize its services in the next few years as it works towards its Network 2.0 initiative.
Our take: In the face of challenging times, look for UPS and FedEx to continue to streamline their operations and reduce operating costs when possible.
Read more here.
UPS turns to AI
In a recent earnings call, UPS CEO Carol Tomé revealed the carrier has turned to using AI and machine learning to deal with its shrinking volume levels.
Tomé stated that UPS was able to use AI and machine learning to move volume to automated hubs and reduce labor hours to match the decline in volume.
The carrier lost volume during the labor negotiations with Teamsters, as shippers shifted to other carriers as a precaution. By turning to technology, UPS was able to adjust which channels packages were flowing through, improving the company’s efficiency and lowering overall costs.
Our take: The pressure on UPS and FedEx to cut costs and leverage technology is high right now. And, as we’ve said before, it’s a great time to renegotiate your parcel contracts.
Learn more about UPS’s turn to AI here.
USPS looks to boost volume by offering discounts
The U.S. Postal Service is attempting to combat declining volume by offering discounts to its biggest customers. The USPS is calling its latest offering a win-win.
High-volume shippers will receive discounts for shipping more than one million parcels. There are two separate incentives, one for First-Class mail, and another for Marketing mail. The discount will vary depending on the customer, but it will be calculated on the average per-piece price.
In the last 15 years, USPS volume has decreased by 42%. This new effort not only looks to counteract the declining volume but also increase revenue by roughly $1 billion.
Our take: This is the second offering the USPS has announced to increase volume in the last month, with its Ground Advantage service being the first. If these efforts take off, shippers could see more parcel product offerings they could benefit from soon.
Read more here.