This week in parcel, the industry awaits UPS’s GRI decision as it weighs factors like rising operational costs, staying competitive with FedEx rates, and possibly having to fend off a new competitor.
While shippers wait for UPS to announce its rates, it’s a good time to prepare for risks aside from rates and capacity.
Parcel world awaits UPS’s GRI
FedEx has announced its general rate increase for 2024, and now the parcel industry awaits UPS’s response.
This year, UPS is trying to balance increased operational costs resulting from the new labor agreement with the Teamsters Union as well as its need to recoup the volume lost during the negotiations.
Branden Burt, Director of Parcel Operations at TransImpact, believes UPS will match its competitor’s 5.9% GRI, if only because of the decelerating inflation.
Of course, the 5.9% increase is just a headline number, with certain types of shipments seeing higher increases. When factoring in surcharges, many shippers could see an overall 10% rate increase.
Our take: While UPS may end up matching FedEx’s GRI, it’s important to review the details behind the rate increases.
Read more here.
Is Amazon Shipping a serious competitor for FedEx and UPS?
The relaunch of Amazon Shipping could be a disruption for the small parcel industry. Amazon is one of the few companies that has the infrastructure to challenge FedEx and UPS, as it already delivers nearly five billion packages per year, 23% of U.S. package volume.
Amazon hasn’t released many details regarding the service. However, from what it has shared, the service appears to target small and medium-sized businesses.
With “simple rates,” Amazon could win over shippers who want a straightforward rate. However, larger shippers could avoid Amazon Shipping for several reasons, including needing to maintain discounts from their incumbent carriers and Amazon not covering enough of the U.S.
Our take: Amazon might not be in a position to steal away a significant portion of UPS’s and FedEx’s volume right away, but it shouldn’t be counted out for the long term.
Read more here.
Logistics is in a buyer’s market. It’s time for shippers to shift focus away from worrying about costs and capacity
With logistics in a buyer’s market these days, shippers can focus more of their energy on the strategic supply chain risks highlighted in the most recent Lehigh Business Supply Chain Risk Management Index Quarterly Report, such as cybersecurity and data, and not as much on rates and capacity, as has been the case the past few years.
Cybersecurity risks are the biggest threat businesses face. They have risen over the years and will continue to be an issue. Data breaches could wreak havoc on your business if you are left exposed.
Economic risks rank second on the index, with the threat rising in this most recent quarter. Labor shortages, increasing energy costs, and pricing volatility are just a few risks companies face.
Our take: Moving past rates and capacity could give shippers a more complete shipping process.
Read more here.