I’m Jay Kent, managing director of SLB Performance, a consulting firm that helps companies reduce supply chain costs, implement BI tools, and improve in-stock and customer service. After 25 years of leading some of the most complex supply chains in the industry, I began advising companies in multiple industries and verticals. It’s important to understand the market to mitigate costs and improve efficiencies. So, twice a month, I’ll share parcel news and thoughts. Be sure to hit the subscribe button to receive the latest newsletter in your LinkedIn notifications.
2024 Rates
2024 average general rate increases are now in effect for UPS beginning Dec 26. Next up are FedEx, OnTrac, and other regional parcel carriers on Jan 1 and the USPSon Jan 21.
Note that these increases are average increases, so shippers may find their rates increase even more. A number of parcel consultants have crunched the numbers to compare the latest rates with previous years. For example, according to Reveel, if they make the same shipments as this year, the average FedEx customer will pay 8.17% more in 2024, and the average UPS customer will pay 7.72% more.
Returns
As end-of-year holidays begin to wind down, returns become a focus. Salesforce predicts a “returns tsunami” for the second year in a row. More than $131 billion in holiday purchases are expected to be returned.
To mitigate costs and optimize routes, UPS acquired Happy Returnsin October to add to its reverse logistics services. The acquisition not only offers a returns portal that shippers can use to manage returns, but it also will help UPS optimize its routes to better manage the anticipated number of holiday returns.
In early December, FedEx Express Europe extended its partnership with ZigZag. Per the announcement, using ZigZag, FedEx e-commerce customers benefit from an online returns portal that is branded with their logo and easy to integrate with their webshop. Via the portal, retailers are able to retrieve insights that help them understand the reasons for returns in order to prevent them in the future. For return shipments requiring customs clearance, documentation is created and uploaded digitally, ensuring retailers get the refunds and exemptions they are entitled to.
FedEx Earnings
Market conditions impacted FedEx’s latest earnings for the period ending Nov. 30. Total revenue declined 2.6% year over year to $22.2 billion while reported operating income increased 8.5% YoY to $1.28 billion and adjusted operating income increased 17.4% YoY to $1.42 billion.
The Express Division continued to disappoint, resulting in FedEx’s stock price falling over 12%.
However, according to Chief Customer Officer Brie Carere, the holiday peak season has been relatively similar to last year’s and is in line with the company’s expectations.
“This holiday season, we estimate over 365 million packages will be delivered with a picture showing proof of delivery,” Carere told analysts on Dec. 19.
In addition, FedEx is benefiting from additional volumes won from the closure of less-than-truckload provider Yellow and packages diverted from UPS when the competitor was negotiating a new contract with the International Brotherhood of Teamsters.
“We are tracking all accounts we won, specifically because of their concerns on the labor negotiations. The vast majority of those had an early termination clause. And to my knowledge, we have not lost a single one of those accounts,” Carere said. “Now, of course, we do trade accounts with UPS, and we have accounted for the trades between the two of us over the last quarter, and we’re still up more than 400,000 average daily packages in the U.S.”
Strike Ends
After a 12-day strike that saw DHL Express union members at the Cincinnati/Northern Kentucky International Airport (CVG) walk off their jobs, a tentative agreement was reached with DHL Express.
Bill Hamilton, president of Local 107 and director of the Teamsters Express Division, was involved in the Local 100 negotiations. According to Hamilton, the tentative agreement includes wage increases that total $5.50 per hour over the course of a four-year contract, as well as full health care at no cost to employees and a $1,000 signing bonus.
That’s it for now. Comments are always welcome. Reach out if you’d like to learn how to lower or even possibly eliminate any parcel fees. Stay tuned for the next newsletter on January 10, and don’t forget to hit the subscribe button to ensure you receive it in your LinkedIn notices.
-Jay