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.
In addition, on those weeks that Parcel Notes does not go out, we send a market update and analysis email to subscribers. ***If you would like to be added, please DM me***.
FedEx and UPS
- In an interesting twist between FedEx and Amazon, FedEx, Amazon signed a large-package delivery deal. As noted in this Supply Chain Dive article, the two companies signed a partnership deal that provides Amazon “cost favorability” when compared to using UPS, Business Insider reported, citing an internal document. A big thanks to Max Garland for quoting me in the article in which I questioned if this was due to FedEx possibly being ahead in the network optimization race and able to deliver these package types at a lower price compared to UPS and still make a profit. Did UPS miss an opportunity here? What about its subsidiary Roadie which introduced a large package service last year?
- Meanwhile, as UPS and FedEx continue with their network optimization strategies and also raising delivery area surcharges that impact rural areas, Parcel and Postal Technology International wrote on Amazons announcement that it will continue to develop its last-mile operations with a US$4bn investment in its rural delivery network across the USA to bring faster delivery times to less densely populated areas.
A couple of rate increases as reported by Supply Chain Dive:
- UPS Mail Innovations is notifying customers of price increases as it adapts to rate changes from the U.S. Postal Service. In some situations, the rate increase is 40% higher.
Note that during UPS’ Q1 earnings call, CFO Brian Dykes told analysts:
“In the first quarter, Supply Chain Solutions generated operating profit of $98 million. Operating margin was 3.6%, a decline of 320 basis points compared to last year, primarily driven by cost pressure in our Mail Innovations business. This is a postal injection product, and our contract with USPS expired at the end of 2024. The new rates from the USPS are causing short-term cost pressure, which we expect to address as we make adjustments to that business.”
- UPS is implementing a surge fee on U.S.-to-Canada shipments for several services starting May 18, four days before a potential Canada Post strike.
More rate UPS and FedEx rate announcements to be aware of:
Effective June 2, UPS will make changes to the following changes (https://www.ups.com/us/en/support/shipping-support/shipping-costs-rates):
- Additional Handling and Large Package Surcharges for Zones 7 and above
- Remote Area Zip Codes in the U.S. 48 contiguous states will apply a Remote Area Surcharge to Ground Saver packages.
- Shipping Charge Correction Audit Fee
- The Over Maximum Limits fee for packages
- A new International Collect on Delivery (ICOD) fee
FedEx changes (https://www.fedex.com/en-us/shipping/rate-changes.html#demand-surcharge):
- Effective June 1 – Late Payment Fee increases
- Effective June 2 – Changes to the Delivery Area Surcharge ZIP code lists
In case you haven’t seen yet, a new video from earlier this month on UPS click here.
USPS
- USPS names FedEx board member and former Waste Management CEO David Steiner as new postmaster general.
- The USPS reported total operating revenue of $19.7 billion for the quarter ending March 31, essentially flat compared to the same quarter last year and a net loss of $3.3 billion. “As we mark 250 years of service to the nation, our organization continues to face economic headwinds. We are working diligently to control costs, increase revenues, and transform and modernize our infrastructure,” said Acting Postmaster General Douglas Tulino.
“At the same time, we are seeing strong market acceptance of shipping products like USPS Ground Advantage and adopting an increasingly competitive posture across our product portfolio. We are also encouraged that the increasing efficiencies of our processing, logistics and delivery network are showing steady progress in reducing our relative cost as we serve the nation and American commerce.”
- The Postal Service filed notice with the Postal Regulatory Commission (PRC) for shipping services price changes to take effect July 13. The changes would raise domestic shipping services prices approximately 6.3 percent for Priority Mail service, 7.1 percent for USPS Ground Advantage and 7.6 percent for Parcel Select. Prices are not changing for Priority Mail Express service.
That’s it for now. Stay tuned for the next newsletter May 28. Don’t forget to hit the subscribe button to ensure you receive it in your LinkedIn notices. In addition, if you like what you’re reading, sign up to receive additional insights and analysis via emails twice a month – DM me for more info.
Most important though, reach out if you’d like to learn how to lower or even possibly eliminate any parcel fees. 📦
-Jay