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Does anyone else find it interesting that in these tough economic times that carriers are reporting significant increases to their bottom-line profitability, on a quarterly basis? Shippers need to beware of some of the strategies and tactics that are being implemented by UPS and FedEx. For starters, have you tried to negotiate your service agreement lately? Both UPS and FedEx have made a policy against negotiating service agreements for shippers when the shipper has engaged a third party consultant. We have seen situations where the carrier sales representative has informed the shipper that they would not present pricing if the shipper was using a third party to help them negotiate. We have seen situations where the carrier has gone as far as to require the shipper to sign a very strict Mutual Non-Disclosure Agreement (MNDA) with terms that prohibit the shipper from sharing the pricing proposal with anyone outside their company. Is that not like telling someone that they cannot use an attorney to represent them in a legal matter?... |
The enVista transportation team comments about many recent news events that matter to your business. Click on the headlines below for enVista's commentary and insight on what this news means to you.
- Continued Volatility in Fuel Prices
The two recent stories on changing fuel prices reflect the volatility of this market and the potential for rising prices long term. Diesel prices have dropped in recent weeks as spot crude oil prices have declined. The most recent DOE nationwide price reflected a $0.73 decline. Since the Fuel Surcharge has become such a key component of LTL carriers pricing strategy, limiting the variation in your Fuel Surcharge factor or index is critical...
- Issues Mount at YRCW
It has been reported that YRC Worldwide has eliminated 200 positions at its Overland Park, KS corporate office and satellite facility in Akron, OH. The cutbacks include 90 employees in their IT department. YRC has eliminated 4,500 positions from its workforce in the past year in an attempt to align labor costs with shrinking revenue and shipment count...
- FedEx and UPS Go Toe to Toe Over Railway Labor Act vs National Labor Relations Act
The confrontation between FedEx and UPS continues to heat up and we want to keep you abreast of the latest developments. These carriers have been at each other for three decades and temperatures continue to rise concerning the labor issue of what law should govern FedEx Express workers...
- ABF / Teamster Concessions
On March 12, the Teamster union’s website posted a notice that the Teamster union had agreed to enter into discussions of possible wage and benefit concessions with less-than-truckload (LTL) carrier ABF Freight System. The Teamster said this decision was based on ABF’s current financial position and the overall poor state of the LTL industry...
- LTL Carrier First Quarter Results
While FedEx Freight’s revenue and shipments grew 14% and 26% in the first quarter, their average yield per cwt declined 8%. The net result was an operating loss of $107 million. While the parcel side of FedEx’s business units is improving significantly, FedEx Freight has major issues...
- Parcel Carrier First Quarter Results
FedEx Express reports improved fiscal third quarter results based on strong results in its domestic and international air operations. Revenue rose 7% from year to year to $8.7 billion, while net income jumped 146%. FedEx reported these improvements were driven by improving demand and strict cost controls implemented in recent months...
- FedEx Expands IEF Service
FedEx Freight recently announced that they would expand their International Economy Freight coverage from about eighty (80) countries to one hundred fifty (150). FedEx freight is a “... customs-cleared, time-definite delivery service... “Given the price differentials between FedEx’s IEF and IPF (International Priority Freight) services, this could be a real opportunity for shippers with heavy import/export volumes...
Evan Armstrong of Armstrong & Associates, a leading a recognized leader in supply chain market research and a significant resource for companies selecting third-party logistics providers (3PLs), recently conducted a full-day briefing with enVista’s consultants.
A change is coming to the parcel market; and it is not one that will be friendly to shippers. As we predicted the UPS/FedEx feeding frenzy to gain the disenfranchised DHL shippers is now over. The remaining US parcel carriers are now waking up to the fact that they now represent a virtual duopoly.
Stifel Nicolaus upgraded both FedEx and UPS on May 20, 2010. Morgan Stanley issued a positive research piece on FedEx the next week. While there are obvious macro-economic and market factors contributing to the carriers’ improved outlooks, there is another, more disturbing, common thread in the analysts’ research. Stifel’s Principal David Ross’ recent piece put it well, “In 2009, because DHL's business was concentrated around a relatively small number of accounts (that had low pricing to begin with), UPS and FedEx were price aggressive to get the volume into their networks. This had a negative impact on yields, but with DHL gone and USPS losing billions/year, we believe FedEx and UPS should show strong yield improvements over the next year or so. ” William Greene of Morgan Stanley said this of FedEx, “... an intense focus on yield mgmt should support better pricing trends in C2010+... “ In other words, UPS and FedEx expect higher per package yields going forward.
These industry experts are saying, in an understated and diplomatic way, what we have been seeing for the past few months. Both UPS and FedEx are changing the rules of the game. Prior to 2003 UPS and FedEx maintained very disciplined pricing strategies...
Learn free, easy steps to trim money off your parcel costs!
enVista's leading transportation experts share in-depth insight in Parcel Magazine about the dynamics of today's transportation challenges, and how to conquer them.
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Business Intelligence and Packages - Part 1 by Baris Tasdelen |
Business Intelligence and Packages - Part 2 by Baris Tasdelen |
Ideas for Green Packaging by Baris Tasdelen |
For more information, please contact enVista at inforequest@envistacorp.com or 877-684-7700.
In order to gauge your customers’ perception of your company, you must monitor the performance of your carriers. Carriers are viewed by customers as an extension of your company, and when a shipment arrives late, they look to you for an explanation. Of course a carrier can make claims to their shipping performance, and some even back those statements with a money-back guarantee. However, validating these claims and calculating a carrier’s actual performance can be a daunting task.
The Executive Dashboards available on enVista’s myShipINFO® web portal provide you with a comprehensive carrier performance analysis. enVista’s Carrier Score Card, for example, allows you to compare your spend across carriers and monitor their on time performance on a weekly, monthly, or annual basis.
While carriers will report their on time performance, they often grant themselves a great deal of latitude when determining whether a package is late or not, subsequently swaying the results in their favor...
For more information about any of the news or articles in this newsletter, please contact Kyle Braaksma via email or 877.684.7700 x. 264.
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