newsworthy
The “disconnect”:
carriers vs. the economy
IN MID-SEPTEMBER, SWIFT TRANSPORTATION CO., THE
nation’s largest truckload carrier by sales, took the unusual step of holding an analyst conference call before the end of its third quarter, rather
than waiting until the quarterly results were made public in late
October.
In the 10-minute update, Phoenix-based Swift said its July and
August truck volumes were following normal seasonal patterns and that
third-quarter traffic should rise 4 percent year over year. In addition,
Swift held to its forecast of full-year pricing growth of 4. 4 percent and
reaffirmed that it would meet earnings-per-share targets for the rest of
2011. It also said that most customers held a positive view of their traffic flows and were worrying more about the future availability of freight
capacity than about anything else.
Swift’s decision to schedule the call and the comments the company
made during it were designed to show that the transportation sector
was conducting business as usual—despite
slowing global economies, a growing
Eurozone debt crisis, congressional
brinkmanship over raising the nation’s
debt ceiling, and a summertime sell-off of
transport stocks that was seemingly unrelated to the economic climate or a company’s individual situation.
Swift is not the only member of the
transport fraternity looking to convince
observers that the world isn’t coming to an
end, at least as far as shipping volumes are
concerned. “We polled our operations
folks, and we do not see any general slowdown. Most of our customers’ volumes are
steady,” Ben Cubitt, senior vice president of
consulting and engineering for the Dallas-based third-party logistics firm Transplace,
told DC VELOCITY.
According to Cubitt, the biggest concern for carriers is that all the talk
about a slowdown or double-dip recession might influence business
behavior and become a self-fulfilling prophecy.
UPS Inc., which tends to be cautious in its public statements and as
recently as late August held a somber view of macroeconomic conditions, surprised analysts during a late October conference call when it
expressed optimism about the economy’s fourth-quarter prospects,
even as the Atlanta-based giant reported third-quarter earnings and
revenues that hardly blew off the doors.
Scott Davis, UPS’s chairman and CEO, said the U.S. economy had “
stabilized” and was “showing modest growth.” UPS’s exports out p. 20
USPS to raise rates 4.6%
in 2012
The U.S. Postal Service (USPS) said that
effective Jan. 22, 2012, it will raise rates
on its portfolio of shipping services by
4. 6 percent.
Under the 2012 rate adjustments, rates
on USPS’s Express Mail overnight delivery
service will increase by an average of 3. 2
percent, while rates for its two- to three-day delivery service, known as Priority
Mail, will rise by 3. 1 percent. USPS’s First
Class Package service, formerly known as
First Class Mail Commercial Parcels and
recently reclassified as a product subject
to market competition, will increase by
3. 7 percent.
The biggest increase, 9 percent, will be
imposed on international mail services. But
perhaps the most significant is an 8.5-per-
cent increase on the USPS’s Parcel Select
product, where packages are tendered by
private carriers and so-called parcel consolidators to the Postal Service for final delivery to residential destinations.
Parcel Select is extremely popular
among merchants who handle most of
their transactions online and rely on a
network of carriers, consolidators, and
the USPS to deliver orders to customers.
Many experts see products like Parcel
Select as the future of the USPS as many
of its other product lines—in particular,
first-class mail—are increasingly vulnerable to digitization. “You can’t digitize a
sweater from L.L.Bean,” said Jerry
Hempstead, head of an Orlando, Fla.-based consultancy that bears his name
and a long-time postal watcher.
USPS said it would introduce flat-rate
pricing on its Express Mail product, also on
Jan. 22. Shippers will pay a flat rate of
$39.95 for all shipments weighing up to 70
pounds that can fit into a special flat-rate
envelope. The service will be available for
all domestic U.S. mailings, USPS said.
The Postal Service already offers flat-rate pricing on its Priority Mail service. ;
