DC Velocity - April 2012

newsworthy

Parcel fight heads to California court

For the conveyor
industry, one good
year begets another
AS THE FEUD PITTING FEDEX CORP. AND
UPS Inc. against parcel consultant AFMS LLC
heads for a May 2013 trial date in a California
courtroom, the question raised in the real world of
everyday business is how consultants have been affected by the alleged boycott
by FedEx and UPS of their businesses.

IMPACT ON PROFITS DEBATED

Parcel consultants that agreed to be identified in the AFMS complaint claim they continue to lose millions of dollars in business as nervous shippers avoid them out of concern their freight won’t get moved. For its part, AFMS said the actions by FedEx and UPS have cost it about $20 million in lost profits and diminished revenues since the policies were publicly announced in October 2009 and put into practice the following spring.

Insource Spend Management Group, a Hilliard, Ohio-based consultancy, said it had projected total revenue of $35 million between 2010 and 2012. Since the FedEx and UPS policies took effect, Insource has cut its revenue forecasts to $14 million for the same period, according to Brett A. Febus, the company’s president. Insource has also halved the size of its staff, he added.

Consulting veterans, virtually all of which held high-level positions with the carriers before going out on their own, don’t view the issue in black-and-white terms, however. Jerry Hempstead, head of an Orlando, Fla.-based consultancy that bears his name, said many consultants have “more work and more income now than ever.” Hempstead added that a detailed examination of consultants’ financial records would show that, in most cases, “business is brisk.” p. 24

At a time when signs of robust economic growth can be hard to find, the material handling industry—and particularly the conveyor sector—keeps rolling along nicely.

At the annual spring meeting of the Conveyor Equipment Manufacturers Association (CEMA), Daniel Fannin, vice president of marketing at Emerson Industrial Automation and chair of the group’s statistics committee, reported double-digit growth for the conveyor business in 2011. Fannin also projected continued growth in 2012, albeit at a slower pace.

According to Fannin, the conveyor industry reported sales of $8.5 billion in 2011, which equates to a 28-per- cent increase in units shipped over 2010 numbers. CEMA’s statistics committee tracks revenue based on the dollar value of the products shipped to customers.

The conveyor industry also outpaced the strong growth rates of the material handling sector overall, which reported gains of about 17 percent.

While Fannin’s committee projects the growth rate will slow somewhat in 2012, it will still be notable. He said that projections call for year-over-year 10-percent growth in the dollar value of equipment shipped. That would equate to about $9.3 billion. ;