newsworthy
increases for both products roughly doubled, according to Shipware data.
As has been the case for years, companies tendering
lighter-weight ground packages can expect to pay higher
percentage increases than the average rate increase
announced by the carriers across all weight classes. For
example, on Nov. 21, Atlanta-based UPS announced a 2014
general rate increase of 4. 9 percent, on average, for ground,
domestic air, and international parcels, effective Dec. 30.
However, UPS’s ground list rates for shipments weighing
between one and five pounds rose by 7. 5 percent, while
rates on shipments weighing six to 10 pounds increased by
7 percent, according to Shipware estimates.
By contrast, the heaviest weighted shipments from 140
pounds to the 150-pound maximum—rose by 3. 1 percent,
analysts said.
Lighter-weight parcels were hit with the higher increases
because they account for most of the carrier’s volumes.
About 55 percent of UPS’s ground shipments weigh
between one and 10 pounds, according to Rob Martinez,
Shipware’s president and CEO.
The same holds true at Memphis-based FedEx. In 2013, it
raised tariff rates by 8. 19 percent on shipments within the
one- to 10-pound weight range, nearly doubling its across-the-board tariff increase, according to Shipware. By contrast, FedEx’s rates for ground parcels weighing between 71
pounds and the 150-pound maximum rose 4.02 percent,
Shipware said.
Lest anyone think that FedEx isn’t capturing much of
the tariff bounty because many of its customers are under
contract, Martinez said about half of the company’s shipments move under the tariff. FedEx and UPS representatives did not respond to e-mail requests seeking comment
for the story.
RATES A SORE POINT WITH SHIPPERS
Shippers say they are generally satisfied with FedEx’s and
UPS’s level of service. What they don’t like is the carriers’
opaque rate structure and their own lack of bargaining
power. In the October Shipware survey, 64 percent said it
was harder to negotiate with the carriers than it was several
years ago. They said FedEx and UPS have no competition
and are too focused on margin improvement to cut ship-
pers many breaks. In addition, 83 percent said the recent
general rate increases have been “too high.”
Few of the respondents have used regional carri-
ers, but about a quarter of those who had said they
saved more than 31 percent over FedEx and UPS.
Another quarter said they saved between 6 and 10
percent. Although most respondents didn’t care for
USPS, about one-third of those who used a portfo-
lio of its parcel services in order to be “modally
optimized” reported savings of 25 percent over
FedEx and UPS rates.
Where the parcel market goes from here depends
on the channel of distribution. The B2C segment,
which is showing substantial growth relative to the
low-single-digit growth of B2B, is being driven by
large retailers like Amazon.com, Wal-Mart Stores
Inc., and e-Bay, to name just a few. They, not the
carriers, will call the shots. USPS—which recently
announced a major revamp to its Priority Mail
service in an effort to capture more e-commerce
share—will be a more formidable competitor to
FedEx and UPS for B2C delivery dominance.
By contrast, in the B2B world, the status quo
could long remain in place. “It is very difficult to
build a network and compete profitably against
well-entrenched companies, as we found out,” said
Clough of DHL Express. ;
—Mark Solomon
Third-party logistics service provider (3PL) Total Quality
Logistics has received the 2013 Transportation Intermediaries
Association 3PL Samaritan Award. … Kuehne + Nagel and
Benetton have received the Logistics Award of the Year from
Assologistica, the Italian Logistics Association; the magazine
Euromerci; and Assologistica Cultura e Formazione. … Penske
Truck Leasing is a recipient of the 2013 National Excellence in
Training Award from the Automotive Training Managers
Council. … Supply chain commerce solutions provider
Manhattan Associates was awarded the Brandon Hall Gold
Award for Best Custom Content for its “Distribution Center
Operations” e-learning course. Manhattan also won the award
for Distribution Center Innovation at the Supply Chain Asia
Awards 2013. … LLamasoft, a developer of supply chain design
software solutions, has been recognized as a World Class Team
supplier to Northrop Grumman Corp. … Dow Chemical Co.’s
Nancy Fazzoni has won the Elemica Lifetime Achievement
Award for contributing significantly in countless ways to the
growth of Elemica, a supply chain operating network, in the
chemical marketplace.
accolades
go figure …
73 million
The number of packages delivered on Christmas Eve
2013. The U.S. Postal Service delivered 31 million, UPS
Inc. 26 million, and FedEx Corp. 14 million.
SOURCE: SJ CONSULTING
