Welcome to The Parcel News Buzz, your ultimate source for all the latest news and market updates in the dynamic and ever-evolving parcel shipping industry. Our weekly blog is your go-to destination for insights, trends, and innovations that drive the industry forward. As your trusted partner, we are committed to keeping you informed and empowered with clear and concise information that helps you stay ahead of the curve. Learn more about what’s happening in the world of parcel shipping and uncover the buzz that drives the industry’s future.
April 22: U.S. Parcel Revenue Drops for First Time in Seven Years, Despite Volume Increase
- According to the U.S. Parcel Shipping Index by Pitney Bowes, U.S. parcel revenue declined for the first time in seven years, dropping by 0.03% to $197.9 billion in 2023 despite a slight increase in parcel volume, in a context marked by changes in carrier competition and consumer behaviors, highlighting a shift toward more frequent shipments of smaller, less expensive packages. (Pitney Bowes)
April 15: DAS Zip Codes Updates are Already Underway
- UPS and FDX added the DAS zip codes effective April 8th (UPS) and April 15th (FedEx).
- OnTrac is adding DAS zip codes effective May 4th.
- Pitney Bowes launched regional delivery service in Midwest.
- Better Trucks adds 1100 new zip codes to coverage area.
April 8: UPS Prepares for Increased Air Cargo Demand by Hiring Additional Pilots
- The Independent Pilots Association, which represents about 3,200 pilots at UPS said with regards to the UPS and USPS air cargo deal, “The Independent Pilots Association Executive Board was informed that UPS HR is resuming their pilot hiring process to account for the additional volume surge that will occur as the year progresses…the initial projected estimate for hiring is expected to be 300+ additional crew members…” (Freight Waves)
April 1: USPS Chooses UPS as Primary Air Cargo Provider, Replacing FedEx
- The US Postal Service has named UPS its primary air cargo provider, replacing FedEx effective later this year, as both UPS and FedEx adjust their strategies to counter declining volumes, with UPS set to handle the majority of USPS air cargo in the US. (CNBC)
- This shift reflects broader changes in the parcel market, marked by increased competition and shifting dynamics, with UPS and FedEx facing challenges from emerging players like Amazon and regional delivery services, while the USPS aims to expand its market share through services like USPS Ground Advantage and partnerships with UPS.
March 25: FedEx Express US Domestic Package Down 4% in 3Q24 Earnings
- FedEx announced its 3Q24 earnings last week, which accounts for the period of December through February. Overall, revenue was down 2% YoY at $21.7 billion.
- Customer demand remains weak according to monthly volume trends. February experienced YoY reductions in volume across all segments, except FedEx Ground, which was up 1%.
- FedEx Express US Domestic Package was down 4%. FedEx Express International was down 2% and FedEx Freight LTL was down 2%.
March 18: UPS Adds to Delivery Area Zip Codes and Zones
- UPS’ Delivery Area Surcharge (DAS) zip codes will be adjusted starting April 8 and zones will change on June 17. Approximately 28-30% of the US population will now be in a DAS area.
- Starting April 8, 2024, the list of ZIP codes affected by the Delivery Area Surcharge will be updated. Check the revised listings here.
- From June 17, 2024, certain origin/destination ZIP code pairs will experience zone changes. The updated charts will be available after June 17, 2024, at ups.com/rates.
- These changes will impact your shippers’ parcel spend. If you don’t have the tools to determine the increase, it’s worthwhile to find a partner to help you navigate these changes.
March 11: FedEx Express Pilots’ Union Seeks Strike Authorization
- According to a recent article in FreightWaves: The union representing some 5,800 pilots at FedEx Express has asked the National Mediation Board to be officially released from mediation for the purpose of being able to go on strike against the company to achieve a new contract. (FreightWaves)
March 5: UPS reduces sort operations across select states
- UPS is reducing its sort operations, by either eliminating facilities or reducing the number of shifts in the following states: Kentucky, Indiana, Maryland, Oregon, Connecticut and Texas.
February 26: Amazon Shipping Chooses ShipBob as Exclusive Fulfillment Solution Provider
- ShipBob, a leading eCommerce fulfillment solution announced a partnership with Amazon Shipping, and will now offer Amazon Shipping as a new delivery option for US orders. (Supply Chain Dive)
- Currently, Shipbob is the only fulfillment solution provider to offer this shipping option.
- ShipBob has 35 US fulfillment locations and $500M annual revenue which will help Amazon Shipping continue its growth as a carrier.
February 21: USPS revenue grows as UPS sees decline
- USPS recently reported a decrease in volume but an uptick in revenue against a backdrop of UPS’ recent report of declining volume and declining revenue.
- Regional parcel players are also expanding their operations if they have the cash to do so.
- The implications of both USPS revenue growth and regional players’ expansion efforts will continue to challenge the duopoly of FedEx and UPS in 2024.
February 5: Now is the time to reassess your shipping strategy for cost-effective solutions
- Here is our recommendation for how SMB Parcel Shippers should act right now: Now is the time to try and renegotiate any small parcel contract you have. Typically, SMB shippers are aggregating their spend with one carrier. But it may be worthwhile to look at other carriers out there, especially given that UPS is focusing on the SMB parcel shipper segment.
January 29: UPS announces 12,000 job cuts and explores sale of Coyote truck brokerage business
- According to Bloomberg News, “United Parcel Service Inc. plans to cut 12,000 management jobs and explore the sale of its Coyote truck brokerage business in moves Chief Executive Officer Carol Tomé is taking to offset soft demand and higher union labor costs.” (Bloomberg News)
January 23: UPS and FedEx announce new Demand Surcharge updates
- Another round of Demand Surcharge updates from UPS and FedEx have been announced.
- FedEx’s current Jan. 15th surcharges expire on Feb 4th and will be replaced by the new additional handling surcharge will be $3.45 per package (+$1.45) and the oversize charge will be $39.50 per package (+19.50).
- UPS’ October surcharges expired on January 13th. The new surcharges went into effect on January 14th. For additional handling, UPS will now charge $3.50 per package, a decrease of $3.40. For its large package surcharge, UPS will now assess $40.00 per package, a decrease of $34.90. Lastly, for packages over maximum limits, there will be $0 assessed versus $410.
January 15: Amazon enters carrier market with launch of Amazon Shipping
- Amazon is finally throwing its hat into the ring of carriers and it is launching Amazon Shipping, a service that bears a closer resemblance to the national carriers than anything they’ve offered before. (Parcel Industry)
- If you’d like to learn more about Amazon Shipping and how it can potentially disrupt the duopoly of FedEx and UPS, you can read more here.
January 8: FedEx and UPS Announces Surcharges are Staying and On-Time Deliveries are a Priority for Amazon
- FedEx announced that the peak season surcharges will stick and not be lowered. UPS said demand surcharges are set to be removed on 1/13, but are expected to stick as well.
- Through the 2022 peak season, Amazon reportedly suffered with on-time deliveries which frustrated many of their Prime Members. The eCommerce giant rolled out a regional distribution model in 2Q23 which went into effect in 3Q23.
December 18: FedEx Introduces Hassle-Free Returns Program with No Box or Shipping Label Required
- FedEx said Monday that it has launched a program in which consumers can return merchandise without a box or shipping label to more than 10,000 locations, including 2,000 FedEx Office stores. More on this program and other post-holiday parcel metrics on FW here. (FreightWaves)
December 11: UPS and FedEx Implement Fuel Surcharge Changes Shippers Caught Off Guard by Unplanned Increase
Last week UPS implemented their fuel surcharge changes and FedEx announced theirs.
Fuel Surcharge changes are not an ‘instead of’ move that will alter FedEx or UPS’ current practice of adjusting its fuel surcharges as market conditions change. It’s a definitive price increase. However, unlike the other price increases that were included in GRI announcements, it’s one that shippers didn’t have a chance to plan for in their 2024 budgets. Details below:
- The UPS Ground Domestic Fuel Surcharge affects various services, including UPS Ground, UPS Ground with Freight Pricing, UPS Hundredweight Ground Service, UPS SurePost and UPS Basic. (Shipware)
- The International Ground Export Import Fuel Surcharge table will also see a 0.5% increase on December 4, 2024. This adjustment will apply to UPS Standard shipments to/from Canada and UPS Standard shipments to/from Mexico. (Shipware)
- UPS made FIVE index changes in 12 months from April 2021 to April 2022 increasing the ground charge by almost 60% and now this is the sixth change to the index in over twenty months.
- FedEx followed suit this week, raising it even higher to 1%, effective December 11th.
- The FedEx Ground Domestic Fuel Surcharge affects various services, including Residential, Delivery Area, Additional Handling, Oversize and Signature services.
December 4: USPS Ground Advantage Outperforms Expectations with High Delivery Times
- USPS Ground Advantage is performing better than expected with on time in transit.
- UPS Ground Saver (an attempt to compete with USPS) is not performing as well. Specifically designed for low-value residential shipments that need reliable delivery.
- UPS raised Fuel index by ½ percentage points which makes sixth time in last twenty months. FDX is expected to follow shortly.
- Amazon is expected to deliver more packages in 2023 (5.9B) than UPS/FDX. UPS 9.4% decline in volume Q3 2023 YOY. Amazon delivered 4.8B in 2022.
November 27: UPS and FedEx to Raise DAS Rates, Affecting Shippers Across the U.S.
- UPS is set to adjust the U.S. ZIP codes subject to delivery area surcharge (DAS) in 2024, with estimates suggesting the addition of 2.75 million to nearly 3 million Americans to the DAS list, despite plans to remove more ZIP codes than add. Similar changes are expected from FedEx, potentially affecting 29% of the U.S. population.
- DAS, a costly per-package levy, includes standard, extended, and remote area surcharges, designed to offset higher costs in certain delivery regions. The 2024 changes will impact shippers’ budgets, as the carriers, including UPS and FedEx, raise their DAS rates, with DAS accounting for approximately 20% of a shipper’s average total surcharge costs.
- While DAS can be negotiated, offering a potential 25% to 50% discount off published rates, many merchants tend to accept these changes each year due to concerns with customer service impacts with carrier partners.
November 20: FedEx and UPS Engage in Unprecedented Discounting, Offering Extraordinary Rate Reductions
Parcel carriers, particularly FedEx and UPS, are engaged in unprecedented discounting, offering extraordinary rate reductions, paying each other’s early termination penalties, and providing signing bonuses to new and existing customers. Shippers need to be careful though when executing new agreements because carriers are also adding in detailed language regarding volume commitments, service level requirements and diversification limitations.
November 13: 2024 General Rate Increase Comparison
UPS
- 3 Zone Accessorial Rates (2, 3 / 4, 5+)
- Higher on Zones 5 / 6, lower on Zones 7+
- International AH has one rate for all types ($31.00)
- Residential Surcharge is now $0.05 higher than FedEx for both Ground and Air
- Missing PDL has increased from $3.00 to $3.85 (28.3% increase)
- Shipping Charge Correction Audit Fee increased from $1.00 to 1.25 (25% increase)
FedEx
- 4 Zoned Accessorial Rate (2, 3 / 4, 5 / 6, 7+)
- Matching Zones are higher on Zones 7+
- International AH has different rate by type (Packaging $21.50, weight $36.00 and dimension $25.50)
- Does not charge Missing PDL
- Does not charge Shipping Charge Correction Audit Fee
October 30: UPS and FedEx Raise Transportation Charges by 6.2-6.3%
- UPS and FedEx have raised their transportation charges by an announced 5.9% over 2023. However, through our analysis, we are seeing more of a 6.3% and 6.2% respectively. Both carriers’ Ground minimum charges has been raised 5.9% from $10.10 to $10.70. The minimum charge in 2014 was $6.24. In 10 years the minimum charge has increased 71%.
- UPS and FedEx have raised additional handling surcharges and fees in double digits over the past 10 years.
- In 2024, both carriers raised those rates approximately 20%.
- Effective Jan 15, 2024 International Additional Handling and International Oversize surcharges are applicable “Per Packages” instead of “Per Shipment”, which matches UPS.
October 23: UPS, FedEx, and USPS Release Shipping Deadlines for Holiday Deliveries
UPS, FedEx and the U.S. Postal Service announced shipping deadlines for all customers seeking to ensure products are delivered ahead of Christmas.
- FedEx: To ensure delivery on or before Dec.24, it is advised that Ground and Freight packages be shipped by Dec 15 for 5-shipping with Dec.22 is the latest date to ship using FedEx’s SameDay and Home Delivery services.
- UPS: To ensure delivery by Dec.23 (Parcel carriers will not be operating on Thanksgiving Day, Christmas Eve and Christmas), send packages by Dec.19 using Ground Shipping or Dec.22 at the latest using UPS Next Day service with Saturday enabled.
- U.S. Postal Service: USPS is advising shippers to consider Ground Advantage option that ships packages within two to five business days, based on distance. To ensure delivery for domestic packages ship by Dec. 16 using Ground Advantage or by Dec.20 using Priority Mail Express.
More details about UPS and FedEx 2024 rates include:
- Delivery area surcharges will once again be impactful with additional zip codes added.
- UPS – Saturday surcharges are getting more expensive.
- UPS had added an additional day in transit for some zips based on network changes.
October 16: Peak Season Surcharges are going into effect
Some of the Parcel Carriers’ Peak Season surcharges are in effect and some are taking effect soon. FedEx: Oct. 30 – Jan 14, 2024; Nov.27- Dec 10, 2023 (additional increase $2.60/pkg).
UPS: Oct 1 – Jan 13. USPS: Oct 2 – Jan 22. Amazon: Oct 15 – Jan 14.
October 9: Project44 Report Shows Rise to 85.1% Service Commitments
A recent Project44 report on last mile delivery performance found that 85.1% of last mile deliveries hit their service commitments in August. This is up from 78.3% in 1Q23 and 83.8% in Aug. ’22. The report also found that shippers are using 6.1 carriers on average to manage last mile deliveries, which is up from 4.2 carriers in October 2020. (FreightWaves)
October 2: UPS Invests in Healthcare Distribution with Acquisition of MNX Global Logistics
UPS is bolstering its healthcare products distribution operations by acquiring MNX Global Logistics, adding to the logistics sector’s growing investment in medical supply chains (WSJ).
September 26: No Demand Surcharges for USPS, Veho, and Axlehire, Differing from FedEx and UPS
Contrary to the demand surcharges announced by FedEx, UPS, and OnTrac, there will be no demand surcharges from USPS, Veho, and Axlehire.
September 18: UPS and FedEx Announce 5.9% Rate Hike, Reflecting Industry Challenges and Rising Costs
In recent developments within the parcel shipping industry, both UPS and FedEx (FDX) have announced General Rate Increases (GRI) of 5.9%. This rate hike reflects the ongoing challenges faced by these carriers, including rising fuel costs, labor constraints, and strong demand for e-commerce deliveries. As parcel shipping continues to play a crucial role in the global supply chain, these rate increases are likely to impact the pricing strategies of e-commerce businesses and other industries heavily reliant on parcel services, especially those that ship to remote areas or provide consumers with large, bulky items.