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As the parcel transportation industry continues to navigate falling volumes, FedEx is trying something new: consolidation. By consolidating Ground and Express services, FedEx CEO Raj Subramaniam hopes to see significant cost reductions in operational spend. But that’s not the only news in the parcel transportation industry: labor issues at West Coast ports brought the Ports of Los Angeles and Long Beach to a grinding halt, and high-stakes negotiations have started between the Teamsters and LTL provider ABF Freight. Here's what you need to know in the industry that’s always moving.
FedEx has announced its plans to consolidate Ground and Express services to cut costs in a hostile parcel environment. According to CEO Raj Subramaniam, the company aims to become “[...] leaner, more agile and better positioned to execute on our mission to help customers compete.”
The consolidations will see FedEx Express, Ground, and Service brought under the Federal Express Corporation. According to reporting from Supply Chain Dive, FedEx Freight, the parcel giant’s freight division, will remain a standalone company.
FedEx’s consolidation plans could lead to significant savings. Currently, FedEx Express and Ground have entirely separate operations under the larger umbrella of their parent corporation. However, once consolidated, FedEx could see a combined $6B in savings.
According to FedEx EVP and Chief Transformation Officer Sriram Krishnasamy, as quoted by Supply Chain Dive, “We are making it organizationally and execution-wise more effective [and] more easy to create, manage and execute this process.”
During the last Teamsters strike at UPS, the United States Postal Service was able to take on most of the parcels disrupted by the labor action, limiting the negative impact of the strike upon shippers. However, given UPS’ significant growth since then, it remains to be seen if the USPS can compensate for the loss in capacity caused by another Teamsters strike.
And it’s not just capacity that USPS is worried about: according to industry expert Josh Haber, as quoted by FreightWaves, “The Postal Service is structured for lighter-weighted shipments weighing up to 10 pounds. But in many cases, they are price-competitive only up to 5 pounds.” This discrepancy in package size could mean that the USPS is ill-equipped to handle packages from UPS, which tend to be larger than those typically seen by the USPS.
On Apr. 6, two of the West Coast’s busiest ports saw significant shutdowns due to labor issues. The Port of Los Angeles and the Port of Long Beach were forced to shutter operations through Friday due to a range of topics—with labor at the ports, the current focus of much industry scrutiny as ILWU negotiations continue.
While the Pacific Maritime Association, an industry group representing some seventy carriers, insinuated that unions were withholding labor, the local ILWU clarified that operations had returned to normal shortly after the disruptions began. According to a quote given to Supply Chain Dive by a representative of ILWU Local 13: “Cargo operations are ongoing as longshore workers at the Ports remain on the job.”.
As volumes continue to shift from West Coast ports, Georgia is quickly establishing itself as the new port haven for West Coast refugees. According to a press release from the Georgia Ports Authority, the Port of Savannah saw a record 3.8 million TEU within the fiscal year to date from July 2022 to Feb. 2023.
While Savannah is setting records, things aren’t quite so rosy at the Port of Los Angeles, according to reporting from Supply Chain Dive, which states that volumes fell a staggering 43% YoY at the West Coast port.
While the nation watches negotiations along the West Coast and at UPS begin to heat up, another set of talks is kicking off. The Teamsters National Freight Industry Negotiating Committee began contract negotiations with LTL freight carrier ABF Freight in late March. The bargaining will determine the language of a new contract for ABF Freight’s 8,000 Teamsters following the current contract's expiration on June 30.
As Walmart continues bolstering omnichannel operations to push back against Amazon, the mega-retailer is turning to the supply chain to stand out. In a quote obtained by FreightWaves, Walmart U.S. CEO and President John Furner touted the effectiveness and limitations of Walmart’s supply chain as it is: “We got by serving customers with these resources … but they weren’t connected. They operated in parallel, and they weren’t flexible. They were each effective at completing the task they were built to perform. Now that’s changing. We’ve re-engineered our supply chain networks to connect all the assets we have.”
Parcel giant UPS plans to expand its Florida operations despite the growing concerns surrounding its current labor strife. By the end of 2023, UPS plans to have opened a new 40,000-square-foot sorting facility at Tampa International Airport. The facility, which UPS will lease from Tampa International Airport’s Aviation Authority, will have the capacity to sort up to 7,500 packages per hour, according to reporting from Supply Chain Dive.
The global outbreak of avian influenza, or HPAI, is responsible for the deaths of over 58 million chickens and turkeys, according to reporting from Supply Chain Dive. With seasonal migrations underway, experts fear this number could rise.
In an interview with Food Dive, Rodney Holcomb, an agriculture economist at Oklahoma State University, said much of the contagion could result from predation by migrating raptors: “Hawks, owls, and eagles love to prey on other birds, especially nice, plump broilers and turkeys when they get the chance,” Holcomb said., “Even if they don’t kill a bird, the fact that they may attack a bird means they could transfer the flu to that one bird and thus the entire flock.”
With the parcel transportation industry turning its attention to consolidation efforts at FedEx—and the high-stakes negotiations taking place at UPS—it’s vital that parcel shippers don’t lose sight of what really matters: improving resilience to provide customers with fast, effective parcel service.
With Intelligent Audit, shippers can optimize operations to ensure smooth operations regardless of the latest news events and trends. With a robust toolkit of parcel shipping assets, Intelligent Audit brings shippers the latest tech-enabled resilience.
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