With volumes continuing to decline across the parcel transportation industry, regional carriers want to compete with legacy companies UPS and FedEx. For Texas-based Lone Star Overnight, that means touting impressive performance metrics, while Santa Fe’s GLS is turning to an innovative pricing strategy to lure shippers away from brand-name carriers. Here are the eight headlines you need to know in an industry that's always moving.
Legacy carriers are taking significant hits as the parcel industry continues to readjust to pre-pandemic levels, according to the Pitney Bowes Parcel Shipping Index. Supply Chain Dive reports that, according to the index, U.S. parcel volumes declined 2.2% between 2021 and 2022. The news was incredibly bleak for parcel giant FedEx, which saw the steepest volume decline of all major U.S. carriers.
With UPS already facing the fallout from a potential strike, FedEx is looking to capitalize on this difficult moment for their key competitor. In early March, FedEx told customers that new business from former UPS customers would be prioritized–regardless of whether or not a Teamsters strike occurs.
While this strategy's effectiveness remains to be seen, leading parcel industry consultants believe that a multi-carrier approach is the new industry norm for today’s shippers, according to Mike Erickson, founder of AFMS LLC. “We’ve recently seen several large, longtime UPS exclusive customers putting in place backup plans with FedEx and the regionals,” Erickson told FreightWaves. “These shippers are being proactive and plan to keep these multi-carrier strategies in place regardless if the strike happens.”
It’s not just FedEx looking to take advantage of UPS troubles. Texas-based carrier Lone Star Overnight is seeing increased interest from shippers as they look to decrease reliance on UPS in the event of a strike. Like many regional carriers, Lone Star Overnight (LSO) hopes to leverage strong performance metrics to pull volume from national carriers. According to reporting from Supply Chain Dive, “LSO’s on-time delivery performance network-wide is now between 97% and 98%, up ten percentage points from a year ago.”
GLS, a Western regional parcel carrier with U.S. headquarters in Santa Fe Springs, CA, announced the launch of an innovative pricing strategy. The strategy aims to provide a more specific pricing strategy than large carriers to pull customers from legacy carriers in a high-stakes parcel landscape. The strategy will introduce a new designation, Zone 0, for super short-haul, super-dense urban deliveries, according to FreightWaves.
Amid the economic uncertainty caused by the COVID-19 pandemic, many retailers and brands were forced to cancel large orders. While these canceled orders were felt as supply chain disruptions in the United States, they led to catastrophic consequences for factories in foreign countries. For example, Bangladesh saw over $3.8B in canceled orders in 2020.
In an interview with Supply Chain Dive, Mark Anner, labor professor and director of the Center for Global Workers’ Rights at Penn State, said, “They were just in shock [...] [Suppliers] were in debt, operating on credit, and getting paid later and later over time. … When you cancel on them when they’re in debt to the banks and everyone else, the ripple effects are very severe.”
Following the widespread culling of 59 million poultry flocks, the outlook for the poultry industry has begun to approve, according to industry experts. Kevin Bergquist, sector manager at Wells Fargo’s Agri-Food Institute, predicts that egg prices will continue to moderate as the egg-laying stock is slowly rebuilt. Inventory for egg-laying birds is gradually rising, increasing by 1% in February of 2023.
Tensions continue to rise between the Teamsters and Yellow Corp. According to documents obtained by FreightWaves, the Teamsters have recently notified Yellow Corp. to cease using outside transportation to move freight. This notification comes as Yellow Corp. plans to institute a change of operations—a development Teamsters leadership has taken significant issue with in recent weeks.
As the U.S. seeks to bolster electric vehicle supply chains, international trading partners play a vital role. In March, the U.S. and Japan agreed to a trade deal meant to increase the availability of minerals necessary to make batteries for electric vehicles. According to reporting from Supply Chain Dive, the agreement includes reduced duties, best practices for reviewing foreign entities, and measures meant to reduce reliance on virgin mineral extraction.
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