As FedEx announces yet another diesel surcharge hike, parcel industry professionals are predicting added financial pressure on an industry already contending with record inflation. While the surcharge increase is only incrementally higher than that of their primary competitor, UPS, it nonetheless underscores a reality of today’s highly dynamic parcel sector: the cost of doing business is increasing, and the bill, more often than not, ends up in the hands of shippers. Paired with significant labor disruptions at high-profile, centrally located distribution hubs for UPS and DHL, the U.S. parcel sector is under more pressure than ever.
While parcel is struggling, however, recent headlines point to a brighter future in the global transportation industry’s largest sector: maritime. CPG giant Nestlé has announced an agreement with major carriers that stands to cut roughly half of the company's maritime emissions, and Maersk’s first green-methanol-powered carrier is set to make its maiden voyage in early 2024.
Whether it's low-lows or high-highs, professionals throughout the transportation industry continue to forge ahead. In the industry that’s always moving, here’s what you need to know.
FedEx Ground, the ground-delivery arm of parcel giant FedEx Corp., has raised its diesel fuel surcharge. The increase, which took place on Dec. 11, raises the diesel fuel surcharge by 100 basis points to 16%. According to reporting from FreightWaves, the carrier’s surcharges are based upon on-highway diesel prices set weekly by the U.S. Department of Energy’s Energy Information Administration.
FedEx’s primary competitor, UPS, announced a similar increase, increasing their surcharge by 50 basis points to 15.25%.
Following the layoff of roughly 35 administrative employees at the UPS Centennial plant in Louisville, KY, Teamster’s President Sean O’Brien, is making it clear that he’s ready to provide a directive to strike if the workers are not reinstated.
“If UPS doesn’t get its act together, they’ll be on strike next,” warned O’Brien in a Dec. 12 press release, “Local 89 is currently filing unfair labor practice charges against UPS. Our union will not hesitate to act, and we will not back down. The Teamsters will protect all our members in the delivery and logistics industry no matter the cost. UPS has been given notice it has until Monday to rectify this situation. On behalf of 1.3 million Teamsters across North America, I suggest UPS move fast and act accordingly.”
While UPS maintains that the layoffs are in accordance with the National Labor Relations Act, company leadership has assured stakeholders that they do not expect a labor disruption to affect operations at the Centennial plant.
At DHL’s Cinncinati air hub, more than 1,100 workers have gone on strike in protest of stalled contract negotiations. The employees, members of the Teamsters Express union, are vital to loading and unloading cargo aircraft at DHL’s facility at the Cinncinati/Northern Kentucky Airport (CPG). The facility is one of three global hubs for DHL, and plays a major role in the carrier’s global air cargo operations.
“DHL bosses are pocketing billions as many of these workers live paycheck to paycheck,” said Bill Hamilton, Director of the Teamsters Express Division in a Dec. 7 press release. “Meanwhile, this anti-worker company has the audacity to disrespect rank-and-file workers who are simply trying to stand up for themselves at the bargaining table. Enough is enough.”
As canal officials struggle to contend with record drought levels, November saw a continued decline in the amounts of vessels allowed through the vital trade conduit. Transits through the canal’s Newpanamax locks fell by 28% from October levels, while dry bulk transits through the smaller Panamax locks fell by a staggering 47% month-over-month, according to data from FreightWaves.
Nestlé has reached an agreement with carriers to ship roughly of its total shipments using lower-emission fueled vessels through A.P. Moller-Maersk, CMA CGM, and Hapag-Lloyd. The agreement comes as the CPG giant is working, like many companies, to starkly lower emissions.
"Reaching net zero requires changing many aspects of how we source, make, and distribute our products," said Stephanie Hart, Executive Vice President and Head of Operations at Nestlé in a Dec. 6 press release. "The agreements we've signed with our shipping partners will help us cut emissions and immediately reduce our carbon footprint. We know this is an interim solution and continue to encourage the development of longer-term decarbonization solutions in shipping and distribution."
In early 2024, A.P. Moller-Maersk plans to launch the first of its green methanol-fueled containerships. The vessel, which is scheduled to launch from its construction berth at Hyundai Heavy Industries in South Korea on Feb. 9, is equipped with a dual-fuel engine, which can run on biodiesel and methanol in addition to conventional fuel.
The vessel will run along the congested AE7 trade lane, which includes major ports like Shanghai, Tanjung Pelepas, Colombo, and Hamburg. While Maersk has secured enough fuel for the vessel’s maiden voyage, the carrier continues to work to establish reliable souring procedures for methanol and other clean fuels.
At the Port of Long Beach, terminal operator SSA Terminals LLC has unveiled 33 new zero-emissions, battery-electric yard tractors. The purchase of the tractors was funded, in part, by the California Air Resources Board, a high-profile regulatory organization leading the charge to decarbonize ports throughout the Golden State.
“Meeting our aggressive zero-emissions goals is not possible without the support of our partners, and this project is just another example of the shared commitment at the Port of Long Beach to a zero-emissions future,” said Port of Long Beach CEO Mario Cordero in reporting from Freight Business Journal North America. “I’d especially like to thank SSA Terminals for leading zero-emissions efforts at Pier C, Southern California Edison for prioritizing zero-emissions infrastructure projects and CARB for the funding to make these types of projects possible.”
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