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As parcel carriers continue to contend with low volumes, some, like UPS, are turning to innovation in the form of artificial intelligence and machine learning. However, despite these innovations from parcel’s old guard, newcomers in the parcel industry see the current moment as an opportunity to compete. Following a pandemic delay, Amazon is launching Amazon Shipping, a deferred ground delivery service sure to compete with UPS and FedEx. But it’s not just Amazon looking to take a bigger slice of the parcel pie; Australian parcel carrier Sendle is launching 2- and 3-day delivery in the U.S., hoping to compete with UPS’s pricier expedited options.
Here is our weekly roundup to keep you up to speed with the latest news and trends shaping the fast-changing parcel industry and logistics transportation.
Amazon is launching a deferred ground delivery service to attract shippers that don’t currently use Amazon for fulfillment or retail ordering. Amazon Shipping, which aims to complete all deliveries in five days or less, can be used by shippers placing orders through Amazon’s website, a shipper's website, and other e-commerce channels.
Initially planned for release in 2020 but deferred due to the COVID-19 pandemic, Amazon Shipping will likely become a significant competitor to the current leaders in the deferred ground sector, FedEx and UPS, according to The Wall Street Journal.
Facing persistently low volumes, UPS leveraged recent innovations in AI in Q2 of 2023 to ensure maximum efficiency in their use of network capacity. Leveraging NPT, the carrier’s in-house AI platform, UPS reduced hours by 10%, along with many semi-variable and fixed costs.
“In the quarter, we leveraged the agility of our network to match capacity with volume levels. Key to this agility was NPT, which is a set of technologies that use AI and machine learning to harness the value of our data to quickly make changes to low planning, scheduling and volume flows across the network,” UPS CEO Carol Tomé said during an Aug 8 earnings call. “This technology is powerful. In fact, NPT can do in an afternoon what used to take a team of engineers months to do.”
In the fiscal third quarter of 2023, the U.S. Postal Service saw an adjusted, non-GAAP loss of $860M. The USPS also faces a revenue decline of 0.9% in 2023 to $18.6B. These stark numbers result from significant decreases in package volumes over the year. According to a FreightWaves article, shipping and package volumes were down 2.4%, while revenue from those services remained stagnant at $7.5B.
As e-commerce grows and diversifies, new players are emerging in the parcel delivery sector. Sendle, an Australian parcel delivery company geared toward serving small e-commerce companies, is launching two-day and three-day guaranteed delivery services across the U.S. The decision to launch faster delivery services comes following increased demand for a low-cost alternative to UPS’s expedited delivery services.
Following Yellow’s bankruptcy on the heels of turbulent labor negotiations in a difficult freight market, former LTL rival Old Dominion is stepping in to purchase a significant part of the company’s transportation infrastructure. Per an Aug 18 filing in Delaware bankruptcy court, Old Dominion Freight Line entered a $1.5B bid for Yellow’s terminals. This bid significantly exceeds a previous proposal from Estes Express, which had offered $1.3B for Yellow’s terminals. According to FreightWaves, Yellow’s assets include 166 terminals throughout North America.
Like many in the retail sector, Walmart has been caught off guard by surprisingly strong Q2 results. In the second quarter of FY 2024, revenue grew 5.4%, alongside a 6.4% increase in U.S. same-store sales. This resulted in an overall increase in operating income of 6.7% YoY. As a result, the retail giant is lifting guidance looking forward, projecting systemwide sales figures increasing by 3%, operating income rising by 1%, and adjusted earnings per share moving from $1.45 to $1.50.
“We had another strong quarter. Around the world, our customers and members are prioritizing value and convenience. They’re shopping with us across channels — in stores, Sam’s Clubs, and they’re driving e-commerce, which was up 24% globally. Food is a strength, but we’re also encouraged by our results in general merchandise versus our expectations when we started the quarter,” Doug McMillion, President and CEO of Walmart, said in an Aug 17 earnings release.
Following a slight pick-up in rates in June, truckload freight volumes and spot rates fell during July. According to a SupplyChainBrain article citing the DAT Truckload Volume Index, the amount of decline varies by medium:
The stark decrease in rates sends a worrying signal to carriers, many of whom are already pushed to the financial brink after months of record-low rates in an increasingly difficult market.
In a major step toward a more sustainable maritime industry, Cargill and Mitsubishi Corp. have partnered to test the efficacy of wind power on Panamax-size bulk carriers. The Pyxis Ocean, a dry-bulk vessel owned by Mitsubishi Corp. and chartered by Cargill, has been equipped with WindWings, large aluminum sails that, according to experts, could cut down on fuel costs by as much as 30%.
“At Cargill, we have a responsibility to pioneer decarbonizing solutions across all our supply chains to meet our customer’s needs and the needs of the planet,” Jan Dieleman, President of Cargill’s Ocean Transportation Business, said in a quote obtained by SupplyChainBrain. “A technology like WindWings doesn’t come without risk, and as an industry leader — in partnership with visionary shipowner Mitsubishi Corporation — we are not afraid to invest, take those risks and be transparent with our learnings to help our partners in maritime transition to a more sustainable future.”
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