In the post-pandemic era, carriers like FedEx and UPS face significant challenges, forcing shippers to adapt as well. As carriers adjust strategies amidst dwindling parcel volumes, shippers must seek innovative solutions to maintain relevance. One solution gaining prominence is parcel management software, which offers optimization and cost-saving advantages.
Employing multi-carrier parcel management systems, shippers bolster collaboration with carriers, elevating timeliness and customer satisfaction, particularly in rocky environments. By embracing these solutions, shippers can preserve their competitive edge, surmount market obstacles, and flourish in the face of uncertainty.
Discover why and how below.
The pandemic-induced surge in parcel volumes has subsided, causing FedEx and UPS to reflect on their strategies to maintain a competitive edge. Shippers are grappling with the impact of this shift and feeling its ripple effect. You might be surprised by some of the below statistics, facts, and figures.
The 2023 "E-Tailers Almanac" by DHL eCommerce Solutions reveals a significant drop in U.S. lightweight parcel volumes from pandemic heights. Although volumes remain 20% above pre-pandemic levels, carriers like UPS face unexpected delivery declines and tough choices, grappling with a strained labor market and a bleak forecast. Consequently, they must pivot to lucrative delivery options, layoffs, price hikes, and other uncomfortable tactics to stay competitive.
As summer brings little relief, shippers must navigate this shifting industry by adopting innovative strategies like parcel management software and multicarrier solutions. Furthermore, they should prioritize shipping costs, real-time visibility, and data analytics, particularly as regionalized demand resurges.
UPS is taking significant measures to adapt to falling package volumes and reduced consumer spending. Some ways it's doing so is through layoffs, facility consolidation, price hikes, surcharges, and investments.
Due to decreased consumer spending and falling volumes, UPS is implementing a more aggressive labor cost management strategy. While the company traditionally relies on attrition, the current economic climate requires a more assertive approach. This approach includes workforce reductions in operational and nonoperational roles, layoffs at a global trade management services subsidiary, and termination of an undisclosed number of "22.4" junior drivers.
UPS is not alone in executing layoffs; other logistics firms face similar challenges. Examples include Uber Freight (150 layoffs), Ryder System (801), Flexport (700), C.H. Robinson (650), and GXO Logistics (over 1,000 affected by four mass layoffs in 2022).
In addition to workforce reductions, UPS is consolidating properties to minimize its U.S. real-estate footprint. By focusing on core services and streamlining its trade advisory portfolio, UPS aims to adapt to changing market demands. Moreover, facility closures and consolidations are part of a broader effort to maintain an efficient and resilient business model.
However, shippers must also adapt to this environment, leveraging parcel management software and multicarrier parcel management solutions to stay competitive.
Lastly, in response to decreasing shipping volumes and slower consumer demand, UPS hiked prices by 6.9% at the end of 2022 and extended demand surcharges beyond the peak season, burdening shippers further.
However, despite these cost-cutting measures, UPS's capital expenditures continue to rise, with $5.3 billion expected this year, up from $4.77 billion in 2022. It's no wonder why CFO Brian Newman anticipated a "bumpy year" in UPS’s Q4 2022 earnings call.
FedEx is also adapting to the post-pandemic era and falling volumes by implementing similar strategies to stay profitable. These strategies revolve around administrative layoffs and the introduction of the DRIVE initiative.
Like UPS and countless other logistics companies looking to manage labor costs and adapt to market dynamics, FedEx intends to reduce its officers and directors by 10%. CEO Raj Subramaniam announced these administrative layoffs as crucial to creating a leaner and more agile organization, aligning with fluctuating customer demand.
FedEx is also combating reduced shipping volumes with the DRIVE initiative. The DRIVE initiative is a comprehensive strategy designed to address the challenges of these changing market dynamics. The program focuses on restructuring operations, optimizing networks, and improving overall efficiency to achieve long-term savings. By doing so, FedEx aims to deliver high-quality service while reducing costs and ensuring its supply chain remains flexible, efficient, and intelligent in a rapidly changing environment.
The DRIVE initiative represents a significant shift in operational strategies and highlights the importance of adapting to fluctuating economic conditions.
Shippers must adapt quickly to avoid getting left behind in the uncertain, shifting, post-pandemic carrier environment. Yet, they can remedy several of the following challenges by adopting innovative parcel management software and solutions to reduce costs, improve customer satisfaction, and discover strategic opportunities.
Accurately evaluating carrier partners is challenging for shippers, as it requires staying updated on carriers' shifting capabilities and services. Implementing parcel management software can streamline this process, enabling shippers to identify the optimal carrier mix for their needs. In addition, by comparing benchmark data against similar businesses, shippers can enhance cost-efficiency and service delivery.
Multicarrier parcel management solutions offer strategic portfolio diversification, connecting seamlessly with parcel management software. These solutions optimize carrier selection, modes, and shipping locations, ultimately reducing transportation costs and elevating customer experiences. Furthermore, interactive systems facilitate accurate forecasting by considering factors such as capacity and inventory restrictions.
Maintaining visibility over operations is a critical challenge shippers face. Shippers must adapt and respond effectively to constantly changing conditions, so it is crucial to ensure a comprehensive overview of their supply chain performance.
Utilizing parcel management software, such as interactive parcel management systems, can help address these challenges by unlocking complex data and providing real-time and historical insights. Moreover, by balancing flexibility and efficiency, they can use mobile solutions to monitor freight and parcel operations from any location, making it easier to identify areas for improvement and optimize operations.
Auditing spend becomes increasingly complex as shippers expand their carrier pool to accommodate new strategies and services. As a result, they must contend with diverse invoicing formats and rate structures across multiple carriers. Parcel management software, such as multi-carrier parcel management solutions, streamlines this process by ensuring accurate rate application for each carrier, promoting transparency, and reducing billing discrepancies, ultimately leading to cost savings for shippers.
Freight Audit & Payment solutions offer additional benefits, including uncovering hidden savings and automating cost recovery. These tools help shippers recoup inaccurate carrier invoices by automating claims submission and recovery when they identify discrepancies. Customizable auditing options further enhance the system's adaptability, allowing for tailored assessments at any supply chain level and catering to various departments or functions' unique needs.
Shippers can maintain competitiveness in this new normal by utilizing intelligent freight audit software. Doing so can glean valuable insights, optimize operations, reduce costs, and promote informed decisions.
As carriers shift strategies, machine learning offers a cutting-edge solution for shippers seeking to optimize their carrier selection process. Advanced algorithms employed in parcel management software can identify patterns and anomalies in data, enabling shippers to make informed decisions.
The powerful algorithms analyze massive amounts of data and provide instant results at the invoice level. Hence, with this tool, shippers can easily detect invoicing errors, prevent delays, and save costs.
Real-time visibility has emerged as a crucial factor for maintaining control over parcel operations and ensuring efficient management of shipments, no matter how carriers adjust their strategies.
Parcel management software with real-time visibility features allows shippers to monitor their shipments' progress, pinpoint potential issues, and implement timely solutions—this heightened level of oversight results in more streamlined operations, better-informed decision-making, and an enhanced customer experience.
As carrier strategies shift, shippers must tackle transportation expenses. Parcel management software's freight auditing and accounting tools offer a robust solution, accurately validating charges, identifying discrepancies, and ultimately improving the bottom line.
Moreover, automated freight audit solutions reveal hidden savings by analyzing factors such as rate variances, accessorial charges, and duplicate invoices. These tools also initiate recovery for discrepancies, streamline internal communication, and facilitate better decision-making. Additionally, tailored data sets and payment optimization tools empower shippers to excel in a dynamic carrier environment, ensuring cost-effective, efficient operations.
Shippers must adapt and optimize their operations as carrier strategies shift due to reduced shipping volumes. Parcel management software provides a comprehensive solution, offering tools for carrier selection, real-time visibility, freight auditing, and more.
Intelligent Audit's suite of services, including Freight Audit + Recovery, Business Intelligence + Analytics, Real-Time Visibility, Machine Learning, Logistics Network Optimization, and Finance + Accounting Tools, empowers shippers to stay competitive in this environment. These innovative solutions enable informed decision-making, transportation expense optimization, and streamlined operations.
Don't fall behind in the rapidly changing carrier landscape. Embrace Intelligent Audit today to unlock your shipping operations' full potential and secure a prosperous future in an increasingly competitive industry.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
Understanding and managing freight charges is much easier with a custom freight audit check and better insights provided by FAP experts. Learn more today.