you may also enjoy
Two’s company, but is three a party? As FedEx attempts to woo customers away from UPS amidst fears of a summertime strike, Player 3 has entered the game: Amazon and its ambitions toward total supply chain independence. As UPS attempts to contend with the e-commerce giant’s growing delivery network, how might FedEx respond? For curious shippers, we’ve compiled the 11 stories shaping the transportation industry this week.
UPS has announced intentions to further reduce business with Amazon, the parcel carrier’s largest customer, in 2023. Amazon, which has long pursued independence from UPS and other logistics partners, has made significant strides toward supply chain independence in recent years as it works to gain control over the last-mile.
Despite the shift in strategy, UPS CFO made clear in a Jan. 31 earnings call that relations between the two companies remain positive: “We’ll continue on a mutually agreed path to glide that business down in 2023,” said Newman, according to reporting from Supply Chain Dive.
In an attempt to woo customers from their primary competitor, FedEx advises them to shift volumes away from UPS to avoid the fallout from a potential strike. According to Supply Chain Dive, “Customer volumes onboarded by March 31 will be included in the carrier’s capacity planning ahead of the potential strike date, according to an email sent to FedEx customers.”
The strike date referred to is July 31, when UPS’ contract with the Teamsters is set to expire. The teamsters, led by union President Sean O’Brien, have made their willingness to strike clear. “FedEx told shippers that if a strike occurs, no single carrier has the capacity to absorb all of UPS’ package volume,” reports Supply Chain Dive.
As FedEx continues its efforts to optimize operations following a volatile several years, CEO Raj Subramaniam is turning his attention to FedEx Express. Going forward, the parcel giant will have its aircraft fleet concentrate on moving priority shipments. As Express refocuses on priority shipments, FedEx will use third-party providers to move less urgent shipments.
According to FedEx CEO Raj Subramaniam, as quoted by Supply Chain Dive, “What we see going forward is that when you look at the demand profile, there’s going to be increasing demand for deferred traffic, so when we structure our network, we will focus on agility, flexibility and technology.”
As Amazon continues to pare down operations to meet the post-Pandemic volume decline, the online retailer is closing, canceling, and delaying facilities. According to reporting from Supply Chain Dive, in conversation with Marc Wulfraat of supply chain consultancy MWPVL, “Amazon has canceled, closed or delayed 99 facilities, impacting nearly 32.3 million square feet of active or planned ground-level space in 30 states.”
Amazon, however, disputed Wulfraat’s claims, with Amazon spokesperson Steve Kelly arguing that Wulfraat “says we’re selling or abandoning land or buildings that we’re keeping, or buildings that we never had in our possession to begin with,” according to Supply Chain Dive.
In a sign of the strength of diversified delivery strategies, mega-retailer Walmart is reporting record growth in its store-fulfilled delivery sales. According to reporting from Supply Chain Dive, “Walmart’s store-fulfilled delivery sales have nearly tripled over the last two years, and the company is now seeing more than $1 billion a month in that category.”
As e-commerce has continued to swell in recent years, Walmart has expanded store-fulfilled delivery operations. According to a Walmart earnings presentation, more than 3,900 Walmart locations offer same-day delivery.
On Feb. 28, LaserShip/OnTrac abruptly announced the departure of CEO Mark Holifield. While the reasons for Holifield’s sudden departure were not immediately clear, the vastly changed market conditions since his appointment in late 2021 are likely to blame, according to Supply Chain Dive.
“Holifield was hired to promote growth — and that he did. Through 2022, the company opened and expanded four automated sort centers, launched 25 branches and began coast-to-coast service, with Texas next to go live likely by midyear at the latest,” wrote Supply Chain Dive, “But volumes have dropped off, and the macroenvironment isn’t anywhere near as favorable as it once was.”
Delivery service Roadie recently announced an expansion of coverage from 90% to 95% of U.S. households. Roadie, a delivery service specializing in flexible courier delivery, uses a broad courier network of over 200K drivers to provide shippers with reliable delivery regardless of location.
Despite a significant drop in cargo demand in the second half of 2022, container lines are still seeing considerable business, with volumes beginning to settle above historical rates. According to reporting from FreightWaves, “The Harpex index, which measures charter rates across multiple ship sizes, stood at 1,059 points on Friday. That’s down 77% from the all-time peak in March 2022. But the pace of decline has lessened this year and the index has stabilized in recent weeks. The Harpex index remains more than double its level in February 2019, pre-COVID.”
As the container industry moves on from the annual slowdowns of Chinese New Year, volumes will likely continue their steady rise.
At the recent TPM23 conference, held from Feb. 26 to March 1, DHL Global Forwarding CEO Tim Scharwath was asked about the company’s intentions to acquire German carrier DB Schenker. Scharwath dodged the question, according to reporting from Supply Chain Dive, and instead provided some insight into how DHL thinks about M&A at a dynamic time for the transportation industry.
“We have to manage that balance in ways that not one part becomes too big in the overall scheme of things,” said Scharwath before reminding the audience that, for businesses, it’s about the bottom line: “What do we have to pay for it, what’s the outcome, and how much more financial results do we get from it?”
Nobody likes supplier negotiations. The difficulty of finding competitive rates, negotiating price discrepancies, and navigating endless renegotiations can make even the most seasoned procurement professional want to give up. Luckily, Praveen Kumar Soni and the transportation experts at Supply Chain Dive recently created a step-by-step guide to shed light on the negotiation process.
“No matter what,” writes Soni, “the most important thing for a successful negotiation is to have a win-win mindset. A winner-takes-all approach only offers short-term rewards and may erode important supplier relationships.”
As an ongoing labor shortage forces businesses to rethink how they keep their stores operating, grocery store Save Mart has launched a fully automated same-day delivery center in Mountain View, CA, according to reporting from Supply Chain Dive.
Supply Chain Dive reports that the robots, designed by micro-fulfillment start-up Fulfil, “[...] are designed to prevent product damage, keep down picking time and balance loads as they traverse the fulfillment center.”
While Amazon, UPS, and FedEx duke it out for the top spot in parcel delivery, it’s easy for shippers to feel left behind. By partnering with Intelligent Audit, a leading provider of innovation in the parcel sector, shippers can access a vital toolkit of logistics assets they need to keep up with the parcel industry’s most prominent players.
Get started with Intelligent Audit today, and see how more than 25 years of experience at the cutting edge of the parcel transportation industry can help transform your operations.
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.
