Peril Persists for Parcel Industry

As parcel shipping volumes continue to cool, legacy carriers are struggling to adapt to a challenging parcel industry landscape. Despite the very real threat of a strike by the 350,000 Teamsters they employ, UPS is expressing optimism about their fortunes in the new year. Meanwhile, primary competitor FedEx is turning to Layoffs throughout their operations to eke out cost savings amid falling demand. Here’s what you need to know in the industry that’s always moving. 

2022 Reports Are a Mixed Bag for UPS

For parcel shipping giant UPS, thefourth quarter and calendar year results for 2022 were mixed. According to reporting from Logistics Management, quarterly profits were off by 17.9% YoY, while annual profits saw an increase of 5.9%.

“I want to thank all UPSers for delivering what matters throughout the holiday season, including industry-leading service to our customers for the fifth consecutive year,” said UPS CEO Carol Tomé, as reported by Logistics Management, “For the year, we reached our targeted consolidated operating margin and return on invested capital goals one year earlier than originally anticipated. Our results in 2022 demonstrate our strategy is working.”

UPS CEO Expresses Optimism Around Upcoming Negotiations

In a Jan. 27 earnings call, UPS CEO Carol Tomé expressed optimism aboutupcoming negotiations between UPS and the Teamsters Union, which represents 350,000 UPS employees. “Over 10 decades, we’ve negotiated many, many contracts,” said Tomé, according to reporting from Supply Chain Dive, “This is not our first rodeo.”

Teamsters Maintain Hardline Stance in Upcoming UPS Negotiations

Despite UPS’s hopes for smooth negotiations, Teamsters leadership has been consistent in their willingness to strike should negotiations break down. Last year, Teamsters General President Sean O’Brien, in a statement posted on the Teamster’s website, said, “Our union is resolved to win the best contract for UPS members and to reset the standards for wages and benefits in this industry by August 1, 2023. We won’t extend negotiations by a single day.”

While a strike by the 350,000 Teamsters currently employed by UPS would certainly throw the parcel carrier’s operations into chaos, it wouldn’t be the first time the company has had to handle a work stoppage, as Supply Chain Dive reports: “In 1997, 185,000 UPS Teamsters halted deliveries for more than two weeks before a new contract agreement was reached.”

In Worrying Sign for UPS, Teamsters Strike at Major Food Company

In a demonstration of the Teamsters’ willingness to strike, Teamsters Local 916 workers at Archer Daniels Midland (ADM), one of the ten largest food companies in the world, have gone on strike. 

According to WAND, a Decatur, Ill.-based television station, workers have a broad range of concerns: “ADM is refusing to offer these workers wages and benefits on par with what union members receive at other union facilities, which is a slap in the face,” said the President of Teamsters Local 916, “We all know the real reason the company is doing this – when these workers get a contract, non-union ADM staff will hear about it and want to join the Teamsters. ADM needs to stop the union-busting and start showing some respect to the people who are responsible for its prosperity.”

The strike signals Teamsters’ willingness to exercise their right to strike, a worrying sign for parcel carrier UPS. 

Despite Challenges, Analysts Remain Bullish on UPS

Despite facing falling parcel volumes and unpredictable labor negotiations, economists remain bullish on UPS. According to Yahoo News, “Raymond James analyst Patrick Tyler reiterated a Strong Buy rating on the shares of United Parcel Service Inc (NYSE: UPS) and lowered the price target from $210 to $207.” 

While a positive rating doesn’t necessarily guarantee smooth sailing for the parcel carrier, it does indicate significant investor confidence despite an array of challenges.  

Intelligent Audit’s Joe Wilkerson Explores UPS’ Fortunes in Feature Piece 

In an article titled “The Best of Times / The Worst of Times: What’s happening with UPS?” Intelligent Audit’s Vice President of Professional Services, Joe Wilkerson, provided his expert insight on the state of UPS to the readers of, a leading resource for the parcel shipping industry. 

These are fast-moving times for UPS and the parcel industry as a whole. I would argue that more has changed, changed back, and changed again in the past three years than in the previous 10,” Wilkerson wrote.With a dynamic parcel industry, Wilkerson recommends that shippers focus on developing strategic flexibility and data-driven feedback loops to ensure positive momentum.

FedEx to Layoff 10% of Management Force

In a sign of the difficult times currently faced by the parcel industry, FedEx has announced extensive layoffs to its team of officers and directors. The cuts, announced in a Feb. 1 letter to employees from CEO Raj Subramaniam, will see staff at the top levels of FedEx reduced by 10%.

We have embarked on a transformation effort to create the world’s most flexible, efficient, and intelligent supply chain for our customers,” Subramaniam wrote in his letter to staff, according to reporting from Supply Chain Dive, “This process is critical to ensure we remain competitive in a rapidly changing environment, and it requires some difficult decisions.

To Cut Down on Costs, FedEx to End SameDay City Service

To reduce costs amid falling parcel demand, FedEx announced the suspension of SameDay City Service effective on March 31st, according to reporting from Supply Chain Dive

The service, which operates in 1,800 cities in 30 commercial markets, will see all associated positions eliminated. According to a FedEx statement obtained by Supply Chain Dive, the service is being ended as FedEx works to “prioritize several other opportunities for growth.”

CH Robison Leader Predicts More Layoffs in 2023

During C.H. Robinson’s Q4 earnings call on Feb. 1, Mike Zechmeister, Chief Financial Officer for the logistics powerhouse, told listeners to expect more layoffs in the new year.

Zechmeister’s statement follows the company’s November 2022 announcement of 650 layoffs, according to Supply Chain Dive.

 Manufacturing Experts Predict Tech Advancements in 2023

The Vice President and CTO of the Association for Manufacturing Technology, Tim Shinbara, predicts that innovations in manufacturing technology will play a vital role in the manufacturing landscape in 2023. 

“That’s important because that’s a demand domain for [U.S. manufacturing supply] manufacturing technology,” Shinbara told Manufacturing Dive, “We see that picking up speed. I thought it did OK in ’22, but I think it’s going to increase the pickups and speed and evolve.”

Trucking Industry Labor Woes Likely to Persist for 2023

Despite hopes for some sense of normalcy returning to the trucking industry after several tumultuous years, fleet owners can expect to see labor woes worsen in the year, according to Truckload Carriers Association President Jim Ward. “Workforce challenges have not gone away,” Ward told Transport Dive, “They continue to be an issue for our industry and our members. ... We’re going to continue to be confronted with this challenge, just from attrition alone.”

Carriers facing an aging workforce can expect attrition rates to increase in the coming years. 

Poultry Prices Plummet 22% YoY

Just in time for gameday chicken wings, new data indicated the price of chicken wings — a staple at Big Game celebrations across the nation — plummeted 22% YoY in January. According to Bloomberg, last January, “whole chicken wings were priced at $3.38 per pound, according to a USDA weekly retail price report. Now, they sell for $2.65 per pound as poultry farmers pushed the supply of birds to the highest level since the beginning of 2019.”

Aldi Invests in Gulf Coast Supply Chains 

German food retailer Aldi has invested in a new distribution center in Loxley, Alabama. The 564,000-square-foot facility was built to eventually serve 100 new grocery stores in Louisiana, Alabama, Mississippi, and Northern Florida. According to Supply Chain Dive, the distribution center will “initially serve the roughly 30 Aldi locations along the Gulf Coast — 20 of which opened in the last year alone, according to the company.”

With the Parcel Industry in Peril, Shippers Turn to Intelligent Audit for Unprecedented Insight into Parcel Operations

As legacy carriers struggle to maintain operational standards, shippers need help to keep up with a rapidly changing parcel shipping industry. With Intelligent Audit, shippers can access the latest parcel shipping innovations they need to optimize operations and ensure maximum efficiency. With Intelligent Audit, shippers can access:

  • Real-Time Parcel Visibility to maintain control over complex operations.
  • Streamlined Freight Auditing Software to bolster transportation spend management in difficult times.
  • Unparalleled Business Intelligence and Analytics to gain insight into KPIs and unruly supply chains. 

With over twenty years of experience helping shippers optimize their parcel operations, Intelligent Audit works to help parcel industry professionals ship smarter. Get started with Intelligent Audit today, and see what expert parcel innovation can do for your business in uncertain times.

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