Tough Times for Tomé as UPS Flounders in Q1

Spring is bringing showers for UPS, and, as the adage goes, when it rains, it pours. A bleak set of Q1 results has UPS looking for solutions and investors on edge, with some corporate insiders disagreeing with Citigroup’s recent “buy” rating for the parcel giant. And that’s not all: International Brotherhood of Teamsters President Sean O’Brien has some characteristically strong words for UPS as the union, representing 350,000 UPS workers, works for better benefits and pay. In an industry that’s always moving, here are the latest headlines making news. 

A Weak Q1 Points to Trouble for UPS

On Tuesday, April 25, UPS shared its Q1 FY2023 results with shareholders and the public. Perhaps unsurprisingly in a challenging parcel landscape, the results were not what shareholders might have been hoping for:

  • Revenue is down 6% YoY at $22.9B
  • Consolidated Operating Profit was at $2.5B, down 21.8% YoY
  • Diluted earnings per share at $2.20, 27.9% down YoY

CEO Carol Tomé remained optimistic in the parcel giant’s earnings report despite these grim numbers: “We will remain focused on driving productivity while investing in efficiency and growth initiatives, enabling us to come out of this demand cycle even stronger.”

Citigroup Says ‘Buy’ on UPS; Others Have Their Doubts

Despite UPS’s difficulties in recent months, Christian Wetherbee of Citigroup reiterated his buy rating for the parcel carrier on April 24. Despite the buy rating from Citigroup, however, the corporate consensus seems to be negative toward UPS. According to Market Insider: “Based on the recent corporate insider activity of 40 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter, there has been an increase of insiders selling their shares of UPS in relation to earlier this year.”

Teamsters Working “Seven Days a Week” to Craft New UPS Contract

Speaking at a rally on April 15 in Orange, Calif., Teamsters President Sean O’Brien said, “There are 12 weeks from Monday until the expiration of the contract. We’ve stated our intentions. Teamsters will not be working beyond the expiration date of that contract unless there is a new contract that our members deserve, endorse, embrace, and vote on. We are prepared to work seven days a week to get it done.” The Teamsters represent 350,000 UPS employees seeking increased wages and improved benefits. Their current master five-year contract expires on July 31.

For FedEx at 50, the Future Remains Uncertain

On April 17, FedEx celebrated 50 years of parcel operations. Through difficult market conditions, volatile regulatory trends, and good times and bad, FedEx has continued to provide its customers with parcel service. It is currently the largest airline in freight. Yet, even as the mega-carrier continues to push forward with CEO Subramaniam’s wide-ranging efforts toward consolidation, the future remains uncertain in the face of falling volumes and new strategies. However, Udo Lange, the President of Health Care, Logistics & Americas International at FedEx Express, expressed optimism: “We have stronger network capabilities. We are modernizing our fleet. And we are extremely oriented in data, more so than perhaps any company ... We are very different than UPS.”

Manufacturing Troubles in China Top List of Risks in Evergreen’s Annual Risk Report

According to Everstream’s annual risk report, sourcing issues from Chinese manufacturers are the top supply chain risk facing the transportation industry in 2023. The German analytics firm assigned a 90% risk score to the likelihood of supply chain disruptions from Chinese suppliers, mainly blaming the possibility of continued outbreaks of COVID-19 within the country. The report states, “Ongoing disruptions will upset Chinese manufacturing until authorities can provide a clear roadmap for exiting the pandemic. Currently, China’s rapidly changing COVID-19 policies create ongoing headaches for manufacturers as companies and workers struggle to adapt to shifting local policies.”

Despite Industry Hopes, Uncertainty Reins in the Freight Market

Despite the transportation industry's hopes for a pickup in freight this spring, industry experts are saying that there’s little chance of predicting when a stagnant market will rebound. Morgan Stanley analysts, in an April 4 research note cited by Supply Chain Dive, wrote, “A month ago, we expected [management] teams to dismiss a soft 1Q print and sound great about 2Q and beyond [...] Now, we expect to hear 50 shades of ‘we have no idea’ on the conference calls.”

DHL Express Unveils New Sustainability Initiatives for U.S. SMEs

The express division of DHL is offering U.S. small and medium enterprises, or SMEs, a new range of low-emissions air delivery options. Through their “GoGreen Plus” service, the German carrier allows customers to lower the overall emissions of their shipments by using Sustainable Aviation Fuel, or SAF. 

Greg Hewitt, CEO of DHL Express U.S., said in an April 20 press release, “Consumers have an increasing interest in environmentally friendly products and services, and businesses can cultivate brand loyalty by making an effective commitment to environmental sustainability … We take pride in assisting our customers as they build more sustainable supply chains, and in offering guidance to SMEs that may lack the necessary means to take that first sustainability leap on their own.”

Frayt Looms Large in Last Mile with $7M Series-A Funding Round

A recent entrant to the competitive last-mile delivery sector, on-demand delivery provider Frayt is attempting to woo large retailers and industrial customers. Frayt CEO Luke Denny, in an interview with Supply Chain Dive, said, “We’re striving to empower retailers, industrial suppliers, and manufacturers to be able to catch up and surpass Amazon by having a delivery partner with a marketplace model that has not only the speed that Amazon has, but the reliability ... That’s a key thing that’s hard to find in the industry today is that reliable marketplace network.”

Investors and businesses alike have signaled enthusiasm for Frayt’s services, with companies like Sherwin-Williams, Walmart, and Bridgestone joining the company’s 300-plus customer list, and investors providing the last-mile delivery service with $7M in series-A funding to help expand into new markets. 

In Positive Sign for West Coast Shippers, ILWU and PMA Reach Tentative Agreement on “Certain Key Issues”

In a positive sign for West Coast shippers, the International Longshore and Warehouse Union, or ILWU, has reached a tentative deal with the Pacific Maritime Association, or PMA, according to an April 20 press release from the ILWU. 

“The International Longshore and Warehouse Union (ILWU) announced today that it has reached a tentative agreement with the Pacific Maritime Association (PMA) on certain key issues,” says the press release, “Talks are continuing on an ongoing basis until an agreement is reached.”

A Difficult Q1 Takes its Toll on Knight-Swift

For Knight-Swift, Q1 FY2023 brought a stark reality to bear. Low volumes and continued shifts away from the West Coast meant that Knight-Swift, the nation’s largest truckload carrier, was forced to significantly reduce its earnings outlook for the year, lowering forecasted full-year earnings per share from $3.35 - $3.55, a full 16% lower than last quarter’s predicted rates. 

Biden’s Ambitious EV Plan Faces Challenges in Congress, Courts

As the Biden Administration continues its push to lower transportation emissions, the President has encountered a series of setbacks. Working under the administration's purview, the Environmental Protection Agency’s 515-page proposal would have a quarter of all heavy trucks sold in the United States be electric vehicles, as well as two-thirds of new passenger vehicles, according to Logistics Management. While the EPA’s ambitious plan is a bold step toward the decarbonization of the transportation industry, it faces significant challenges in Congress. It is then likely to be challenged in the courts, as well. 

Frito-Lay Bets Big on EV with Help From Schneider National

As the transportation industry works to lower its emissions, Frito-Lay has made its first third-party EV delivery. The vehicles, operated by carrier Schneider National, were Freightliner eCascadias. Initially, the vehicles will carry shipments from Southern California ports and the company’s Rancho-Cucamonga distribution center. 

David Allen, vice president and chief sustainability officer of PepsiCo Foods North America, said of the shift to electric in an April 13 statement, “As a company with massive scale, Frito-Lay looks for opportunities to create positive change – but we can’t do it alone [...] By working with Schneider, we are taking an important step forward in our efforts to reduce value chain emissions and move our snack products in a more sustainable way.”

As Spring Showers Pelt the Transportation Industry, Keep Your Head Above Water with Intelligent Audit

In a fast-moving transportation industry, it can be challenging for shippers to make smart choices. With Intelligent Audit, shippers can access the business intelligence they need to navigate a fast-moving industry effectively. With Intelligent Audit, shippers can access a robust toolkit of transportation assets, including:

  • Business Intelligence to optimize carrier selection.
  • Machine Learning to detect anomalies.
  • Real-Time Visibility to gain a birds-eye view of parcel operations.

With over 25 years as a leading innovator in the supply chain, Intelligent Audit is the transportation industry’s choice for smarter shipping. Get started with Intelligent Audit today.

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