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With the contentious negotiations with the Teamsters in the books, it’s time for UPS to begin working toward recovery. Will CEO Carol Tomé’s emphasis on service be enough, or will UPS have to get creative to regain standing in a competitive carrier landscape?
But that’s not the only news in the transportation industry: a high-value merger between Forward Air and Omni Logistics has created a new LTL giant, and logistics companies are coming together to assist with the recovery efforts following the devastating wildfires in Hawaii. In an industry that’s always moving, here’s what you need to know about the news and trends shaping transportation.
Following a prolonged, volatile period of negotiations with the Teamsters, UPS is beginning the struggle to regain volume lost to other carriers. During the contentious labor talks, UPS lost more opportunities than expected to key competitors such as FedEx and the U.S. Postal Service. As a result, UPS is leveraging service quality, faster delivery speeds, new product releases, and expanded weekend services to mitigate the consequences of carrier diversification.
“[...] in the second quarter and into July, we experienced more volume diversion than we anticipated.” UPS Chief Financial Officer Brian Newman said in an Aug. 8 earnings call. “We're already executing our initiatives to win back diverted volume and accelerate the pull-through from our sales pipeline while remaining disciplined on revenue quality.”
Tennessee-based Forward Air and Texas-based Omni Logistics have formally merged in a cash-and-stock deal, creating a new logistics powerhouse with a total adjusted revenue of $3.7B. Company leaders hope the merger will help establish the new company as a leader in the competitive expedited LTL sector, with an expanded service range, brokerage services, and customs management.
“By uniting these two complementary businesses, the combined company will be well-positioned to meet the unique and evolving needs of a diverse and growing customer base while delivering enhanced value for our shareholders,” Craig Carlock, Lead Independent Director of Forward, said in an Aug. 10 press release.
Despite hopes to the contrary, freight operators are anticipating a weak peak season in fall 2023 due to a struggling freight market. This news comes following a subdued summer for freight volumes as retailers worked to offload bloated 2022 inventories. According to The Wall Street Journal, Kuehne & Nagel, the world’s largest freight forwarder, saw a 43% decrease in net turnover for Q2 2023, with a considerable decline in ocean and air freight demand.
Following wildfires that devastated the historic town of Lāhainā on the island of Maui last week, carriers and logistics companies are prioritizing emergency supplies to aid disaster relief. Young Brothers and Matson are supplying bottled water and ready-to-eat meals, while logistics firms like White Gloves Moving Co. and Hawaii Stevedores are donating services and supplies to recovery efforts. Major airlines, including Hawaiian Airlines and Alaska Airlines, are dedicating resources to essential cargo transportation, emergency supplies, and rescue flights for continued evacuation efforts.
According to The Associated Press, the wildfires are responsible for the deaths of more than 90 people and more than $6B in property damage, with the death toll expected to rise in the coming days.
As diesel prices continue to rise, the International Energy Agency is reporting significant increases in oil demand. The IEA attributes this spike to increased summer air travel, a substantial upswing in the amount of oil used for power generation, and the continued growth of the Chinese petrochemical industry. Paired with a global drop in oil supply of nearly a million barrels per day in July 2023, FreightWaves reports that demand will likely remain high in the coming months, forcing many companies to reevaluate predictions for transportation spend.
After years of consistently rising volumes in the state’s industrial real estate market, California’s red-hot warehousing market is beginning to show signs of cooling. In Southern California, the warehouse vacancy rate increased to 3.8% in Q2, up from 1.2% in 2022. According to The Wall Street Journal, the rise in vacancy can be attributed to increasing industrial rents, declining import volumes along the West Coast, and a sharp increase in the construction of new warehousing facilities.
As recovery efforts continue after the Norfolk Southern train derailment in February 2023, the Federal Railroad Administration (FRA) and the Occupational Health and Safety Administration (OSHA) are urging Norfolk Southern to reevaluate its safety practices.
According to FreightWaves, the renewed call to action comes after Norfolk Southern reached a settlement with the Brotherhood of Maintenance of Way – Employees Division (BMWED) regarding safety violations at the derailment site in East Palestine, Ohio.
As leaders in the logistics industry continue to work toward supply chain automation, two Subsidiaries of Genesee & Wyoming, a major U.S. freight railroad, are seeking permission from the Federal Railroad Administration to begin testing autonomous rail vehicles. The subsidiaries, Georgia Central Railway and Heart of Georgia Railroad hope to implement autonomous vehicles designed by Parallel Systems throughout their service range.
“GC and HOG believe the development and anticipated adoption of this technology has the potential to capture new container business moving to and from the Port of Savannah, as well as reinvigorate traffic on rural rail lines and revive inland ports in Georgia — all while removing trucks from the region’s roads and reducing carbon emissions,” a spokesperson for Genesee & Wyoming said in an Aug. 10 press release.
While UPS, FedEx, and USPS vie for volume following a year of high-stakes negotiations with the Teamsters, smart shippers are turning to logistics network optimization to ensure they have on-demand access to their ideal carrier mix. With logistics network optimization from Intelligent Audit, shippers can find their perfect balance of speed, service, and spend. But that’s not all Intelligent Audit has to offer:
Get in touch with Intelligent Audit, and see what 25 years of smarter shipping can do for your business today.
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