Originally published at: FedEx, UPS peak season surcharges could drive shippers to competitors - FreightWaves
Parcel carriers like FedEx and UPS are implementing peak season surcharges to recover costs when there isn’t a spike in volume to gear up for, leaving frustrated customers looking for alternative providers.
I get it. Legacy parcel guys are raising prices because they can’t drive growth. However, if they lose volume as a result, doesn’t it increase the cost of every other package due to reduced density/packages per on road hour? Maybe if you squint hard enough you can see the math working … maybe.
The relative positive growth for FedEx juxtapositioned against UPS decline is worth noting. However, I suspect that the relative share shift between the two with Amazon is a significant factor.
I don’t disagree with the numbers Satish cites at all.
However, I do disagree with lumping retailers with gig private fleets (Walmart, Target, etc.) with pure-play delivery carriers like OnTrac, Jit-su, Better Trucks, Uni-Uni, Optima, CDL, et al.
That is not apples and oranges. It is more like apples and aardvarks. The retailers can leverage product margin and Amazon can fund parcels with AWS. The pure-play guys cannot.
Shouldn’t we put retailers who deliver their own packages in one part of the zoo, and pure-play, alternative carriers in another? Better yet, why not show volume by carrier that make up 80% of the market?
Isn’t there another mega factor driving the market? De minimus impact on Temu, Shein, etc. volume? Did most of their volume go to Amazon?
Whatever you think about winners and losers, the speed in which things have changed in parcel is breathtaking. More to come?