Following on the heels of FedEx’s move earlier this year, UPS plans to update its fee structure for larger parcels, decreasing the size of items that incur an extra $10.50 handling charge. Under the new rule, packages with a long side of 48″ or more will be subject to the charge as of June 6. The previous threshold was 60″.
Continuing its relentless push into logistics to shore up carrier network capacity issues, Amazon has struck a deal with major air transport firm Atlas Air of Purchase, NY, leasing 20 of its Boeing 767-300 jets and taking up to a 30% stake in the company. Atlas is also a supplier of transport planes to UPS.
A final hurdle to FedEx’s proposed $4.8 billion acquisition of Dutch carrier TNT Express NV has been cleared via an unconditional approval from the Chinese Ministry of Commerce. The deal has already been blessed by authorities in the EU and Brazil, after an initial challenge last fall by the former. The deal will bring FedEx close to parity with UPS in Europe, or possibly launch it into second place behind EU market leader DHL.
FedEx told analysts on a third quarter call that Amazon was simply addressing capacity issues with its own assets a la other major retailers, so they weren’t worried about the business. For the quarter, FedEx’s net income fell 19% to $507 million, while Ground revenue was up 30% to $4.41 billion. However higher costs due in part to network expansion and peak season demand caused the segment’s operating income to drop from $559 million to $557 million.
In the global shipping and logistics business, the unforeseen is the norm, and as some brands are learning the hard way. That’s especially true in China, where total online retail spending is forecast to climb above $1 trillion by 2019. Despite these issues, China holds more than enough business opportunities to offset them.