At its Accelerate seller conference in Seattle, Amazon announced a raft of interconnected services Tuesday, branded as Supply Chain by Amazon. It handles everything from logistics and forwarding from point of origin all the way to the customer’s door. For the first time, Amazon offers bulk storage, distribution and replenishment across channels from the same inventory pool, including retail stores.
FedEx Express package and freight standard list rates for U.S., U.S. export and U.S. import services, and FedEx Ground standard list rates will increase an average of 5.9% as of Jan. 1. The Sept. 7 release of the General Rate Increase marks the earliest announcement in company history. While it’s impossible to analyze every 2024 change, here are some important takeaways for shippers to note and assess.
FedEx, sensing an opportunity against its main rival, has posted a general rate increase for next year three weeks earlier than usual and lower than the current year’s figure, coming in at 5.9%, as UPS is dealing with a new union contract cost that the Teamsters estimates at $30 billion over five years. Analysts believe it will lead to a rethinking of UPS’s approach to its GRI strategy.
As expected, the International Brotherhood of Teamsters voted overwhelmingly to ratify a new five-year contract with UPS, giving the 340,000 members at the carrier higher wages for part- and full-time workers, and eliminating a hated two-tier system of driver classification. More than 86% of union members voting said yes to the new contract, the Teamsters said, a record for a UPS deal.
UPS reported a 10.9% dip in second quarter revenue, but still hit its goal of $2.9 billion in operating profit thanks to $889 million in cost reduction compared with 2022. The company also said 1 million parcels a day were diverted to competitors due to concerns about labor negotiations. UPS also lowered full-year guidance mostly due to costs associated with the new contract, the company said.
The U.S. Postal Service reported a net loss of $1.7 billion in the third quarter, placing the blame on the 2022 Postal Service Reform Act which was billed as a way to help provide relief for the USPS from the burden of unfunded retiree healthcare benefits. Parcel volume, which had been ticking up quarter by quarter at the USPS for several years, fell 2.3% to 1.7 million pieces, after dropping 5% in Q2.
UPS and the International Brotherhood of Teamsters reached a five-year contract settlement today, averting a costly strike of 340,000 members that would have begun a week from today and giving part-time workers the pay increases their leadership had pushed for over the past few weeks, while handing newly energized organized labor a major victory. Starting part-time pay will be $21 per hour.
UPS has begun training nonunion workers among the manager ranks to step in as drivers and package handlers, should a contract settlement with the Teamsters fail to materialize before the July 31 deadline, a move that has angered the union as talks remain stalled with about two weeks remaining. The union president also said they don’t want or need the White House to mediate in the talks.
The U.S. Postal Service this week launched a new service called Ground Advantage that seeks to win back some of the parcel volume lost to FedEx and UPS when the major carriers insourced much of what they once handed to USPS Parcel Select Ground, which is being folded into the new offering.
One ultimatum deadline between UPS and the Teamsters union was passed successfully on Friday, raising hopes of a contract settlement, but another one came and went today with prospects somewhat dimmed as the two sides cut off talks. Each party blamed the other for the breakdown, with three weeks left until the July 31 expiration of the current five-year agreement and pay the main sticking point.