The Teamsters union stepped up its rhetoric ahead of the formal start of bargaining Monday for a new contract with UPS, accusing the major carrier of stalling and refusing to negotiate in good faith, while threatening to hold up the process until supplemental issues are settled. But there appears to be difference between the parties on the agreed-upon timetable for addressing them.
FedEx provided details on its plan to consolidate its Ground, Express and Service units by 2024, announced last year, with its less-than-truckload Freight unit remaining separate, projecting cost savings of $4 billion by 2025 and an additional $2 billion in network efficiencies by 2027. The consolidation, undoing the legacy of founder and executive chairman Fred Smith, will cost an estimated $2 billion, FedEx said.
FedEx saw the biggest U.S. parcel volume falloff in 2022, Pitney Bowes reported, and while overall volume last year was down by 2.2%, the pandemic bump in ecommerce helped it outpace the 2019 projection, hitting the target a year early. The CAGR for parcel volume growth from 2023-2028 is projected to be halved, from 10.8% to 5%.
The pain from pullbacks in retail and ecommerce spending is being felt across the board in logistics, delivery and shipping operations, both internal and external, with layoffs announced at a number of companies resizing in line with lowered demand. From Walmart to 3PLs, trucking, supply chain and robotics, reports continue to pour in.
UPS reported fourth-quarter revenue that fell short of expectations but earnings ahead of the consensus, while the outlook for 2023 appears challenged and the company is in margin protection mode against falling volumes and other volatility. And CEO Carol Tome optimistically predicted a “win, win, win” outcome with the Teamsters.
FedEx Ground plans to cut back Sunday delivery from 80% U.S. coverage to 50% starting in March, as it faces lower volume and the high cost of service on a light day. The company initially cut back Ground service on Sunday to 50% coverage from 95% in August, citing a focus on “improving efficiency and reducing costs,”
Amazon lost another skirmish in its ongoing multi-front labor war, as a federal regulator ruled Wednesday against its petition to have a successful union vote in Staten Island, NY vacated. At the same time, the International Brotherhood of Teamsters is heating up rhetoric ahead of the expiration of its contract with UPS on July 31.
The three major parcel carriers had a decent peak holiday season in terms of on-time performance, with service levels comparable to 2019, according to ShipMatrix, not surprising as volumes were lighter even though holiday sales increased, as many shoppers returned to stores. FedEx saw a significant improvement over its 2021 showing.
UPS for the first time is extending its peak surcharges for residential delivery beyond the usual mid-January cutoff, referring to them as by the new designation of “demand surcharges” which will be in place until further notice, while FedEx is not following suit but letting them lapse.
The U.S. Postal Service today announced a major upgrade to its planned rollout of electric vehicles to replace its aging delivery fleet, saying the USPS will purchase only EVs after 2026, as the agency bows to significant pressure from Washington and the states to expand and speed up its changeover.