2015 Q3 QReview-Email Version

qreviewJuly - September, 2015 /// NO.4/Q3

Transportation Impact Quarterly Review Parcel news you can use.

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SURCHARGESPEAK SEASON

SNEAKPEAK

PARTNER SPOTLIGHTHow NASCAR’s all-time wins leader built a racing empire on standards PAGE 6

FEDEX’S SECOND 2015 FUEL HIKE PAGE 8

“DISRUPTIVE”PAGE 4

Are you a

shipper?

“Disruptive” Shippers Partner Spotlight

Carrier Efficiency

Fuel Me Twice

UPS shippers that experience 10% to 20% surges in volume this holiday season could see peak season surcharges.

Learn how NASCAR’s all-time wins leader built a racing empire on standards

Efficiency was the underlying theme in UPS’s July 28 shareholder announcement.

FedEx’s second 2015 fuel hike headlines rate increase announcement.

4-5 6-7

12-15

8-11

Before you ink your next carrier

agreement, carefully peruse the fine

print for any language relating to

your ability to request guaranteed

service refunds. Many times, the

carrier will slip language into an

agreement that waives a company’s

right to request credit for shipments

that did not meet service guarantees.

In other cases, the language will

give a company the right to request

them only if the carrier’s delivery

rate falls below a certain percentage.

Your customers expect you to take

ownership when things don’t go as

planned. Why should your company

expect any less?

QREVIEW is a quarterly newsletter published by Transportation Impact. All content in this publication is under inter-

national copyright laws. No part of the content can be reproduced in any form without the prior written permission of

Transportation Impact.

Guaranteed Service Refunds

Q-Tip

Since our company’s inception in 2008, we have had the privilege of getting to know some power-ful people in the business world. Our travels seemingly have taken

us everywhere, and we have built relation-ships, both personal and professional, with our clients that will last a lifetime. One thing that always strikes me is the commonalities we all share on many levels; mainly that we all once started somewhere small.

That understanding was the foundation for Transportation Impact’s Small Business Forum, held locally near our headquarters in Emerald Isle, N.C. Through a great part-nership we have developed with Carteret Community College we host the event annually, giving local business owners in our area the opportunity to network with us and with each other to better understand the professional challenges we all face and to share experiences and ideas on how to overcome them.

Our sole hope is that something, anything might reaffirm, or even reignite, the passion and persistence that turn good ideas into

great ones for all those who so well embody what makes America great.

It is an exercise we take pride in, mainly because we can share the lessons we have learned along our path to becoming the company we are today. More important, though, are the lessons we learn from other, much smaller companies. You see, relation-ships help small business thrive, a notion that tends to get lost in the shuffle as com-panies grow into larger entities. Whether you are a local mechanic or an executive at one of the largest companies in the world, you only will go as far as the relationships you build will take you. It is easy to lose sight of the human element once engrained in high stakes business endeavors, where consequences, positive or negative, are far-reaching. That fact remains, however, that it is good business to do business with people you trust.

Over the years, trust is something we con-tinue to work hard at. Our mission is simple: we do what we say we will do. It is our responsibility to carry out that mission, not just at work, but in our community. The local

businesses that surround us have played a role in the success of our organization. All the relationships we have built along the way are important to our success and the success of those around us.

Our forum serves as a constant reminder that it is the individual, not the idea, that is most important. As John Wooden once said, “Little things make big things happen.”

So that is what is in it for us: a reminder to never lose sight of the little things. In order to think big, you have to think small. In the end, we are all in some ways only as good as the people around us. We simply strive to surround ourselves with good people, one person at a time.

Keith ByrdCo-Founder, Principal PartnerTransportation Impact [email protected]

ContentsWelcome

ANALYZESTRATEGIZEREALIZE /// [3][2] /// QREVIEW · July-September, 2015 · NO.4/Q3 /// transportationimpact.com

UPS CEO David Abney announced in early

February that the world’s largest shipper would introduce peak season surcharges for residential shipments beginning this year.

Recently, another high-ranking UPS exec said that there will be no formal announcement of such changes and that the carrier will notify affected customers on a case-by-case basis, targeting companies that experience 10% to 20% surges in volume or that are otherwise disruptive to UPS’s supply chain.

The move is undoubtedly one to help UPS home in on what has become a consistently moving target: small package volume during peak shipping season.

Both major national carriers faced the scorn of the public in 2013, when higher-than-ex-pected volumes resulted in late and missed deliveries in and around the holiday season. UPS in particular again made news earlier this year when it posted disappointing 2014 fourth-quar-ter earnings, which it attributed to the high costs associated with bringing on enough manpower to ensure that the same mistakes from a year prior were not made again, leaving the world’s largest shipping company well prepared and underutilized.

As hunting for last-minute holi-day deals continues to become more of a trend for consumers, predicting how long those buyers will wait to trigger their ship-

ments through the supply chain has stumped even behemoths FedEx and UPS.

The implementation of peak sea-son surcharges (assuming FedEx stays its demonstrated course of acting in step with its primary competitor) will put the onus of this difficult task on individual shippers. And with summer draw-ing to a close, the uncertainty has the potential to handcuff holiday plans for certain companies, which could face huge cost increases, according to a senior supply chain executive at one of the world’s large shippers.

UPS will structure this surcharge in a manner that will require relatively detailed forecasting, he said, something his team

Decisions based on pre-dictive analy-sis will amount to a shot in the dark for many shippers . . .

is a need that will quickly be thrust to the forefront. With-out any official announce-ments, however, this need will remain hard to define, forcing shippers to stand idle and hope for the best.

Predicting the future, espe-cially with any accuracy, has plagued mankind since the dawn of time. From the econo-my to the weather, financial investment to horse races, many claim to have found a surefire formula, but few, if any, have proven to be much more than coincidentally good at it. Some of the most sophis-ticated data-driven compa-nies on earth have scores of analysts clambering through mountains of empirical data in search of a philosophy, a formula . . . anything that will stick. And, for the most part, all remain within arm’s reach of the drawing board.

Therein lies an intriguing chal-lenge for companies without those resources. Decisions based on predictive analysis will amount to a shot in the dark for many shippers and prove altogether impossible for others.

So, what is a shipper to do?

The first step should be to contact your carrier to deter-mine whether your company will fall victim, whether you tend to flood the network around the holiday season, have odd-sized shipments, or both. Items like mattresses and outdoor grills can clog carrier supply chains, creating

exceptions in an otherwise heavily automated process. Even the aspects that still require human interaction, like the actual delivery, can encounter issues when, say, a driver has to deliver a new bed frame to the third floor of a rural apartment building. If your shipments fall into this “disruptive” category, you should ask your carrier how these yet-to-be-announced changes will apply to you.

Request a ProjectionFrom there, it will make sense to determine what additional costs your company is likely to incur, which, on its face, should be relatively simple to address. Using historical data, it should be fairly easy to ascertain how much has been spent during peak seasons past. Take that number to your carrier and request (if not require) a hardline projection of how much that number will increase. This will show your carrier that you are on your toes, and will give you tan-gible leverage during future negotiations.

Once a cost analysis has been performed, it should be rela-tively easy (conceptually, at least) to identify other areas where costs can be cut to mitigate the increases. Even if the savings you identify will take time to realize, it is better to have them spill over into 2016 than to never surface at all.

Your Carrier’s InputOf course, while cost is an im-portant part of the equation, it

may only go so far in helping you determine the range in which you will fall when the holidays roll around. For that, you will need to put your partnership to the test. Ask your carrier for input on what a realistic expectation should be. If you do not have the resources to develop a pre-diction you are comfortable with (and many companies do not), there is nothing wrong with asking the carrier to lend you its resources; in a sense, to help you play by its rules. The benefit of shifting more of that responsibility toward the carrier is twofold: first, you will not bog down your own staff, already up to their necks in planning for peak; and, second, you will generate leverage that could serve you well should things fail to go as planned. If the carrier is in on the plan, after all, it would be hard to dodge accountability if the plan has holes.

When price is parallel be-tween the two carriers, part-nership is a key differentiator. Use it to your advantage.

has scrambled to implement in-house. The only alterna-tives were soaring costs or even a scenario in which UPS would have the right to refuse packages if the company hit a commitment ceiling prior to the end of the peak shipping season.

Other sources say that UPS plans to assist customers with preparation, but the fact that predicting shipment volumes has continued to befuddle both major carriers — each possessing some of the most sophisticated technology in the world — illustrates the obstacle shippers still have in front of them. The trick-le-down effect could essen-tially mean that the major carriers could end up dictating their customers’ businesses to a significant degree. Shippers lagging beneath their thresh-old commitments may need to further decrease what already are typically bottom-dollar prices in an effort to funnel more product through their loading docks, and thus erode profit. Those in jeopardy of exceeding their commitments could face an even more problematic scenario, in theory, by having to structure deals in a manner that would actually dissuade customers from purchasing their product after a certain date, and thus forfeit revenue.

Accurate Forecasts With dynamic changes to fun-damental small package pric-ing services on the horizon for some shippers, the ability to perform accurate forecasts

Peak SeasonSupply Chain Solutions

shippers to pay the price this holiday season

SURCHARGESPEAK SEASON

SNEAKPEAK


Richard Petty Motorsports

you’ve ever experienced a NASCAR race from inside the

track, then you know it’s a differ-ent experience than just about anything else. Without really ever knowing it, you’re immersed in the race-day rituals of the drivers and their teams, free to mix and mingle,

If

its partners isn’t solely the association with the on-track greatness of the sport’s big-gest star. Instead,

it’s much simpler.

“It’s about being valuable partners,” said Richard Petty,

co-owner Richard Petty Motorsports. “How can

we help you grow, how can we help your business, and in return, hopefully you can help us compete on the track, or help with Victory Junction or anything else under our umbrella. It doesn’t matter what business you’re in, we’re all in this together to try and get better.”

The entire Petty family is in on the act, and it’s about far more than racing. Petty has several charita-ble arms under his umbrella that provide effective and affordable marketing opportunities for a variety of corporate sponsors. While his RPM Sprint Cup team obviously is the more traditional draw for companies hoping to tap into the unequivocal loyalty of race fans, other, perhaps more estab-lished brands can find additional opportunities of a more charitable nature.

The Petty Family Foundation encompasses several humanitarian efforts, including Victory Junction, Paralyzed Veterans of America, Hospice of the Piedmont and The

Preston Robert Tisch Brain Tumor Center at Duke University.

Walk that same line “Our partnership with Richard Petty Motorsports started simply with an introduction through the Petty Family Foundation and all of the great things that organization stands for and represents,” said Transportation Impact Co-Founder Travis Burt. “For us, when we start-ed out as a smaller company we were looking for ways to give back, and the Petty family model was a great fit for us. We saw everything the Petty name meant to so many people and aspired to walk that same line in many ways as our company grew.

“Richard Petty rose to tremen-dous fame. Even those who have no affiliation with or affinity for NASCAR know that he is an iconic figurehead in American culture. Understanding that and looking at how he has decided to use his fame for the betterment of others was something we found very admirable, and thus began what we are confident will be a longstand-ing partnership with several facets of Petty’s entities.”

as everyone else. And at Richard Petty Motorsports, the treatment feels an awful lot like family.

People in all walks of life know the Petty name. Anyone with even the most remote awareness of the sport can tell you that “The King” arguably is the greatest stock car driver who ever lived. Any Richard Petty loyalist would argue only that there is no argument, that Petty is the best to ever pilot a racecar, period.

Beyond the racetrack With so much fame and adulation surrounding him, there is a unique reach that accompanies any asso-ciation with Richard Petty, one that extends far beyond the racetrack. But where his race team, Richard Petty Motorsports, truly benefits

More inforichardpettymotorsports.com

Richard Petty, Co-Owner of Richard Petty Motorsports

How can we help you grow, how can we help your business, and in return, hopefully you can help us compete on the track, or help with Victory Junction or anything else under our umbrella.

to come and go as you please. Contrarily, imagine yourself inside any other professional sanctuary prior to a game. You likely would feel like an elephant in the locker room; in the way and on the re-ceiving end of those kinds of looks that remind you that you don’t really belong.

That’s the draw for NASCAR spon-sors: the level of inclusion. There is no totem pole. Whether your logo is on the B-post – the space just to the rear of the driver-side window – or the hood of the No. 43 Ford, you’re treated the same

PARTNERINGwith a purposeHow NASCAR’s all-time wins leader built

a racing empire on standards


Partner Spotlight

Parcel News FedEx Rates

Fuel MeTwice…

FedEx will waste little time in hitting customers where it hurts – their pockets – based on the latest in a long-running, well-documented chain of price increases.

In a release posted to its website on September 15, the world’s sec-ond-largest shipping company offi-cially announced that it will increase shipping rates by an average of 4.9 percent, effective January 4, 2016. The announcement was merely a formality, since shippers have grown accustomed to these increases at the turn of each calendar year.

But while the timing and delivery are always generally the same, there is a key difference in the 2016 version, which is that two key facets will be

put in place before 2016. E-commerce and oversize package shippers will have to start spending early, thanks to fuel table changes and unauthorized package surcharge adjustments that will take effect November 2, more than two full months before the rest of the increases are implemented.

FedEx pointedly stated that unautho-rized packages – those that exceed the FedEx Ground published length and weight limitations – will cost more and will be handled solely at FedEx Ground’s discretion.

Less clear, however, was the amount by which the surcharges for fuel and unauthorized shipments will rise, and probably for good reason. The publish-ing of the new fuel tables and a deeper dive into the actual rate structure

highlight substantial changes that will cost customers significantly. A package that exceeds the published maximum dimensions in the FedEx Ground network will cost $110 – 91.3 percent more than last year – effective November 2, and the fuel surcharge will increase at least 0.75 percent, and could spike nearly two percent depending upon the per gallon price of diesel or jet fuel.

The timing, of course, is unarguably dictated by the peak season – the heavy shipping period surrounding the holidays that has plagued both carriers in each of the last two years – that will kick off just a few days later. Nearly doubling the price of unauthorized shipments will do one of two things for FedEx: dissuade customers from clogging its supply

Second 2015 fuel hike headlinesrate increase announcement


SERVICE FEDEX FIRSTOVERNIGHT

FEDEX PRIORITY OVERNIGHT

FEDEX STANDARD OVERNIGHT

FEDEX 2DAYA.M.

FEDEX2DAY

FEDEX EXPRESS SAVER

FEDEXGROUND

RESIDENTIALSURCHARGE

FEDEX HOME DELIVERY

2012 $48.40 $22.40 $18.80 $13.92 $12.10 $11.35 $5.49 $2.55 $8.04

2016 $54.09 $26.09 $23.83 $18.04 $15.69 $14.83 $6.94 $3.25 $10.19

$ Change $5.69 $3.69 $5.03 $4.12 $3.59 $3.48 $1.45 $0.70 $2.15

% Change 11.8% 16.5% 26.8% 29.6% 29.7% 30.7% 26.4% 27.5% 26.7%

5-Year Cumulating Avg. Rate Change

Parcel News

sorial charges, are what keep shippers guessing. The net impact customers feel when-ever they turn the calendar typically is more significant than the 4- to 6-percent aver-age price hikes.

3-year planCompanies that continue to trade down from premium services, for instance, will continue to experience dis-proportionate increases, since those services will receive the largest price hikes in 2016, nearly 8 percent across

all zones for all packages weighing between 1 and 30 pounds. This trend started when FedEx laid out a 3-year plan to generate $1.7 billion in “profitability improvement” in October 2012.

Targeted for the bulk of that improvement, FedEx said at the time, was its Express seg-ment, which was still feeling the effect of a lagging eco-nomic recovery and, ironically, higher prices for jet fuel.

Back then, the Zone 2, 1-pound minimum for a FedEx Home Delivery package was $5.49, plus a residential sur-charge of $2.55, which netted a published rate of $8.04. Next year that same package will cost 26.7 percent more, with a base rate of $6.94 and residential surcharge of $3.25, resulting in a net rate of $10.19.

Fuel surcharge for FedEx Ground will increase 0.75% to 1%, effective 11/2/2015, depending on price of diesel fuel.

FedEx has continued to raise prices on non-premium services disproportionate to premium services over the past five years.

Fuel surcharge for FedEx Express will increase 1.5% to 1.75%, effective 11/2/15, depending on price of jet fuel.

AT LEAST BUT LESS THAN SURCHARGE

$1.27 $1.35 0.50%

$1.35 $1.43 1.00%

$1.43 $1.51 1.50%

$1.51 $1.59 2.00%

$1.59 $1.67 2.50%

$1.67 $1.75 3.00%

2015 FedEx® ExpressFUEL SURCHARGE TABLE

(EFFECTIVE FEB. 2, 2015)

AT LEAST BUT LESS THAN SURCHARGE % CHANGE

$1.19 $1.23 1.50% 1.50%

$1.23 $1.27 1.75% 1.75%

$1.27 $1.31 2.00% 1.50%

$1.31 $1.35 2.25% 1.75%

$1.35 $1.39 2.50% 1.50%

$1.39 $1.43 2.75% 1.75%

$1.43 $1.47 3.00% 1.50%

$1.47 $1.51 3.25% 1.75%

$1.51 $1.55 3.50% 1.50%

$1.55 $1.59 3.75% 1.75%

$1.59 $1.63 4.00% 1.50%

$1.63 $1.67 4.25% 1.75%

$1.67 $1.71 4.50% 1.50%

$1.71 $1.75 4.75% 1.75%

2015 FedEx® ExpressFUEL SURCHARGE TABLE

(EFFECTIVE NOV. 2, 2015)

AT LEAST BUT LESS THAN SURCHARGE

$2.11 $2.29 2.50%

$2.29 $2.47 3.00%

$2.47 $2.65 3.50%

$2.65 $2.83 4.00%

$2.83 $3.01 4.50%

$3.01 $3.19 5.00%

$3.19 $3.37 5.50%

$3.37 $3.55 6.00%

$3.55 $3.73 6.50%

$3.73 $3.91 7.00%

$3.91 $4.09 7.50%

$4.09 $4.27 8.00%

2015 FedEx® GroundFUEL SURCHARGE TABLE

(EFFECTIVE FEB. 2, 2015)

AT LEAST BUT LESS THAN SURCHARGE % CHANGE

$2.20 $2.29 3.50% 1.00%

$2.29 $2.38 3.75% 0.75%

$2.38 $2.47 4.00% 1.00%

$2.47 $2.56 4.25% 0.75%

$2.56 $2.65 4.50% 1.00%

$2.65 $2.74 4.75% 0.75%

$2.74 $2.83 5.00% 1.00%

$2.83 $2.92 5.25% 0.75%

$2.92 $3.01 5.50% 1.00%

$3.01 $3.10 5.75% 0.75%

2015 FedEx® GroundFUEL SURCHARGE TABLE

(EFFECTIVE NOV. 2, 2015)

This year’s trend of FedEx’s perceived angst about unpredictable e-commerce and oversize shippers also is evident in the service-level discount matrices published in conjunction with the an-nouncement.

Keep shippers guessingWhile shippers expect prices to increase annually, the details of the individual service-level increases that FedEx bakes into its annual published average, in addition to the increases in its acces-

chains with big, awkward packages, or pay the carrier handsomely for the effort of moving those packages from A to B. Fuel hikes should pro-vide top-line revenue relief, which is desperately needed to rally support from inves-tors, when Q2 2016 earnings are announced on December 17. As of September 25, FedEx shares were down nearly 17 percent on the year, putting the stock on pace to post its first calendar-year loss since 2011. It is up 70 percent since that time.

Without minimum relief, the discounts most high-volume shippers enjoy lose value with every increase added to the base rate.

By comparison, the net rate for that same package shipped FedEx First Overnight, one of the carrier’s more pre-mium services, has increased only 11.8 percent.

To make matters worse, without minimum relief, the discounts most high-volume shippers enjoy lose value with every increase added to the base rate. Each time that rate rises, the price floor eats away the net discount received by the customer. The result for the shipper is costs that are higher still, and fluffy margins for the carrier.

Trading down costsOf course, weights and zones vary widely, and any combi-nation of the two could yield vastly different results. Ship-ments that carry higher base costs will not be impacted by minimums, and depending on individual discount levels, there likely exist opportuni-ties for customers to operate cost-effectively within a lane that makes sense. Finding that balance, though, is not easy, and it is clear from the latest round of price hikes that FedEx will continue to make sure trading down comes at a cost.

FedEx Rates


Shipping Strategy Taking Stock of Carrier Efficiency

Inside the carrier quest to become more lean

Taking Stockof Carrier

EFFICIENCYE

fficiency was the un-derlying theme in UPS’s July 28 shareholder announcement, during which the world’s largest shipping company said

that second quarter 2015 diluted earnings per share were $1.35,

a 12% increase over adjusted results for the same period in 2014.

All segments improved profit-ability and expanded margins, according to UPS, much to the delight of shareholders, evi-denced by the 7 percent jump in the share price the next day.

“Pricing initiatives continue to drive base rates higher,” accord-ing to a news release posted to the UPS website. Also contained in that release was UPS’s select-ed financial data from its Form


20-percent surges in vol-ume are targets, as are other customers UPS deems are disruptive to its supply chain. Oversize package surcharges are also in play for companies that ship large products that slow down the carrier’s op-eration. These charges could be implemented only during peak season or permanently in certain, yet-to-be-deter-mined instances.

Of course, no shippers will be immune to the general rate increases that are announced annually, usually in late October or early November. With seemingly so many other moving parts in play this year, the effects of those hikes could feel more compounded that usual, especially for cus-tomers subject to the pricing changes outlined above.

With so much at stake, it is no wonder that efficiency and optimization have taken the business world by storm. Companies everywhere are looking for the upper hand, and the good ones are finding answers right under their noses, by effectively utilizing their own data to understand their respective businesses in granular detail. While it obvi-ously is a great time to be a UPS or FedEx shareholder, the same can be said for being an analyst. There is no shortage of solutions clamoring to be found; no shortage of work, in

other words. The challenge, though, is a company’s ability to combine analytical skill with market knowledge suffi-cient enough to build a strong foundation for lower costs through statistical analysis. While many have one or the other, possessing an in-house expert (much less an entire team of them) capable of mar-rying data and market pricing knowledge is a luxury typi-cally afforded only to larger companies, and you would be surprised how many of those do not possess the knowledge they think they do.

A study of 500 high-volume parcel shippers with net an-nual parcel spends between $200,000 and $30 million found that less than 15 percent have market appropri-ate rates for companies with similar spend and shipping characteristics.

Fortunately, shippers without these resources do have options.

Leverage relationshipsFirst, savvy companies can leverage their carrier relation-ships to make ends meet. UPS, in particular, has begun telling customers that the carrier will not make them go it alone when the pricing changes shake out. By leveraging a carrier relationship, high-vol-ume shippers can request that their carrier help shoulder the

load. With an army of analysts and engineers (most or all of whom specialize in this sort of thing), the carrier should have all the necessary data to make as good a prediction as any with regard to how a specific company should prepare for the road ahead. Depending on the nature of that rela-tionship, however, that advice could come with a price tag. Even if the carrier is willing to provide insight at no cost to the customer, there is still an unsettling element of letting the fox guard the henhouse, in a matter of speaking. Ship-pers should use caution and understand that FedEx and UPS have their own margins to protect, and that their sales reps are only empowered with a limited amount of knowl-edge. (UPS arguably is more profitable than ever, after all.) Simply put, it would be good practice to vet any advice they provide to prevent unforeseen issues down the road.

3PL data analysisSecond, options for third-par-ty input abound, many of which are capable of provid-ing the insights needed to make sound business deci-sions on a quick turnaround, as dictated by an ever-changing market. With large customer sets from which to extract data for comparison to your account, a qualified and properly vetted third party is uniquely qualified to perform

powerful data analysis from a customer perspective. Good ones can determine whether your rates are competitive and provide a wealth of actionable intelligence across many different departments. Great ones will even highlight optimization opportunities you are currently ignoring, or unaware of, many of which could greatly improve the overall health and efficiency of your supply chain. While those services, too, will come at a cost, the decision then boils down to the net benefit to your organization. The lat-ter should result in more net costs savings and efficiency enhancements that benefit you, the customer.

Of course, which road is best for your company is a case-by-case scenario. The only universal truth is that changes are coming that could have significant impacts on the bottom lines of companies that are ill prepared.

The carriers are pacing the field in terms of efficiency, showing us all how profitable that can be. If you are an investor, the numbers suggest that you should take notice. If you are a shipper, likewise, you should take action.

A study of 500 high-volume parcel shippers with net annual parcel spends between $200,000 and $30 million found that less than 15 percent have market appropriate rates for companies with similar spend and shipping characteristics.

Shipping Strategy Taking Stock of Carrier Efficiency

10-K and other filings with the Securities and Exchange Commis-sion, which highlighted several suggestive factors that could attribute to the carrier’s strong performance.

For the quarter, operating expenses dropped 10 percent, while operating profit soared 162 percent. Net income rose 171 percent and UPS reported 8.7 percent net income as a percent-age of revenue, up 172 percent from a year prior.

These numbers point to the fact that UPS’s efforts to become more efficient are working, and working very well. The numbers contained within the report point to revenue decline in premium

air services and increases in deferred air and ground ser-vices, two segments that saw the steeper price increases when the 2015 general rate increase was announced last year, substanti-ated by steep volume growth in domestic deferred air services.

Home in this season The evidence seems to point to the fact that UPS’s efforts to more heavily increase prices of services they know their customers will use most are lining their pockets. And as both major global carriers begin to home in on the holiday season – which has pestered them both in each of the last two years – the true cost of carrier profitability still appears to fall down to their customers.

With changes promised to over-size package surcharges and the advent of peak season surcharg-es for certain shippers, both carriers are poised to prevent, or at least limit, the recurrence of issues that have led to each carri-er’s disappointing fourth quarter in each of the last two years.

Contrarily, however, FedEx and UPS customers will face an increasingly tough road ahead as they struggle to remain compet-itive in the face of increasing costs for necessary services.

Peak season surchargesUPS is considering assessing peak season surcharges on a customer-by-customer basis. Customers that experience 10- to

Excellent 3PL data anlysis will high-light optimization opportunities you are currently ignoring, or unaware of, many of which could greatly improve the overall health and efficiency of your supply chain.


Emailed $419 worth of automated address corrections to distribution center. Scheduled monthly email audit-savings report for parcel review meetings. Set up GL coding for web orders, service department and warehouse. Noted $1,284 in soft-dollar savings opportunities and customized dashboard with Air-to-Ground report.

What did you dobefore your first cup of coffee?

Schedule a 20-minute Parcel Intelligence Dashboard demo and learn how you can optimize your shipping spend and capture all your FedEx and UPS refunds.

transportationimpact.com // [email protected] // 252.764.2885

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