Resource Center/Article • 02/18/2021
Carriers and Shippers Navigate Longterm Impact of B2C Deliveries
Carrier margin and surcharge concerns remain as the Parcel AND LTL industry navigate costly and complex residential deliveries.
Key Highlights
FedEx News
- FedEx Ground President and CEO, Henry J. Maier, will retire effective July 31, 2021.
- FedEx Express anticipated to layoff up to 6,300 European employees by 2023.
- FedEx files trademark for new global tagline, “FedEx. Where Now Meets Next.”
UPS News
- UPS sees positive 4Q 2020 earnings, but margin concerns remain as costly B2C deliveries outpace B2B deliveries.
GRI & Surcharges
- Many carriers continue to post updates to pandemic-driven surcharge terms.
LTL Carrier News
- Reminder, UPS sold UPS Freight to TFI International Inc. for a sum of $800 million.
- FedEx Freight President and CEO, John A. Smith, will succeed retiring FedEx Ground President and CEO, effective June 1, 2021.
- Saia and Old Domion Freight Lines (ODFL) have their sights set on network expansion, rate increases also on the rise.
Fuel Trends
- The February Short-Term Energy Outlook remains subject to heightened levels of uncertainty due to COVID-19.
Parcel Carrier News
FedEx enters 2021 with leadership changes, high number of anticipated European layoffs followed by record savings, and sights set on meeting Next, Now.
- The carrier announced FedEx Ground President and CEO, Henry J. Maier, will retire effective July 31, 2021, and be succeeded by FedEx Freight President and CEO, John A. Smith. Since assuming the role in 2013, Maier is remembered positively as playing a pivotal role in FedEx Ground’s ability to understand and efficiently serve growing commercial and E-Commerce markets. Smith will assume the elect role March 1, 2021, until he assumes the full role June 1, 2021. Maier will assume an advisory role through July 2021 to provide guidance and ensure a smooth transition. The carrier will also elevate an existing team member to replace Smith, naming FedEx Freight Senior VP of Operations, Lance Moll, as Smith’s successor.
- FedEx Express anticipated to layoff up to 6,300 European employees by 2023. The carrier acquired TNT Express back in 2016, a strategic move to expand services/coverage throughout Europe. With network integration between FedEx Express and TNT Express near finalization, the carrier believes up to 6,300 employee roles (both operational and back-office roles) will become duplicated and obsolete. Following the layoffs and anticipated severance costs, FedEx estimates this transition will yield $275-350 million in annual savings starting in 2024. Severance costs are predicted to cost the carrier between $300-575 million through fiscal 2023.
- FedEx files trademark for new global tagline, “FedEx. Where Now Meets Next.” The new tagline is designed to be a nod to both the carrier’s future focused attitude and the determination and hard work of its employees throughout the COVID-19 pandemic. FedEx stated, “FedEx is committed to future-focused change, which is why we are evolving our brand to a fresh and modern look and feel. ‘FedEx. Where now meets next.’ is our new global tagline. It represents how we are channeling our innovative spirit to build the network for what’s next. It’s not just a phrase, it’s a representation of our immense pride in our team members and how they are moving the world forward.”
After continued quarterly 2020 earnings, UPS sees 4Q earnings set the ink on a substantially positive financial year for the carrier.
GRI & Surcharges
LTL Carrier News
- Last month, UPS announced it had sold UPS Freight to TFI International Inc. for a sum of $800 million. Citing the acquisition as a “Better, Not Bigger” partnership opportunity, the carrier’s original UPS Freight network will continue to operate independently within TFI’s own network under the title, TForce Freight. What does this mean for UPS Freight customers? TFI has stated it will “aggressively improve margins” by means of contract negotiation or ending partnership with unprofitable accounts.
- FedEx Freight President and CEO, John A. Smith, will succeed FedEx Ground’s current President and CEO, Henry J. Maier, effective June 1, 2021. The carrier has a four month transition period planned to mitigate potential disruptions and ensure success. The carrier will also elevate within its company to replace Smith, naming FedEx Freight Senior VP of Operations, Lance Moll, as Smith’s successor.
- Saia and Old Domion Freight Lines (ODFL) have their sights set on network expansion, rate increases also on the rise. As previously reported, the LTL industry is primed for carrier expansion and rate increases – Saia and ODFL offer an early look at how LTL carriers plan to navigate 2021. Saia has announced plans to open a new terminal during Q1 2021, with high expectations to add an additional four-six terminals this year alone. Similarly, ODFL anticipates opening three new terminals by Q2 2021 at the latest, in addition to the nine facilities added in 2020. Such growth opportunities are typically indicators of margin-improvement-focused strategies, and both LTL carriers have announced record Q4 2019 operating ratios.
Shipping Industry Trends
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