Resource Center/Article08/19/2021

Carriers Seek More Efficiencies as Peak Looms Ahead

Seasonal hiring begins, along with scaling a robotic sorting army, pending surcharges, and – ride-sharing service Uber in the mix, too?

PARCEL CARRIER NEWS

FedEx
  • Carrier announces plans to hire 80,000 employees across U.S. as part of direct effort to meet high residential delivery demands – starting with 3,000 in Memphis, TN.
  • Carrier sees promising results from – and expects to amp up – experimental “AI-enabled robotics system” being used in Queens New York to automate previously manual sorting process. FedEx anticipates that this experimental system, dubbed the Robotic Production Sortation and Identification (RPSi) system, will better position the carrier to handle large-scale e-commerce orders faster. Notably, the RPSi “can autonomously pick, identify, sort, collect and containerise small packages at scale, a process that is traditionally processed and sorted manually. The system can handle a wide array of routine packages, including individual polybags, tubes, padded mailers, and more.”
UPS
In Q2 2021 Quarterly Earnings, the carrier disclosed healthy margin growth amidst operational investments and continued high market demand.
  • Notable Highlights
    • Consolidated Revenue: $23.4B (+14.5% YOY)
      • Revenue up in all segments with double digit revenue per piece growth in both U.S. Domestic and International Package segments.
      • Revenue & Revenue/PC increased due to favorable shifts in customer & product mix and base rate increases, as well as fuel surcharges.
      • U.S. Domestic Package volume decreased driven by lower Residential Ground and SurePost products; of which both attributed to the surge last year due to COVID-19 pandemic.
    • Consolidated Operating Profit: $3.3B (+47.3% YOY, +40.8% Adjusted YOY)
      • Operating profit increased and operating margins expanded in all segments.
    • Net Income: $2.7B (+51.4% YOY)
      • Expense increases for the quarter; driven by compensation and benefits, costs associated with ground network investments and higher fuel prices.
    • Diluted Earnings Per Share: $3.05 (+50.2% YOY)
    • Adjusted Diluted Earnings Per Share: $3.06 (+43.7% YOY)
  • Additional highlights from leadership:
    • Weekend expansion continues; Saturday Ground delivery volume up 13.0%
    • Expanding healthcare capabilities; global healthcare customer revenue up 19.8%
    • Generated $6.8B of free cash flow* in first half of 2021, which is more than any full year in UPS history
    • Expects a significant increase in Capital ROI in 2021

GRI & SURCHARGES

  • DHL Express
    • DHL Express is implementing a new Jet Fuel Surcharge Index which becomes effective September 1, 2021. The new index differentiates between Exports and Imports, and the Import surcharge is 2.75% higher than the Export surcharge at every threshold level. Read the announcement for more details.
  • LaserShip
    • The LaserShip Fuel Surcharge Index changed on August 1, 2021. The surcharge rate increased 0.25% at every threshold level. Read the announcement for more details.
  • Purolator
    • Purolator announced that new Rate and Zone Guides will be available September 1, 2021. Certain surcharge increases were also announced. Residential Delivery will increase from $3.95 to $4.10, Additional Handling will increase from $18.90 to $19.85, and Signature Required (Residential) will increase from $4.75 to $5.50. All rate and surcharge changes are effective September 1, 2021. Read the announcement for more details.
  • UPS
    • Effective August 16, 2021, the Fuel Surcharge table for U.S. UPS Ground services will change upward, approximately .75% per threshold level. Read the announcement for more details.
  • USPS
    • The USPS announced a peak season price increase. The announcement reads in part: “The planned peak-season pricing, which was approved by the Governors of the Postal Service on Aug. 5, would affect prices on commercial and retail domestic competitive parcels – Priority Mail Express (PME), Priority Mail (PM), First-Class Package Service (FCPS), Parcel Select, USPS Retail Ground, and Parcel Return Service. International products would be unaffected. Pending favorable review by the PRC, the temporary rates would go into effect at 12:00 a.m., Central Time, on Oct. 3, 2021, and remain in place until 12:00 a.m., Central Time, Dec. 26, 2021.” Read the announcement for more details.

LTL Carrier News

  • Uber Freight a subsidiary of the ubiquitous, ride-sharing service Uber, whose proprietary app matches trucking companies with loads to haul, said today it is officially expanding into the LTL (less-than-truckload) market. A move geared toward providing shippers with a single platform to support their full truckload and LTL needs.
    • Lior Ron, Head of Uber Freight, said, “Just as we did with the full truckload market, we’re using all our marketplace technology and data science expertise to bring much-needed transformation and new opportunities to LTL. It’s a segment of the industry that is not only in high demand but also furthers our journey to support shippers across first-to-final-mile logistics.”
    • Uber Freight is continuing their push into the LTL market with a $2.25B acquisition of Transplace, who is a provider of managed transportation services through its transportation management systems.
  • Old Dominion Freight Line shatters record with operating ratio of 72.3% in Q2, one of the best ever in the LTL market.
    • Old Dominion Freight Line Inc. has sent a message to truckload carriers that want the LTL operator to haul their so-called spillover freight: Don’t call us and we probably won’t call you.
    • Like many LTL carriers, Old Dominion (NASDAQ:ODFL) isn’t wild about accepting heavyweight loads that, for whatever reason, cannot find a place on a truckload carrier’s network at a specific moment in time.
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