Resource Center/Article • 08/25/2022
New Carrier Surcharges Take Effect with Peak Season Around the Corner
Peak season is just around the corner, carriers focus on productivity gains and announcing new accessorial/surcharges.
Parcel Carrier News
FedEx
- In the pursuit of its ambitious commitment to be carbon-neutral by 2040, FedEx has begun piloting 10 Ford E-Transit electric delivery vans for FedEx SameDay® City service. The pilot program will help the carrier determine how quickly it can swap its entire delivery fleet with electric vehicles and zero emissions. During the pilot, the Ford E-Transit will be put to the test coast-to-coast, with the carrier monitoring overall charging availability, road performance, and weather durability.
- FedEx Ground suspends Sunday delivery for rural and less populated areas starting this month. It’s been nearly three years since FedEx Ground first began supporting a 7-Day delivery model nationwide in January 2020. The suspension is an attempt to ease economic concerns (like inflation and slow inventory) for contractors that help make the 7-Day delivery service possible. It’s estimated 80% of the U.S. will still have access to Sunday deliveries.
- 8/5 – FedEx announced its 2022 peak season surcharges and fees for U.S. Express and Ground services. The “peaking factor” introduced by FedEx during the pandemic returns once again, and this year’s FedEx peak season surcharges are broken up across 11 weeks, each with their own calculation and application periods. Shippers with high residential and/or bulky oversized items will be impacted the most.
UPS
- For the eight consecutive year, Brand Finance has named UPS the “World’s Most Valuable Logistics Brand,” with a value of $38.5B (⬆︎28% YOY). Brand Finance credited the valuation to the carrier’s commitment to raising demand for and awareness about its products/services, all part of the “better, not bigger” mantra. FedEx ranked second with a valuation of $26.6B, and UBER interestingly ranked third with a valuation of $22.8B.
GRI and Surcharges
LTL Carrier News
- Old Dominion Freight Line recently reported on a 69.5% operating ratio (30.5% operating margin) during its Q2 2022 earnings call. The operating ratio is a record for the LTL industry overall, which has seen pricing favor swing in the favor of LTL carriers throughout the pandemic due to increased demand. Like the parcel industry, some of that demand has begun to slow down. While pricing dynamics are expected to stay in the carriers favor, Gregg Gantt, President and CEO at Old Dominion Freight Line, referenced a slow down in hiring as a response to “softening LTL volumes.”
- The July 2022 Freight Index from AFS Logistics and Cowen Research reports “growth trajectories across modes are flattening, as seasonal factors and continued high fuel costs work against the downward pricing pressure of softening demand… While taking advantage of spot rates can provide immediate savings in the short term, shippers should consider how fulfilling their contractual obligations with carriers can help secure capacity when the market tightens over the long term.” The index goes on to report on LTL shipment cost drivers, such as fuel and fuel surcharges that account for 20.7% of the total cost-per-pound and rising accessorial fees.
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