Resource Center/Article • 03/11/2022

USPS Announces New 2022 Surcharges

PARCEL CARRIER NEWS FedEx UPS GRI & SURCHARGES LTL CARRIER NEWS

???? 4/3: New USPS 2022 surcharges go into effect.

???????? 2/27: FedEx and UPS both suspend shipments in Ukraine and Russia.

3/10: DoorDash announced a new product in beta testing: Return a Package. Through the new service, DoorDash customers can ask Dashers (the affectionate term for DoorDash couriers) to return any FedEx or UPS product to a carrier store. Customers are required to box, seal, and affix a return label themselves. Language seen in a screenshot of a beta screen claims, “We can return any package that is fully sealed with a pre-paid label attached.”

PARCEL CARRIER NEWS

FedEx

???? The carrier announced FedEx Express President and CEO, Donald Colleran, will retire before the end of the year. Richard Smith (son of founder and CEO, Fred Smith) will notably succeed Colleran, prompting speculation that Richard Smith is preparing to also succeed Fred Smith in the near future.

The carrier is expected to open a new 259,000 sq-ft distribution facility in Wilson, North Carolina, later this fall. The new facility will yield at least 200 new hires for the carrier and local community.

???? Upcoming Q3 2022 Quarterly Earnings Call: March 17, 2022.

What can you expect?
- Revenue around $23.6B.
- Ground shipments profited from e-commerce shopping during spread of the COVID-19 Omicron variant, though labor concerns likely impacted overall performance.
- Continued growth across all FedEx segments (Express, Ground, and Freight) with large revenue gains driven by Peak Season.

UPS

???????? The carrier announced service adjustments in China as the nation attempts to stop new spread of COVID-19.

The carrier announced two senior staff member retirements (Juan Perez, Executive VP and Chief Information/Engineering Officer, and Scott Price, Executive VP International will retire 3/31/22), as well as an “organizational re-alignment” to follow. What does this mean for UPS leadership?

A new role, Executive VP and President International for Healthcare and Supply Chain Solutions. The role will be assumed by Kate Gutmann, currently Chief Sales and Solutions Officer and Executive VP UPS Global Healthcare. The carrier is eager to see how Gutmann’s experience and expertise will guide “business units [that] reported revenues of more than $37 billion in 2021.”

Meanwhile, Executive VP and President U.S., Nando Cesarone, will gain “additional responsibility for US sales as well as the company’s automotive, and global buildings and systems engineering groups.”

Leadership Quote: “This realignment positions UPS to continue to do what we do best, and that’s deliver what matters. 2021 was a year of momentum for our company and we are off to a solid start in 2022 with these important organizational changes,” said Carol Tomé, Chief Executive Officer.

???? Upcoming Q1 2022 Quarterly Earnings Call: April 26, 2022.

What can you expect?
- Revenue around $23.81B.
- Earnings per share expected around $2.87.

GRI & SURCHARGES

OnTrac

OnTrac will discontinue Collect-on-Delivery (C.O.D.) services effective April 1, 2022. See all OnTrac service updates.

???? USPS

The USPS is introducing new surcharges effective April 3, 2022. One is called Dimension Noncompliance Fee, and the other is a set of what are called Nonstandard Fees. The Dimension Noncompliance Fee’s description is: Add $1.50 for commercial parcels that exceed 1 cubic foot or with a length greater than 22 inches, if the customer did not provide dimensions or provided inaccurate dimensions in the electronic manifest. The three Nonstandard Fees are as follows: 1) length > 22 inches – $4.00; 2) length > 30 inches – $15.00; 3) cube > 2 cubic feet – $15.00.

LTL CARRIER NEWS

A recent article from Logistics Management breaks down the overall LTL market as it stands today, along with an outlook for the future. Notable highlights include:

Valued at $46B, the greater LTL market today mimics – but magnified – many of the same pains the Parcel market saw early into the pandemic – an unyielding wave of customer orders, diminishing carrier capacity, increasing benefit to the carriers during contract and rate negotiation, along with larger technology and labor concerns.

“Customers are afraid to change carriers today for fear of not having enough capacity,” says Chuck Hammel, president of LTL mainstay Pitt Ohio. “In fact, they’re all paying big prices for capacity.”

If they haven’t seen them already, LTL shippers can expect “double-digit percentage increases”, but these increases are not limited to once a year. In the last two years, LTL carriers have been known to adjust contract terms at various points through a given year. As with the Parcel market, increases may vary customer-to-customer, which places a greater importance on fostering a positive and equally beneficial relationship between shipper and carrier. Communication is key.

Network efficiency and optimization are also a critical cost mitigation effort. “All shippers can avoid the majority of these rate increases if they commit themselves to eliminate time-wasting procedures in their supply chains,” says Satish Jindel, principal of SJ Consulting. “Those delays are causing carriers to lose money, which in turn is causing them to raise rates on shippers. But it doesn’t have to be that way.”

XPO Logistics announced that its LTL and freight brokerage business operations will split into two separate companies, anticipated to both be at “the top of their industries”.

Leadership Quote: “XPO’s North American LTL segment would be a pure-play LTL industry leader — the third-largest provider of domestic and cross-border LTL freight shipping,” the company’s statement said. “XPO believes that the separation of its North American LTL business from its asset-light transportation services will unlock significant equity value in both stand-alone companies beyond what is currently reflected in the existing conglomerate, for the benefit of all stakeholders.”

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