Resource Center/Article • 02/22/2022
Working Smarter: Carriers Target Efficiency Opportunities
Parcel and LTL carriers remain focused on the next frontier of shipping and continue to invest in process automation and improvement.
PARCEL CARRIER NEWS
FedEx
- ???? The carrier received its first fleet of “all-electric, zero-tailpipe emissions” delivery vehicles from manufacturer, BrightDrop. The fleet are the first five of 500 all-electrical BrightDrop vehicles purchased by FedEx. The vehicles are notable for:
- Powered by: GM’s Ultium battery
- Estimated range: Up to 250 miles
- Cargo space: 600 cubic feet
- ???? Speaking of these all-electrical FedEx vehicles, the carrier used one to deliver the Vince Lombardi Trophy for Super Bowl LVI, with SenseAware® monitoring technology. The carrier’s “all-electric, zero-tailpipe emissions” delivery vehicle became part of Super Bowl history this week – delivering the Vince Lombardi Trophy (notable for being handcrafted by Tiffany & Co.) across the country from New York City, NY, to Los Angeles, CA. FedEx spared no caution, utilizing their SenseAware® technology for real-time container condition reporting, such as temperature, light detection, humidity, and more.
- A FedEx staff shortage caused by COVID-19 variant, omicron, interrupted Domestic FedEx Express Freight services during peak season. Interrupted services included Two-Day and Three-Day Freight. The carrier’s International Economy Freight had previously been impacted by similar staff shortages from the variant.
- ???? The carrier announced a new partnership with Microsoft to offer “Logistics-as-a-Service” product for “retailers, merchants, and brands”. The concept is to utilize a combination of artificial intelligence, machine learning, and customer Big Data, to help retail customers self-identify faster or more efficient delivery options. Of course, the partners anticipate increasing and long-term benefits for shippers – who will gain increased consumer data, while also being able to offer real-time shipment updates and more convenient returns (including printerless returns) to their customers.
- And while we’re discussing FedEx Big Data, the carrier has other plans to do more with its rich data mine. For example, what if the carrier could use its estimated 17M daily package scans to help better understand demand and predict the most efficient sort center to inject a shipment for the fastest on-time delivery?
UPS
- The carrier once again reported positive earnings at its latest Quarterly Earnings Call (for Q4 2021). Notable highlights include:
- Leadership quotes from CEO Carol Tomé
- “…Not only did our team once again provide industry-leading service during peak, but over the last year, we delivered 1.1 billion COVID-19 vaccine doses, with 99.9% on-time.”
- “The external environment is challenging due to the ongoing impacts of the pandemic, labor tightness, upstream supply chain jams and rising inflation. But inside our better, not bigger framework, we are maniacal about controlling what we can control. We are laser-focused on improving revenue quality, reducing our cost to serve and allocating capital in a disciplined fashion.”
- “...results exceeded our expectations, driven by improved revenue quality across all three of our business segments and significant gains in productivity…the highest quarterly operating profit in the company’s history.”
- “…full year 2021, our business delivered record financial results…”
- “In 2021, our SMB average daily volume grew 18% and represented 26.8% of our total U.S. volume, putting us on track to achieve our 2023 target of more than 30%. Our digital access program, or DAP, makes it easy for SMBs to access UPS services, and it’s an important driver of our SMB growth.”
- UPS Q4 2021 Earnings
- Revenue up 11.5% or $2.9B
- U.S. Domestic revenue up 12.4% or $2.0B driven by a 10.5% increase in revenue per piece
- Operating Profit $3.9B up 91.0% or $1.9B
- Operating Margin expanded to 14.0%; 580bps (5.8ppts) YOY
- Net Income $3.1B up from year ago Net Loss of $3.4B
- Note: Q420 Pension costs of $6.1B
- Diluted EPS $3.52; adjusted Diluted EPS up 35.0% over last year to $3.59
- Declared Quarterly Dividend $1.52 per share up 49% YOY
- Revenue up 11.5% or $2.9B
- UPS Full Year 2021 Earnings
- Revenue up 15.0% or $12.7B
- U.S. Domestic revenue up 12.7% or $6.8B
- Operating Profit $12.8B up 66.7% or $5.1B
- Operating Margin 13.2%; up 410bps (4.1ppts) YOY
- Operating Margin exceeding revised target of 13.0% by 20bps or 0.2ppts
- Net Income $12.9 up 860% or $11.5B from a year ago Net Income of $1.3B
- Note: Q420 Pension costs $6.1B
- Note: Q121 $3.6B Pension Mark to Market adjustment
- Diluted EPS $14.68
- Adjusted Diluted EPS $12.13, excluding the impact of the MTM (Mark to Market) pension gain and transformation and other charges
- Revenue up 15.0% or $12.7B
- UPS Full Year 2022 Forward Outlook
- UPS expects to deliver its 2023 consolidated revenue and operating margin targets one year early
- Revenue $102B
- Operating Margin 13.7%
- Adjusted Return on Capital >30%
- Capital Expenditures expected at 5.4% of revenue or ~$5.5B
- Dividend Payments ~$5.2B
- ShareBuyback of at least $1.0B
- Leadership quotes from CEO Carol Tomé
GRI & SURCHARGES
- LaserShip
- ⛽️ LaserShip increased its fuel surcharge index by 1.0% effective February 1, 2022. This increase followed a 1.0% increase December 1, 2021, a 0.75% increase September 1, 2021, and a 0.25% increase August 1, 2021. See all LaserShip Surcharges.
LTL Carrier NEWS
- ???? During Q4 2021, TForce Freight saw a 60% YOY profits increase, bringing in $2.1B in revenue. What’s more, the company saw an all-time low operating ratio after its parent company, TFI International, acquired UPS Freight, setting TForce Freight on a path to seek out new efficiency and optimization opportunities to improve company outcomes. According to TForce Freight’s CEO of U.S. LTL Operations, Alain Bédard, one of those opportunities is for their drivers to drive less, and carry more freight. “Drivers, they like to drive. … Me, I like to pick up freight,” said Bédard, “So we have a disconnect. So what we want to do is have our P&D guys drive less miles and pick up more freight.”
- ???? After six days of interruption, the busiest U.S.-Canada trade bridge is reopened. The bridge carries important economic ties for both countries, with an estimated “$360M a day in two-way cargoes – 25% of the value of all U.S.-Canada goods trade.” The auto industry in particular has been hit hard by the blockade, with an estimated loss up to $850M and forced Ford Motor Co., General Motors Co., and Toyota Motor Corp. to halt production during the interruption.
- C.H. Robinson Worldwide has reported positive Q4 2021 earnings. Notable highlights include:
- 2021 Net Income: $844.2M, $6.31, on revenue of $23.1 billion
- Compared to 2020 Net Income: $506.4 million, $3.72, on revenue of $16.2 billion
- Leadership Quote: “Within our industry, 2021 will be remembered as a year with some of the greatest disruption and tightest capacity ever seen,” said the company’s president, Bob Biesterfeld, “For me it will be remembered as a year in which the global supply chain was at the forefront of conversations, and where our organization effectively helped our customers and carriers navigate the unprecedented level of supply chain disruption.”
- Saia, Inc. has also reported positive Q4 2021 earnings. Notable highlights for Saia include:
- Revenue: $617.1M (+29.5% YOY)
- Operating Income: $97.4M (+92.3% YOY)
- LTL Revenue per Hundredweight grew 19.6% YOY
- LTL Revenue per Shipment grew 28.4% YOY to $317
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