UPS and Fedex increasing rates by 4.9% for 2010

In the latter part of November, 2009, UPS announced their new rate schedule for 2010 and with it an increase of 4.9% on ground rates. As is the usual relationship between Fedex and UPS, Fedex followed suit on Dec 3, also announcing a 4.9% increase on ground and home deliveries.

This is a whopping increase since a huge portion of these companies' earnings are from the domestic ground market in the U.S.A. Shippers should pay particular attention to the accessorial charges as well since these have also been revised and increased by both UPS and Fedex and may in fact add on an additional $2-$10 dollars per delivery.

As usual with press releases, it 's not made clear whether those shippers with special prices /contracts in place will suffer this increase or will have to re-negotiate but the trend with all logistics companies is that a general rate increase will affect everyone with few exceptions.
Below are the links to the websites
UPS Rates - 2010 Rate Change Information

Fedex Rates 2010

DHL Express goes Green for Canada

Second Review Business Analysts

India Doorstep Trade Service offered by DHL and Standard Bank

In order to save time and administration, DHL Express India and Standard Chartered Bank has launched a Door Step Trade service in those regions that have a concentrated amount of exporters utilizing finance services. No longer will documents have to be couriered to the bank's Foreign office, the documents just have to be scanned by the DHL driver and they will be transmitted directly to the correct office.

I would assume this service will have to be paid for and may only be offered to certain customers however, it is quite innovative and is designed to cut time and red tape in the export finance segmet of logistics. Read full article

Fedex continues to boost it's Asia presence

With DHL, UPS and TNT dominating courier and distribution in the Asia Pacific rim, Fedex has finally made their move to improve their infrastructure and offer upgraded business services to European locations. Lagging behind the other three in brand name recognition by the majority of users in this part of the world, Fedex hopes to boost their presence and hopefully trespass on the DHL/UPS/TNT market share. Read More

FedEx boosts Asia – Europe connection with next-business-day service

UPS Still in the Slow Lane

In 1999, UPS went public and the public as well as private sectors bought in. Now with after 40 acquisitions and large investments in China as well as the 3PL, they have, closed the perceived gaping holes in their global profile. Focusing on Supply Chain and Distribution networks in the last ten years, as well as business services such as the UPS Store, they have come a long way from being just a courier.

It is probably the most well established courier/business logistics company in North America. They are a freight forwarder as well, but these services seem to have been somewhat neglected since forwarding freight requires reliance on extra-company resources such as steamship lines, containers, and airlines. UPS of course is an airline, however they do not commit their aircraft to the normal every day forwarding as their craft have a very high revenue to cost ratio, that only courier revenue provides.

Freight Forwarding also requires an element of entrepreneurship and creativity at the desk level, as there are many milestones of the shipment and conditions that are varied and uncontrollable. It may well be that UPS with it's tight structure and organization of human resources does not lend well to this type of flexibility exercised by employees.

Having a significant part of the North American and global market share for small package and supply chain, they may have reached their saturation limit and this could be an affect on their share price. There is still much work to do for them however especially in the area of forwarding globally, those cargoes that are dependent on extra-company assets, vehicles, ships, aircraft to move.

Gathering the talent is not that hard, since they have the resources and deep pockets to pay for it. Making inroads into the market share of KN International, DB Schenker, Panalpina, DHL Global and many others is the real task and......it can't be done by a fancy commercial.

Recent article discusses UPS's weakness and strengths. At the end of the day, this huge company is still a very strong organization and a viable stock to buy.

newsworthy: Ten years after IPO, Big Brown still trying to deliver – DC Velocity

Posted using ShareThis

Dr. Frank Appel - DHL interview

DHL has not really had a nice time in North America, not for their courier division and not even with their acquisitions of Airborne, Danzas, and Exel. Dr. Appel addresses the mistakes made by the Group in not retaining local management of these companies. Faced with the strong presence of UPS and Fedex, their brand, and their central customer service operations, DHL was unable to establish superior service, customer loyalty or become a registered american airline.

In a recent article from Forbes, the CEO Dr. Appel provides his thoughts on the future strategies of the company. Considered one of the main movers and shakers of the global Logistics industries, he is surprisingly humble in that he does not profess or lecture but actually gives his honest opinion.

"Part of the German postal monopoly, mighty DHL, which celebrated its 40th anniversary last month, lost 1.69 billion euros on revenues of 54 billion euros in 2008. Much of that was due to a bungled foray in North America, where DHL sought unsuccessfully to take on rivals Fedex and UPS." Read more.....

Best Courier

Any company that calls themselves best as their company has to have a lot of confidence and hutzpah. At the very least I can do is post their link here.

Green ambition -UPS tries a one up on Fedex

This is an excerpt from Climate Biz, a website that reports on companies and issues relating to the green solutions.
"Last week, as soon as I sat down with UPSers Scott Wicker, who runs the plant engineering group and oversees sustainability, and Lynnette McIntire, director of global reputation management, to talk about UPS's new sustainability report, they made a point of telling me that UPS is doing a more thorough job of measuring its carbon footprint than FexEd and that UPS runs a more efficient, and therefore less polluting, fleet of aircraft than its rival." Read more...

Courier Wars

Latin American Logistics came up with a fairly good article on the fight for supremacy by the world's couriers.

"All four companies have been vying for global domination of the Logistics Market, but over the last 10 years this struggle has intensified with a systematic stream of acquisitions. Deutsche Post World Net (DPWN), DHL’s parent company, has bought more than 50 companies, mostly in Europe. UPS ever since it went Public has gone on a shopping spree to fill out its Air Express capabilities, FedEx mirrored this move by acquiring ground transportation brands. This break neck speed of expansion and determination to service the entire supply chain along the most important trade lanes shows no sign of abatement." Read more...

Couriers – why they dominate the logistics scene

The initial flourish

Several lessons can be learned from the strategic policies implemented by couriers by their collective response to the changing face of business practices, “just in time” deliveries, and rapidly changing IT technology.

Having gained market exposure and enormous growth in the small package and document transfer industry by providing very fast transit times and super competitive rates, the couriers had phenomenal growth and a massive cash flow injection starting in the 1980’s and 1990’s.

These were the days however of fax transmission, and much slower computers, where companies were dependant on physical transport of their company printed matter and internal documents not to mention samples.

Distribution warehouses existed as their own 3PL entity but for the most part were dedicated to large operations that could drive a single facility, support it and make a tidy profit due to the massive volume of transactions and the ability to economize to scale. Little or no attention was paid to the company that required a smaller distribution service which resulted in the small to medium sized companies turning to couriers.

Freight forwarders served the general cargo industry but would not and could not compete with couriers as their minimum costs door to door were double or triple the cost along with indefinite time guarantees.

These were the ideal conditions for couriers to flourish. Meanwhile rapid advances in IT, tracking and logistics software and the internet were impacting the everyday supply chain solution.

The Challenge

With email transfers, company intranets, websites, powerful software and computers, the need for document transport by courier and post declined quickly eating into the core of their business revenue and service. Couriers had to start relying on slightly larger shipments for their revenue; however for anything more than 20 Kgs, their rates were no longer competitive, driving their clients towards the forwarders.

Steamship lines drastically reduced their consolidation services causing a flood of Freight Forwarders offering LCL and air consolidation services. Competition became aggressive and drove pricing down to the lowest levels allowing the small /medium sized companies to ship and store smaller inventories at the freight forwarders’ warehouse for effective pricing. “Just in time” was starting to die.

Advances in lower cost IT and software allowed forwarders to compete with the couriers’ systems of tracking, online booking and quote requests, eating away at the couriers’ “value added service” advantages.

The Logistics Manager became a professional entity. An expert in shipping, managing costs and assessing supply chain needs the logistics guru was an increasingly valuable asset to companies and they started to hire more of them instead of assigning logistics to the purchasing department. Their transportation system now had a guiding hand and a watchman on the needs vs. cost strategies.

This re-examination of companies’ supply chain led to an economization to scale by global shippers. Couriers did not fare well as traditional airfreight shippers changed their inventory strategy and turned to ocean or road transport.

The Reaction

Traditionally, sales efforts and marketing focus was towards the business community, the couriers decided to aggressively chase the consumer market as well in a catch all attempt to increase their brand awareness. They were aware that the everyday man or woman whether an accountant or a historian still has a need to ship something. Grandma does too. Unafraid of focusing their advertising budgets to television, print, sponsorship, charitable activities, their efforts were largely successful.

As organizations were driven to outsource, reduce their overhead and gain efficiency, the one stop shop strategy gained popularity. Fast implementation was the key and it was not necessary to re-invent the wheel, just to integrate it. UPS bought Fritz. Deutsche Poste bought DHL ,Exel, Airborne and Danzas. Fedex bought several more such as CJ Towers. Couriers now owned major freight forwarders, business supply centers, distribution and 3PL operations capturing the services that had previously impacted their bottom line. They did very well with the “ if you can’t beat them, buy them” strategy.

As airlines reduced their cargo capacity, fragmented their service, encountered financial strain and basically focused their customer service on passenger travel, the standards on cargo transport and rates were no longer acceptable to the major couriers and they themselves became airlines. Control of core assets such as airlines and trucks was vital to a company whose number one service was based on time definite deliveries. This move did more to strengthen the trust and credibility by the consumer/business community than anything else as it solidified the courier’s infrastructure and ability to deliver on their promise.

Summary

UPS, DHL, Fedex have all implemented this strategy, in different stages and not without challenges. Yet today, these companies dominate world airfreight shipping volumes and control much of the global transaction count.

A testament to diversification and continuous investment in branding, core assets and the one stop shop.


Gloria Rubaine
Second Review Business Analysts
Http: www.secondreview.ca
Email: info@secondreview.ca