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SUPPLYCHAINSUCCESS

THE CHANGING PARCEL LANDSCAPE: 2021 AND BEYOND By Logan Mullen

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s the seemingly never-ending 2020 finally comes to an end, parcel carriers, customers, and anyone in the supply chain realm are all thinking about what the future holds. Can the national carriers continue to make the rules as they go along? Will customers finally be able to rationally negotiate in 2021? Or does 2021 continue to bring uncertainty and new challenges to everyone involved?

10 PARCELindustry.com  NOVEMBER-DECEMBER 2020

UPS and FedEx have dominated the news in the parcel world in 2020. From the start of this pandemic, both national carriers have played by their own set of rules (such as each quickly enacting indefinite peak surcharges, impacting customers across all industries). That “indefinite” is still ongoing, and it would be a major surprise if it ended prior to the start of the new year. Additionally, both carriers began siphoning capacity from shippers of all sizes by capping the number of packages customers could ship and/or increasing rates, to guarantee packages get picked up. Despite all of this, FedEx and UPS continue to be the most viable options for shippers trying to get their products to consumers in most cases, paving the way for the rich to get richer. Annual and quarterly reports told a striking story in this regard:  FedEx Ground’s average daily volume grew between six and seven percent in 2018 and 2019, but as of the fiscal year end had grown over 11% for 2020  FedEx Ground’s FYQ4 (March-May) revenue grew 10-12% YOY in 2018 and 2019, but over 20% in 2020.  UPS reported Q2 2020 ADV increases (April-June) of over 22% YOY.

Most regional carriers have also suffered the same capacity constraints UPS and FedEx have, being unable to add additional volume into their networks. It has made for a turbulent and unprecedented year. National Carriers in 2021 As 2021 begins, something must give. The carriers cannot expect customers to continue to take rate hikes, pay non-agreed-upon accessorial fees, and have virtually no indication as to when it may end. One key component you should be asking your carrier about is how you can renegotiate your current contract to eliminate uncertainty now and in the future. Furthermore, regional carriers will continue to become a more viable option as UPS and FedEx change the rules and, in some instances, become unreliable. However, in the latter part of 2020, most regional carriers have stayed away from new volume due to capacity constraints. This may change in early 2021. One would assume UPS and FedEx plan to continue this growth as we head into 2021 and beyond. However, if UPS and FedEx plan to continue expanding their networks to accommodate further increases in e-commerce volume, they will need to get back to the negotiating environment that preceded

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PARCEL November-December  

PARCEL November-December

PARCEL November-December  

PARCEL November-December