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SUPPLYCHAINSUCCESS

UPS AND FEDEX 2020 – EXPECTATIONS AND OPPORTUNITIES By Mark Taylor

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s the small package industry progresses further into the future, it continues to change. UPS and FedEx have adapted and responded to the ever-evolving environment of e-commerce. Long considered bellwether stocks, UPS and FedEx recognize and adapt

8 PARCELindustry.com  SEPTEMBER-OCTOBER 2019

to the conditions of the US and world economies. As the Great Recession occurred in 2007–2009, shippers sought cheaper options for delivery for online purchases. Postal last-mile services like SmartPost and SurePost grew at a quickened pace, making FedEx’s 2004 purchase of Parcel Direct, rebranded as SmartPost, ready to serve as an answer for less expensive shipping. Fast forward 10 years, and the economic conditions have changed. A change catalyst has entered the picture: Amazon. One word, three syllables, sounds like mover-shaker-disruptor. Amazon’s success, sustained year-over-year growth of 20-30%, and its effects on resetting customer values and expectations, will play out in changes to UPS and FedEx in 2020 and the years to come. Shippers are now asking, “What’s the price of committing to faster (one- to three-day) delivery?” Fulfillment speed is taking a pole position in the delivery strategy race. Based on the buzz-worthy announcements of both FedEx and UPS, we expect both carriers to be delivering seven days a week. Additionally, significant changes are expected in FedEx’s SmartPost service. By the end of 2020, FedEx will be delivering all Smart-

Post packages via Ground delivery drivers. FedEx also burned bridges with Amazon, first announcing the end its Express agreement with Amazon, then Ground. Just how these changes affect the landscape will play out in the next few months, as these major carriers announce their 2020 rates and changes any day now. Three areas are going to play particular roles in 2020: faster delivery expectations, the expansion of network and operations, and postal last-mile service changes. Transit Time Implications As shippers compete with large scale e-commerce like Amazon and Walmart, they must tighten their delivery commitments to compete with these two companies that are e-commerce standard-bearers. It all starts with Ground services. To minimize cost, it’s wise to ship as many packages as possible with a Ground Residential service, then supplement with one- to three-day Express services where necessary. The footprints of one- to three-day transit with Ground vary due to operational and network differences between UPS and FedEx. There are slight differences in the services offered to hit these commitments, including availability of overnight with

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PARCEL September/October 2019  

PARCEL September/October 2019

PARCEL September/October 2019  

PARCEL September/October 2019