Logistics Trends & Insights LLC

I missed reporting on the USPS' annual earnings report last week while I was at the TIACA air cargo event but, here you go....with a focus on the UPS contract - My Cargo Facts column - USPS reports another loss as UPS takes over USPS air contract https://lnkd.in/eCD5cwcN Per my column: While details of the USPS- UPS deal were not made public, the UPS Q3 10-Q provides insights. During Q3, revenue attributable to volume gains from USPS increased $111 million. Year to date through Sept. 30, revenue attributable to USPS increased $38 million, due primarily to air cargo volume growth in Q2 and Q3, which “more than offset lower volumes in the first quarter.” “We expect revenue growth will continue in the fourth quarter, as the air cargo volume under our agreement is now fully onboarded,” according to the 10-Q filing. Meanwhile, ?FedEx CFO John Dietrich said at the Baird Global Industrial Conference early in November, “We’ll continue to look for opportunities for the capacity that’s been released to us, particularly in the daytime network that largely serves the Postal Service business to adapt that network to our liking and not necessarily the customer’s liking." Check out the rest of the column and other Cargo Fact articles (https://cargofacts.com/) - It looks like they are offering a nice end-of-the year special subscription rate. ?? For example, a very good article from Robert Luke - Air T-owned carriers grow FedEx Feeder fleet to 106 https://lnkd.in/edMApBZa And from Jeff Lee - FedEx places 5th SkyCourier with Corporate Air https://lnkd.in/eGQnuXs8 Cathy

Yesterday I drove up to Spartanburg SC to visit my Aunt. I-85 was packed with trucks, northbound and southbound - It was good to see - I was told many years ago by a former trucking executive that more trucks one sees on the road, the better the economy. Because I was on the road, I missed several retailer earnings calls. In particular, Walmart. Per Walmart's earnings transcript: "As we scale our store fulfilled delivery business and expand our catchment areas, we've seen significant improvement in batch density with orders per delivery up 20%. In addition, the popularity of expedited delivery has resulted in more than 30% of orders coming from customers and members that elected to pay a convenience fee to receive their delivery in less than 1 hour or less than 3 hours." John David Rainey - CFO "And lastly, we continue to make progress in the automation of our supply chain, as now more than 50% of our fulfillment center volume is automated, which is twice as much at this point last year. This has the obvious benefit of lowering the per unit cost of delivery. These factors contributed to the third consecutive quarter of approximately 40% reduction in U.S. net delivery cost per order." John David Rainey - CFO Key takeaways for me: Density, automation and customer willingness to pay extra for expedited deliveries. - These are success factors for all (retailers and last mile carriers) to strive for. For more: CNBC - Walmart hikes its outlook again as shoppers spend more outside the grocery aisles https://lnkd.in/gRGBKgzS WSJ - Walmart Earnings: Holiday Shopping Is Off to a Strong Start https://lnkd.in/efB57ppj Bloomberg - Walmart Raises Outlook on Strong Spending From Value-Seekers https://lnkd.in/eJzcZwYu - Cathy

The third annual Reverse Logistics Startup Competition will be held during RLA's annual conference in March. https://rla.org/event/330 Interested in learning more in participating in the pitch competition? Details are available here - https://rla.org/page/42 and/or you can contact me at [email protected]. I hope to see you there! It's a great conference for reverse logistics! Cathy

A few tidbits from FedEx’s CFO, John Dietrich at the Baird Global Industrial Conference https://lnkd.in/e5sDjEXU Among the learnings from FedEx’s Network 2.0/ One FedEx integration in Canada was that Dietrch noted that its contractors have more time definite versus day definite packages. In regard to market capacity Dietrich said that much of the excess capacity is attributable to the USPS. “There's a lot of excess capacity there. What I can say from FedEx standpoint is we monitor our capacity on a regular basis. And especially for peak season, we're prepared to take on that volume. And as we get beyond peak season, we'll be monitoring that and making adjustments as needed, both plus and minus.” In addition, Dietrich said, “We're looking at what we've said is somewhat below typical seasonality for Q2 because of the shift in Cyber Week from Q2 to Q3. We have identified, we do have some headwinds with the expiration of the Postal Service contract. We'll start to feel the effects of that on a monthly basis, more significantly in Q2, and then that should ease through the year into Q4. On a quarterly basis, we'll feel more of the impact of that.” Question - When you think about the volume growth outlook, especially your focus on profitably growing your business. What does the slope of that line look like? What do you think are some of the longer-term growth drivers on the volume side? Dietrich: “Yes. Well, as I said, industrial production, we expect will be a contributor. I think it's a matter of when, not if. So we'll be well positioned, as I said, for that. E-commerce is going to make up a large percentage, probably up to 90% of the volume growth that our ground network and our freight business will be the beneficiary of. So can't ignore that, that volume is going to be there, we just have to find the right cost structure to accommodate it.” LTL Market: Dietrich: “There's plenty of capacity in the marketplace for sure. And I think you're seeing some of the heavier freight go over to the truckload business that has a lot of excess capacity. So we're continuing to take a disciplined approach, focus on revenue quality and manage our capacity until we get to a point of return of volumes. You're seeing volumes are softer as well as the kind of weight per shipment is down slightly, roughly 3%, but we're seeing a 5% improvement in the per hundred weight.” Dietrich: “Freight plays a role and particularly in peak season provide some extra capacity during the peak season, and we'll continue to do so. Freight also does a lot of drayage for FEC. So yes, it's a very complementary relationship, and I expect that to continue.” Dietrich: “We said that we expect that assessment [of FedEx Freight] to conclude and expect to announce the outcome of that assessment by the end of the year.” Happy Monday! -Cathy

This week's top news items that I see as part of longer trends. ? Drayage Rules Kuhne + Nagel acquired a 51% stake in?IMC Logistics, a marine drayage provider in the US. IMC specializes in comprehensive end-to-end transportation solutions to or from seaports or rail hubs, customer facilities and inland in the US. Press release - https://lnkd.in/ga3fgGnG The Loadstar – Kuehne CEO Paul’s fingerprints on IMC buy – Next drayage deal please - https://lnkd.in/eZK-ikgp ?? Gloomy Ports Canada’s Industrial Relations Board (CIRB) ordered operations at the Port of Montreal to resume as of this morning. On Tuesday, Vancouver in British Columbia & Montreal in Quebec were ordered back to work citing economic damage & the potential for driving away trading partners. https://lnkd.in/e7URc_uD JOC - BC, Montreal ports set to reopen under orders from Canada’s labor chief https://lnkd.in/e2E3E6jP The Maritime Executive - Canadian Unions Plan Court Challenges to Arbitration Ending Port Strikes https://lnkd.in/erbtUjTT Meanwhile, the ILA walks out of negotiations JOC - ILA breaks off contract talks, accuses USMX of semi-automation push https://lnkd.in/eN7AWVmg Logistics Management - ILA and USMX continue Master Contract talks, but major sticking points remain on technology and automation https://lnkd.in/eeDHuG-P ?? Postal Woes USPS reported a $9.5 billion net loss for fiscal 2024, despite year-over-year growth in revenue and a reduction in its controllable expenses. The agency saw a $6.5 billion loss in FY 2023. USPS delivered about 86% of first-class mail on time in FY 2024, according to its service performance dashboard — down from 91% the year prior. https://lnkd.in/eMqtJqyK Press release - https://lnkd.in/eCii5YbG Meanwhile, 55,000 Canada Post employees began a strike yesterday. ?The Canadian Union of Postal Workers (CUPW) announced the action following a year of stalled negotiations over wages, safety, and its members being replaced by technology. https://lnkd.in/eh3YMBSN Transport Topic - Workers at Canada’s National Postal Service Go on Strike https://lnkd.in/eTM4J9Kr Happy Saturday! - Cathy

One more share from the TIACA conference - “So we very, very rarely ever have to choose between an Amazon package & an air cargo package because of that density, because of that flexibility..." said Tom Bradley, general manager of Amazon Air Cargo at TIACA. I can't tell you how many times we argued with UPS Air when I was in the airfreight forwarding group at UPS over this issue. It was a constant battle over what was priority (usually parcels). Anyway, check out the rest of the story from Freightwaves' Eric Kulisch - Amazon promises equal priority for third-party air cargo, own parcels https://lnkd.in/easpx3eZ - Cathy

Final day here at the TIACA conference with my session being the last one. ?? If you guess ecommerce as the topic of my session, you're correct! We'll be discussing the platforms (Temu, Shein, Alibaba etc) impact on airports, air cargo and the tech that is being used to bring everyone together. In the meantime, here is my Cargo Facts column on the first day's industry leaders' roundtable discussion - https://lnkd.in/eTkNAE5c Also, key findings from the latest Boeing Outlook report were discussed in a separate session (see image below - Freighters now carry more than 50% of cargo). For more, download Boeing's report here - https://lnkd.in/etw6qmvc Check out Cargo Facts' Yael Katzwer's article on the Boeing report - https://lnkd.in/eVixUxeW And, not to be out done, Airbus also produces its own outlook. Download its report here - https://lnkd.in/erfuk_V5 Cargo Facts' Robert Luke writes on the Airbus report - https://lnkd.in/erfuk_V5 - Cathy

Alot of conversation around e-commerce yesterday at the TIACA conference. But if you take e-commerce out, all you have left is a rather muted air cargo market - there may be a few exceptions, of course, but how sustainable is the e-commerce demand for air cargo? how profitable is it for air cargo providers? I have my doubts on the current sustainability but as companies continue their digitalization plans, B2B e-commerce could replace the current B2C trend. If so, what does that mean for those companies that have not digitalized? Is the air cargo market truly prepared? Stay tuned. I'm working on today's Cargo Facts column which will cover some of these questions. In the meantime, check out the chart below from the Boeing Outlook presentation. It shows air cargo up 13% from 2023 and up 8% from 2019. - Cathy

After a few mishaps at the Miami airport, I made it to the hotel and am now getting ready for a full day of TIACA sessions, reconnecting with folks and connecting with new folks. I'll be taking notes along the way and sharing here, probably the Freight Forward and my Cargo Facts column (tomorrow). Checking out the conference agenda, it looks like e-commerce will be a hot topic (besides my session ?? ). For more on the conference: https://lnkd.in/dXdKPUtv

Thank you. ?? A brief history of Veterans Day can be found here: https://lnkd.in/dtFCEjH6