Volume 29: The Parcel Market (and Weather) Heats Up
Volume 29 Breakdown:?
Every Monday we’re catching you up on the top industry news stories from the previous week. Let’s get into it:
#1 FedEx and UPS fighting over SMB volume
Normalized volume levels have led FedEx and UPS to fight for volumes from small-to-medium sized businesses (SMBs), as they typically are more profitable per-piece than packages from enterprise shippers.
FedEx is promoting the integration of Express and Ground as a development that will simplify operations for SMBs. UPS, meanwhile, is touting their already-integrated network and investments into customer service capabilities. They’ve shared they want SMBs to comprise 40% of their clients.
Meanwhile, other carriers are using newer services to pursue smaller shippers, such as Amazon with Amazon Shipping and the USPS with Ground Advantage.
#2 USPS proposes 25% average rate hike for Parcel Select
The USPS is seeking to increase Parcel Select rates by an average of 25%, according to a proposal filed with the Postal Regulatory Commission.
Parcel Select involves carriers moving a package through much of their network before injecting it into the USPS’ network, usually at the local level for last-mile delivery. The new rate structure would financially incentivize injecting volume further upstream in the USPS’ network.
The new rates are slated to take effect July 14, and will impact key partners like Pitney Bowes and DHL eCommerce. The Postal Regulatory Commission will review the proposal ahead of the start date.?
Evidence suggests the USPS will be flexible with major partners, as they only expect Parcel Select to bring in 1.5% more revenue in FY2025. They also expect the increases to lead to a 2% drop in Parcel Select volume.
#3 FedEx to adjust air network after USPS contract expiration
The end of the USPS air cargo contract will allow FedEx to make massive adjustments to their air network, according to FedEx EVP and CFO John Dietrich.
FedEx Express will continue to offer daytime flight operations, but “will not be as wedded to” them in the future, according to Dietrich, who said they’ll likely will have fewer daytime operations than they did with the USPS partnership.?
“We are going to continue to rationalize the network, and there’s a lot of great work going on in that area,” said Dietrich.
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What is $ Lost from Returns?
$ Lost from Returns refers to how packages returned by customers directly impacts your bottom line.?
Why is tracking $ Lost from Returns important?
Tracking $ Lost from Returns is especially important for eCommerce businesses following peak season. As eCommerce sales go up, in turn, so do returns; this can have a massive impact on your bottom line. Understanding how much you lose from returns allows you to make decisions regarding your return processes going forward (i.e. consider if you need to update your return policies, change prices, or work with third party merchandise handlers).
LeaderShipping Ep. 10: The New Age of Return Management ft. Kyle Bertin
Speaking of $ Lost from Returns… We have a great LeaderShipping episode on eCommerce returns.
In this episode, @Kyle Bertin, CEO and Co-Founder of @Two Boxes, joins @Caleb Nelson to discuss new innovations in reverse logistics, and what better returns management looks like in the future.
Listen if you haven’t already:
Spotify: https://bit.ly/3IMKVOg
Apple Podcasts: https://bit.ly/4aipvnI
YouTube:https://bit.ly/3TqfNZB
More From Sifted
Sifted at Home Delivery World 2024
Home Delivery World is approaching fast - and we can’t wait to be there this year! It is taking place June 5-6 at the Pennsylvania Convention Center in Philadelphia.?
“The best part about these events is getting to talk with shippers face-to-face about what they’re seeing in the market, what challenges they’re facing, and what they’re hoping to achieve,” says Caleb Nelson, Chief Growth Officer at Sifted. If you’d like to meet with Sifted to learn more about our solution, we’ll be at booth #1049 ???
You can read more about Home Delivery World and Sifted’s attendance here: https://bit.ly/3xBcIyD