parcel rate outlook 2009

2009 Parcel Outlook

Jerry Hempstead407-342-3825

gmhempstead@aol.com

Let the pains begin

• ATLANTA, Oct.17, 2008 - UPS (NYSE:UPS) today released new list rates for 2009, including an average increase of 5.9 percent for UPS Ground packages and an average net increase of 4.9 percent on all air express and U.S. origin International shipments.

• UPS Freight announced a general rate increase of 5.9% for 2009.

• The rate increase for air express and international shipments is based on a 6.9 percent increase in the base rate, less a 2 percent reduction in the air and international fuel surcharge index.

2009 Largest announced increase in recent history

The Good News About Fuel

Some Bad News about Fuel

2009 Air

2009 Ground

More Important – MinimumsLets pretend a 35% Discount

A

D C

B

So what does it really mean to that shipper

For most of the business an 8.81% rate increase

A

C

B

Accessorial Creep

And you pay the Fuel Surcharge on these accessorial charges

NEW AND IMPROVED 19,252 Rural and Super Rural zip codes now have a new premium charge added. This means that the charge for an ‘Extended’ DAS Residential package will increase $0.35 (15.2%) to $2.65.

Saturday & Address Correctionet al

• Address Correction – up $2.00 to $8.00• Saturday P/U & Delivery – up $2.50 to $15• Additional Handling - up $1.00 to

$7.50• Hazmat – up $2.50 to $32.50/$22.50

It’s a struggle out there• UPS Oct. 23, 2008 announcement “Average daily U.S.

domestic volume declined 3.4%, reflecting on-going weakness in the U.S. economy. Air products posted declines of 6.4% and ground volume decreased 2.8%.”

• FedEx Dec 18, 2008 “Total combined average daily package volume in the FedEx Express and FedEx Ground segments was down 2% year over year, as the weak economy reduced demand for shipping services. FedEx Ground average daily package volume was down 1% year over year, as continued growth in the FedEx Home Delivery service was more than offset by a decline in commercial volume. Less-than-truckload (LTL) average daily shipments decreased 2% year over year, as market share gains were more than offset by the weakening U.S. economy.

What's a shipper to do

• Growth at both UPS and FedEx is, for all intents, non existent – They can’t afford to loose any customers

• The DHL incremental business is not putting a dent into the lack of organic growth at UPS FedEx

• The USPS can now be a player. Call them in. • Most shippers are in a “locked in” 3 year or 5 year – I’m

in a contract mindset. • Everything is negotiable – so put your business out to

bid.• An extra set of eyes looking at your invoices can and will

help. www.hempsteadconsulting.com