parcel rate outlook 2009
TRANSCRIPT
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