Controlling Shipping Expenses in a Carrier’s Market Author: Nathan Wheadon
December 17, 2020

If your business relies on UPS & FedEx, chances are your ‘spidey’ senses are tingling.

With demand (packages needing to be shipped) far exceeding supply (UPS’s and FedEx’s ability to deliver packages while honoring service guarantees), limited options, and a lack of competition, the small parcel industry is in the throes of a carrier’s market.

With this year’s series of unfortunate events, demand has exceeded supply, for a number of reasons:

  • More consumers are making purchases online in a much higher quantity than ever before
  • Global supply chains have been pushed to the brink causing carriers to adapt to an ever-changing environment
  • As consumers move from commercial to residential locations, more packages are being delivered to residential addresses, resulting in longer delivery times and a higher cost per package

As a result, both carriers have responded by implementing higher rates and new surcharges.

All things considered, it’s a perfect storm for UPS and FedEx. They’ve never had more of an advantage, and it shows.

Let’s recap.

This year, both carriers have:

  • Waived all service guarantees
  • Eliminated a shipper’s ability to file for late delivery credits
  • Introduced several mid-year surcharges
  • Banked record profits

It doesn’t stop there. Both carriers are weeks away from rolling out their rate increases for 2021.

Get your free general price increase report here or click the image below.

2021 Lojistic GPI LinkedIn

Here’s something else to add to our “we’ve never seen that before!” list: the carriers have taken a brazen approach in their communication and response to their customers. They’re operating with complete impunity, which creates a big problem for most shippers.

Here’s just one example of an email we received from a Client after they spoke with their FedEx rep (click here or the image below to view a larger version in your browser):


Wow, right?!?

If you’re feeling powerless, frustrated and angered by the carrier’s arrogance, you certainly aren’t alone.

Here’s what you need to know: your carrier is armed with more information about your shipping characteristics than you. That’s why every carrier agreement is customized and it’s how they’re able to structure your contract for maximum profitability (for themselves). Even if they concede on a discount in one area, they know where to recoup profits elsewhere.

Right now, the carriers are using current global events to make shippers feel like they have no alternatives to exorbitant costs. They’ve even gone as far to say that money-back guarantees could be a thing of the past and are using this rationale to insert money-back guarantee waivers into all new service agreements.

What happens when a shipper asks for the money-back guarantee waiver to be removed? In the carrier’s words “be careful what you wish for” because that could mean a worse discount for your business.

Idle threat or foreshadowing of more things to come?

Don’t wait to see. There’s a solution for pushing back against ballooning costs and deflated service experiences. And it starts with Lojistic.

With your Lojistic account, you can level the playing field by operating with the same level of information as your carrier. It’s the path to eliminating overspend, paying less, and balancing the lopsided relationship you have with one of your most important vendors: UPS and FedEx.

Information is the great equalizer in parcel shipping.

Create your free Lojistic account today or login to your Lojistic account to see how much you stand to gain. On average companies identify 9.2% - 14.4% in shipping overspend using Lojistic.

If you need help diagnosing the severity of any issue you’re facing, uncovering cost savings opportunities or identifying inefficiencies within your shipping ecosystem, we’re happy to discuss your savings potential.

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