How the Battle Between FedEx and UPS Affects Your Business

T Nguyen

August 02, 2012


Whether you are a business that frequently ships parcels all across the country or an individual shipping small parcels to people in your state, you’re most likely to be using one of two major shipping forces - UPS and FedEx.  They have both controlled and been a part of a long-standing oligarchy in the small parcel delivery services industry with few competitors in their way.  For businesses, this oligarchy set-up has meant only really one of two choices to ship their wares to customers along with increased rate hikes and penalties at the whims of these two companies.  However, this past year has been a much more aggressive one for the companies with new acquisitions and possible defections.  Here, we’ll review the most recent news thus far and their possible implications on your business and shipping.

UPS on it’s end has been having a fairly positive year thus far.  Overall, they had a slightly larger gross year-over-year (currently at 5.3%) and a high dividend yield (2.8).  Not only have they been profiting well this year from general shipments but they finally completed their acquisition of a major shipping force, TNT Express, to boost their international shipping with more than 30,000 trucks and planes in over 200 countries - a healthy competitive boost that will continue to boost their international output.

FedEx, on the other hand, is having a bit more of a difficult year comparatively.  Their year-over-year gross is at 5.2%, close to UPS’ percentage, but the rest of their metrics are far off from their main competitor.  Their dividend, for instance, is only at 0.6.  Even worse, one of their biggest partners, the USPS, has announced that it will seek actual bids rather than a usual renewal, which could potentially result in a loss of aircraft and assistance in shipping overnight and other types of shipping that was once easy and affordable to the team.  For businesses, these developments mean that businesses need to be wary of any slight changes and acquisitions or losses from either company that could highly change future rate hikes or shipping restrictions.

Here at Source Consulting, we have experienced staff continually researching the latest development with FedEx and UPS.  Their research and knowledge allows them to give Source customers the best analytic information and ways to proceed in saving money from shipping costs.  More UPS and FedEx news is expected to happen over the course of the next few months into 2013.  Stay updated with Source on our Facebook, Twitter and/or blog for all the latest news and tips in how your business can stay on top.

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