While Black Friday and Cyber Monday have passed, we’re still in the thick of the peak shopping season – and shippers are now feeling the pinch of UPS’ Peak Surcharges, which were announced in June and went into effect Nov. 19.
But The Wall Street Journal reports that retailers are working around the increases by using FedEx and USPS, or offering delayed shipping to consumers who are willing to wait for delivery. So far, consumer response to that choice has been mixed while retailers like Macy’s offer incentives for opting into delayed shipping.
Given increased shopper expectations for ever faster delivery options, it shouldn’t be surprising customer willingness to wait longer is tepid, Supply Chain Dive says.
As a shipper, are you factoring these seasonal surcharges and coming rate increases into your total cost of goods? Visibility into the effective impact of carrier pricing changes and ways to mitigate them can be at your fingertips now. Get your free impact analysis tailored to your specific shipping profile.
Amazon and Apple Propelling Holiday Season Happiness for FedEx and UPS
FedEx and UPS got off to a great start, posting their best start to November ever in the terms of “purchase intent mentions” – an important early indicator heading into the holiday season, Forbes reports.
Purchase intent, derived from consumers tweeting about sending or receiving packages, the size of the holiday spike historically is predictive of the companies’ stock the next year. This year’s early upswing is likely tied to Apple – which shipped the iPhone X on Nov. 3 and coincided with a record number of single day Twitter mentions for UPS.
Amazon, of course, continues to be a shipping behemoth: it sent 1 billion items worldwide in 2016 and expects even higher volume this year.
Speaking of Amazon and Expedited Shipping…
As Amazon continues to innovate in order fulfillment (think the ubiquitous two-day and even two-hour delivery) it still hasn’t solved the “last mile” challenge – getting packages to the final destination efficiently. The answer, says Loop Capital, is to stop relying on third parties to deliver and return packages. And that means buying FedEx.
“As business-to-consumer shipments (e.g. residential, e-commerce, etc.), which are low margin, have reached a ‘critical mass,’ that’s straining parcel carrier margins and budgets – which hasn’t gone unnoticed by shareholders, who want price increases.”
The report outlines Amazon’s options in the face of their system inefficiencies: do nothing, build its own last mile network, or buy.
Interestingly, the “partner” option of the traditional “buy, build, or partner?” question is omitted. Really, partnering with regional last-mile couriers might make the most sense as they’d likely be willing to provide Amazon better rates than the duopoly in exchange for the major volume boost.
4.9%…Where Have I Seen That Before?
DHL Express announced that its expedited shipping segment will raise 2018 rates in the US by a 4.9% average.
4.9%? That sounds familiar.
Susie Walker is a Senior Product Manager at VeriShip and provides shippers UPS and FedEx impact analyses derived from billions of data points and the industry’s only data science-backed simulation engine.