UPS and FedEx customers regain upper hand in delivery price battle
© Reuters. FILE PHOTO: A worker clears debris so delivery vehicles can exit a FedEx Ground distribution center in this aerial photograph taken over Carson, California, U.S., September 16, 2022. REUTERS/Bing Guan/File PhotoLOS ANGELES -U.S.
UPS in a statement said it is not using discounts as the sole way to win back business lost during its contentious Teamster contract talks this summer. The world's biggest parcel delivery firm added it is using price negotiations to encourage attractive high-margin or high-volume customers, while discouraging high-cost deliveries.
While deals vary widely between customers, shippers generally are reaping savings of around 8%-12% from their previous agreements, said Mark Taylor, senior director of transportation consulting at Korber Supply Chain. Those discounts are similar to what companies saw pre-pandemic. Third quarter ground delivery rates are forecast to fall 0.55% per package versus a the year earlier period, according to the TD Cowen/AFS Ground Pacrel Freight Index.
The demand downturn hit FedEx earlier and harder than at UPS, pricing advisers said, prompting it to begin discounting sooner and more aggressively than UPS. FedEx has said it can keep the roughly 400,000 packages per day it added during the UPS talks without lowering prices.
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