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Supply Chain Still Future Focused, Economic Concerns Persist

Carriers continue to raise prices planning the supply chain of tomorrow, but what’s around the economic corner?

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PARCEL CARRIER NEWS

FedEx
  • Tue., Jun. 28 – Citing unsuccessful contract negotiations for over a year, FedEx pilots held an informational picket outside the FedEx Express Air Operations Center in Memphis, TN. Chris Norman, FedEx alpha MEC Chair Captain, spoke on a variety of reasons for growing frustration amongst the union, such as a pension plan that hasn’t been updated in 23 years. In a response statement given to ABC24, FedEx stated that they continue to work in good faith to find an equitable solution for all parties involved in the contract negotiations.
  • ✈️ Related: UPS pilots’ union began voting on new contract agreement.
  • FedEx sets its sights on $400M in annual savings with plan to close all data centers and retire all mainframes by 2024. “We’ve shifted to cloud,” said Rob Carter, FedEx CIO, “We’ve been eliminating monolithic applications one after the other after the other…we’re moving to a zero data center, zero mainframe environment that’s more flexible, secure, and cost-effective.”
  • ❄️ Just in Time for Holiday Shopping: FedEx Ground and FedEx Express announces “Picture Proof of Delivery” for residential shipments in the U.S. and Canada. The program is intended to help package recipients more easily find their packages and reduce lost package claims. The service will notably allow recipients to view the photo evidence from the default package tracking webpage, meaning no additional account or login information will be necessary. FedEx is the first national carrier to offer such a proof of delivery to its customer and package recipients. Amazon released a similar program (which does require an account to access) in 2018.
  • FedEx also follows Amazon to Montgomery County, AL, where the carrier is investing $35M into a new 250,000 sq. ft facility that will provide support to its national distribution network. Already in development, the construction is expected to complete in 2023. The new facility will be in close proximity to Interstate 24, an area that Amazon found equally attractive leading to a $100M facility investment anticipated to complete soon.
  • In its latest Q4 2022 earnings report, FedEx displayed strong financial performance across the year. Notable highlights include:
    • Revenue: ⬆7.9% or $1.8B YOY
    • Operating Profit: ⬆6.6% or $0.12B YOY
    • Operating Margin: ⬇0.1% YOY
    • Net Income: $558M, ⬇$1.31B YOY
    • Diluted EPS: $2.13, ⬇69% YOY from $6.88
UPS
  • The UPS pilots’ union began voting on a contract agreement detailing annual wage increases and improved pension benefits on Jul. 12, 2022. For those unfamiliar, UPS pilots are currently operating on a contract extension that will expire Sep. 1, 2023. The proposed agreement would ensure continued UPS flight service through Sep. 1, 2025. The proposal received unanimous support from a six-pilot executive board, but must receive a majority vote from all UPS pilots. The voting process is open until Aug. 3, 2022.
  • ✈️ Related: FedEx pilots’ union picket for new contract agreement.
  • Tue., Jun. 14 – UPS appointed Bala Subramanian to newly created role, EVP and Chief Digital and Technology Officer. Subramanian will report directly to Carol Tomé, UPS CEO, working to “drive more innovative, agile and flexible solutions.” Subramanian notably worked as the Chief Digital Officer at AT&T.

LTL Carrier NEWS

  • Logistics Management (LM) shared a new LTL revenue per shipment chart that highlights just how much LTL carriers are raising pricing this year. Alongside the chart, LM points to a year’s worth of activity that shows how much the LTL market is growing – and what that means for LTL carrier pricing – including a quote from Darren Hawkins, CEO of Yellow Transportation: “Looking ahead, demand for LTL capacity still appears to be strong, with inventory levels remaining below normal and a manufacturing sector playing catch up from supply chain disruptions and a tight labor market.”
    State of Logistics Chart
  • Alternatively, Freight Waves warns carriers to “brace for even weaker conditions than normal,” pointing to a potential economic bullwhip in which retail inventory outnumbers consumer willingness to spend due to recession worries. Is the U.S. economy going to experience a recession this year? According to the Federal Reserve Bank of Atlanta, the recession is already occurring.


 Written by Cam Elliott


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