Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
In addition, FedEx today released its fiscal 2015 first quarter results showing a solid quarter across all of its product
lines. The results exceeded most analysts' expectations and sent FedEx stock soaring more than $6 a share in early trading on
the New York Stock Exchange.
The combined impact of the rate increases and the shift to so-called dimensional weight pricing are a double-whammy for many
customers of FedEx Ground, FedEx's fastest-growing unit. Those especially vulnerable are businesses that tender overpackaged,
lightweight shipments that occupy a disproportionate share of space in a FedEx van. Currently, those shippers qualify for a
relatively low rate even though their goods cube out much faster than they weigh out. Effective Jan. 5, however, they could be
hit with double-digit price hikes unless they can shrink their parcels' cube by using less packaging; FedEx executives said on
an analyst call today that the company is working with many customers to streamline their packaging.
As if ground shippers don't have enough angst, the rate increases on millions of lightweight shipments transiting short
distances will be significantly higher than the average rate hike announced yesterday. For example, the rate for a 1-pound ground
parcel moving between 151 and 300 miles will rise by 7 percent, according to data from Spend Management Experts, a consulting
company. The rate for a 7-pound package moving between 301 and 600 miles will increase by 6.5 percent, according to the data.
Virtually all of the increases above the 4.9 percent average will fall on packages weighing up to 15 pounds; the typical FedEx
Ground business-to-business (B2B) package weighs less than 15 pounds, while the average residential shipment weighs less than 10
pounds, according to John Haber, Spend Management Experts CEO. In addition, the FedEx rates will be higher on shipments moving 600
miles or less, the normal distance of a ground delivery.
The increases don't stop there. FedEx Ground's so-called minimum charge, which is the rate assessed on a 1-pound shipment
moving under 150 miles, will increase by 6 percent to $6.61, plus any applicable fuel surcharge. That increase will mostly affect
larger shippers, according to Jerry Hempstead, a long-time parcel executive and head of a consultancy that bears his name.
FedEx will also hike fees on a broad range of "accessorial" services that are provided beyond the actual line-haul operation.
For example, fees for specialized types of deliveries will increase by 4.3 percent to as high as 16.9 percent depending on the
services involved, according to consultancy Shipware LLC.
The rate increase on traffic moved by FedEx Freight, the company's LTL unit, will be the same as those for its other units, a
departure from past practice, according to Rob Martinez, Shipware's president and CEO. In addition, the effective date for the
FedEx Freight increases will be moved up three months to align with the rate changes in the rest of the portfolio, Martinez added.
In an email, Martinez said the increases were in-line with expectations. Yet he called them "very significant," especially when
combined with the shifts to dimensional pricing. Haber added that many businesses shipping by ground with FedEx and UPS are
"looking at double-digit percentage year-over-year increases" due to the impact of the rate increases and dimensional price change.
SOLID RESULTS
The slew of rate actions came as Memphis-based FedEx released strong fiscal first-quarter numbers before financial markets opened
today. The company reported 24-percent increases in net and operating income, respectively, over the year-earlier quarter. Revenue
rose 6 percent year-over-year to $11.7 billion, the company said.
The numbers were solid across-the-board. FedEx Express' operating income rose 35 percent from the year-earlier period, while
operating margin increased 4.1 percent. Domestic package volume rose 5 percent, paced by an 8-percent gain in overnight and
second-day package volumes.
FedEx Ground's operating income rose 13 percent year-over-year, while operating margins climbed 18.4 percent. The unit's
revenue rose 8 percent to $2.96 billion. Additionally, FedEx Ground's average daily volume rose 6 percent, due mostly to growth
in e-commerce. Revenue per package increased 3 percent because of higher rates and increases in residential delivery and fuel
surcharges.
FedEx Freight's operating income rose 70 percent year-over-year, while margins increased 10.4 percent. Revenue rose 7 percent
to $1.61 billion. The unit's average daily shipment volume rose 11 percent, paced by a 13 percent increase in its expedited LTL
service. Revenue per shipment increased 3 percent.
Frederick W. Smith, FedEx's chairman, president, and CEO, called the numbers an "outstanding start" to the company's fiscal
year. Company executives said it is on track to hit goals from a "profit improvement plan" announced in 2012 that is expected to
add $1.7 billion annually to its bottom line by 2016. Most of the changes under the plan are targeted at the FedEx Express unit.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.