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.
FedEx Corp. said that, effective late January, it will apply so-called dimensional pricing—rates based on a package's dimensions instead of its weight--to its "SmartPost" service, in which FedEx parcels are inducted deep into the U.S. Postal Service's (USPS's) vast infrastructure for last-mile deliveries.
Separately, Memphis-based FedEx said it will apply a 2.5-percent surcharge on all shipments that are billed to a third party that is neither the shipper nor the consignee. The action would mostly hit large e-tailers with steep shipping discounts that instruct third parties like fulfillment houses and so-called drop-ship vendors to use the e-tailers' account numbers when the e-tailer discounts are greater than the third party's price breaks.
The moves, disclosed late Monday, follow the lead of rival UPS Inc., which imposed both measures in 2015 and 2016, respectively. FedEx also announced on Monday a series of rate increases for 2018 that will push up list prices by 4.9 percent across the company's three main service lines. The rate increases take effect Jan. 1. The other charges, known in the transport trade as "accessorials" because they are considered separate from a carrier's basic line-haul service, go into effect Jan. 22, FedEx said in its online service guide.
On average, SmartPost handled more than 2.5 million packages per day in FedEx's 2018 fiscal first quarter, according to data from SJ Consulting. Not surprisingly, FedEx's 2017 fiscal third quarter, which included the holiday period, showed the highest demand for the service, according to SJ data. FedEx's fiscal year runs from June 1 through the following May 31.
Several attendees at the annual Parcel Forum in Nashville this week said they were not surprised that Memphis-based FedEx plans to impose dimensional pricing on SmartPost packages, because UPS, which has a similar service called "SurePost," has reaped tens, if not hundreds of millions, of dollars of additional revenue through the pricing measure. FedEx was "tired of leaving money on the table and watching UPS take it," said one attendee. Another said that shippers were lucky the change would not take effect until after the pre-holiday peak shipping season.
Under the carriers' dimensional pricing formulas, packages are priced by the higher of either their dimensions or their actual weight. A package's dimensions are calculated by multiplying its length, width, and height in cubic inches, and then dividing the total by a set number, either 139 or 166. For example, a parcel measuring 3 cubic feet—or 5,184 cubic inches—and divided by 166 would yield a dimensional weight equal to a 31-pound shipment, even though its actual weight could be much less.
Except for UPS shipments measuring less than 1 cubic foot—where the divisor is set at 166—both carriers use 139 as the divisor, thus making it that much more expensive to ship bulky items with large dimensions. E-commerce shipments—which compose much of the traffic tendered under the carriers' postal services—are generally lightweight, but are getting bulkier as more goods are sold online. FedEx and UPS already impose dimensional pricing on U.S. air and ground deliveries, as well as on international services.
The companies say dimensional pricing is necessary to properly compensate them for handling lightweight and bulky packages that occupy disproportionate amounts of space aboard an aircraft or ground vehicle. As e-commerce volumes continue to grow, the companies have said they handle a larger proportion of packages with those characteristics, and can no longer price all of them at their actual weight.
The FedEx and UPS last-mile services operate in conjunction with USPS' "Parcel Select" program, which connects local post offices to residential and commercial addresses for local package deliveries. USPS, which is required by law to serve every U.S. address, picks up and delivers at 156 million addresses.
USPS prices the Parcel Select service incrementally, and its low prices have made it very popular with shippers. FedEx and UPS have migrated to it because it enables them to broaden their delivery coverage without the expense of deploying drivers and delivery vehicles to stop at countless residential addresses. However, FedEx, UPS, and Seattle-based Amazon.com Inc., the three largest users of the service, have been mapping plans to more efficiently handle their own last-mile shipments because of the segment's rapid growth. USPS acknowledged in a regulatory filing earlier this year that such measures could divert business from Parcel Select.
USPS, for its part, does not impose dimensional pricing under Parcel Select.
Rob Martinez, CEO of consultancy Shipware LLC, said between 70 and 80 percent of SmartPost packages would be eligible for dimensional pricing. However, Martinez said that FedEx and large users of the service will negotiate concessions in one form or another to avoid most of the pain associated with the pricing scheme. Jerry Hempstead, who runs a consultancy bearing his name, said shippers that have SmartPost discounts and that ship packages weighing less than 10 pounds will still get a better deal with SmartPost than with other FedEx delivery products. The vast majority of SmartPost shipments fall under that weight threshold, Hempstead estimates.
The SmartPost and third-party billing charges are part of a slew of FedEx accessorials announced late Monday. Hempstead said the new dimensional-weight charge, along with the other accessorials, represent a "bold new world of pricing." Being publicly traded companies, FedEx and UPS "have to deliver top-line and bottom-line growth, so each year there are surprises that sting shippers," he said.
Given that the two have a duopoly on U.S. business-to-business parcel traffic, and a strong, albeit not fully dominant, footprint in the business-to-consumer segment, "there is little a shipper can do," Hempstead said
It’s probably safe to say that no one chooses a career in logistics for the glory. But even those accustomed to toiling in obscurity appreciate a little recognition now and then—particularly when it comes from the people they love best: their kids.
That familial love was on full display at the 2024 International Foodservice Distributor Association’s (IFDA) National Championship, which brings together foodservice distribution professionals to demonstrate their expertise in driving, warehouse operations, safety, and operational efficiency. For the eighth year, the event included a Kids Essay Contest, where children of participants were encouraged to share why they are proud of their parents or guardians and the work they do.
Prizes were handed out in three categories: 3rd–5th grade, 6th–8th grade, and 9th–12th grade. This year’s winners included Elijah Oliver (4th grade, whose parent Justin Oliver drives for Cheney Brothers) and Andrew Aylas (8th grade, whose parent Steve Aylas drives for Performance Food Group).
Top honors in the high-school category went to McKenzie Harden (12th grade, whose parent Marvin Harden drives for Performance Food Group), who wrote: “My dad has not only taught me life skills of not only, ‘what the boys can do,’ but life skills of morals, compassion, respect, and, last but not least, ‘wearing your heart on your sleeve.’”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
DAT Freight & Analytics has acquired Trucker Tools, calling the deal a strategic move designed to combine Trucker Tools' approach to load tracking and carrier sourcing with DAT’s experience providing freight solutions.
Beaverton, Oregon-based DAT operates what it calls the largest truckload freight marketplace and truckload freight data analytics service in North America. Terms of the deal were not disclosed, but DAT is a business unit of the publicly traded, Fortune 1000-company Roper Technologies.
Following the deal, DAT said that brokers will continue to get load visibility and capacity tools for every load they manage, but now with greater resources for an enhanced suite of broker tools. And in turn, carriers will get the same lifestyle features as before—like weigh scales and fuel optimizers—but will also gain access to one of the largest networks of loads, making it easier for carriers to find the loads they want.
Trucker Tools CEO Kary Jablonski praised the deal, saying the firms are aligned in their goals to simplify and enhance the lives of brokers and carriers. “Through our strategic partnership with DAT, we are amplifying this mission on a greater scale, delivering enhanced solutions and transformative insights to our customers. This collaboration unlocks opportunities for speed, efficiency, and innovation for the freight industry. We are thrilled to align with DAT to advance their vision of eliminating uncertainty in the freight industry,” Jablonski said.
Global trade will see a moderate rebound in 2025, likely growing by 3.6% in volume terms, helped by companies restocking and households renewing purchases of durable goods while reducing spending on services, according to a forecast from trade credit insurer Allianz Trade.
The end of the year for 2024 will also likely be supported by companies rushing to ship goods in anticipation of the higher tariffs likely to be imposed by the coming Trump administration, and other potential disruptions in the coming quarters, the report said.
However, that tailwind for global trade will likely shift to a headwind once the effects of a renewed but contained trade war are felt from the second half of 2025 and in full in 2026. As a result, Allianz Trade has throttled back its predictions, saying that global trade in volume will grow by 2.8% in 2025 (reduced by 0.2 percentage points vs. its previous forecast) and 2.3% in 2026 (reduced by 0.5 percentage points).
The same logic applies to Allianz Trade’s forecast for export prices in U.S. dollars, which the firm has now revised downward to predict growth reaching 2.3% in 2025 (reduced by 1.7 percentage points) and 4.1% in 2026 (reduced by 0.8 percentage points).
In the meantime, the rush to frontload imports into the U.S. is giving freight carriers an early Christmas present. According to Allianz Trade, data released last week showed Chinese exports rising by a robust 6.7% y/y in November. And imports of some consumer goods that have been threatened with a likely 25% tariff under the new Trump administration have outperformed even more, growing by nearly 20% y/y on average between July and September.