More than most companies, FedEx and UPS have had to make big adjustments to their businesses over the past year. For shippers, the most obvious signs of that have been the many fees and surcharges that have come and gone, as well as the temporary suspension of service guarantees.
At the same time, there is plenty going on under the surface with both small parcel carriers. To shed some light on those things, we dug deep into the most recent FedEx and UPS earnings calls to see what else might be of value to all of us.
Here are some notable comments and statistics that were mentioned:
From FedEx:
- The carrier said its expanded 7-day-a-week Ground operations have helped add flexibility to its network.
- It expects demand for e-commerce and International Express to remain high for the foreseeable future.
- December 2020 was the highest monthly total for revenue and profit in FedEx history.
- The company is one year into its Last Mile Optimization (LMO) initiative, which has the goal of increasing delivery density for residential, rural, and deferred packages.
- FedEx delivered nearly 500M packages during the 2020 peak season.
- In January 2021, B2B volume returned to pre-COVID levels.
- E-commerce is driving significant growth internationally, and the carrier plans to continue imposing peak surcharges in that part of the business.
From UPS:
- The carrier saw record profits and operating margins across all segments, with the most attractive markets being SMB, healthcare, and international.
- Its investments in network automation and technology enhancements are driving flexibility and efficiencies.
- UPS expects market demand to continue to outpace capacity supply for the foreseeable future and pricing to remain "firm.”
- SMB volume growth accelerated for the 4th consecutive quarter and outpaced growth from larger customers for the 3rd consecutive quarter.
- UPS saw growth across all geographies, but the Asian growth rate is trending down as Europe is ramping up.
- Saturday delivery coverage will expand to 90% of the U.S. population by October 2021. It is currently at about 75%.
- The carrier’s B2C volume is up 23.8% year over year.
Taken all together, it seems that FedEx and UPS may be seeing the light at the end of the tunnel with regard to the pandemic. Both carriers’ networks are adapting to the “new normal,” and the partial return of service guarantees is a clear sign of that. Stability on their part should enable a more predictable build-up to peak shipping season, positioning small parcel shippers for a better finish to 2021 than last year.
