UPS Inc. (NYSE: UPS) lost about 5% of its domestic average daily volume, almost exclusively to rival FedEx Corp., (NYSE: FDX) due to shipper concerns over a possible strike by the Teamsters union, according to consultancy ShipMatrix Inc.
ShipMatrix, which compiles extensive data on industry trends and issues, said about 1 million parcels were diverted daily to FedEx in the days and weeks leading up to a tentative agreement announced last Tuesday. The percentage of diversion is based on UPS handling, on average, 18.6 million domestic parcels per day as of the end of the first quarter, ShipMatrix said.
Satish Jindel, ShipMatrix president, said about half of the diverted parcels will remain with FedEx because the prices offered were lower than what UPS would charge.
Diversion to other providers like the U.S. Postal Service, regional carriers and parcel consolidators that aggregate large volumes to induct into the Postal Service’s delivery network was statistically insignificant, Jindel said.
UPS’ 340,000 rank and file now have three weeks to review, ratify or reject the contract on an up-or-down majority vote. Voting ends on Aug. 22.
CUCURBIT
@Tim Kjos
They are not striking at this time. That means your parts haven’t been delayed by the contract negotiations.
Cheap shipping risks occasional delays. You get what you pay for with shipping. Faster options with guaranteed delivery dates might be a better choice when shipping tractor parts for time-critical farming operations.
Malik
Everyone needs to strike.
ka
@Fr8dawg maybe, maybe not. last couple years Fedex announced price increases ahead of ups.
previously they had cloned ups’s percent climb. both corps up 5.8% for example.
last couple years the went first and UPS did the same percent, unless I read it wrong.
if that trend follows we will have to see if fdx picks a number too low for ups to maintain margins.
Tim Kjos
I ordered tractor parts that were shipped UPS before the “strike” and are now stuck in transport somewhere with no idea of when I will get them. If it takes until Aug. 22 to ratify the settlement agreement it will nearly be a month of not being able to use this tractor, which harms my farming operation. This isn’t right, and I think UPS workers ought to take that into consideration because there are likely thousands of others like myself who are waiting on packages now stuck somewhere in a UPS warehouse.
Kim Vasey
Wait until the contract is voted down. Many believe the union leadership gave a huge pension boost to the Central while ignoring other locals.
Fr8dawg
@Midwest Teamster
UPS is about to have a massive reckoning with the costs of this contract combined with a depressed shipping industry – margins are about to plummet over there. FedEx will take all the customers they want to give away with the price increases UPS is about to implement. Fed will Change their route structure to more efficiently accommodate in due time! Better hang on!!
Midwest Teamster
Just heard from locals in a small town where we have a facility that FedEx had offered lower rate to one of their larger customers. This is happening and UPS has been aware of it.
However, FedEx is sending a driver a long distance to do this single pickup and they had to undercut UPS on price, who just use a local package car driver.
If FedEx wants to keep losing money, I suspect Carol will let them.
Don
Why didn’t O’Brien take some of the 39 billion dollars given to the Central Fund over COVD about 38 billion of it not used for the purpose sent and bail out Yellow. The government needs to look at the total monies given to the Teamsters and determine what was used for the purpose sent and have the remainder returned. During the Pandemic almost all companies continued to pay their obligations and did not require any government funds. Perhaps O’Brien can get off his victory tour because in five years or more UPS could be the next Yellow. And he continues to run his mouth over FED EX and does nothing.