The Changing Landscape of Parcel Shipping: Consolidation, Discounts, and Carrier Diversification

The world of parcel shipping is constantly evolving, and recent trends indicate a shifting landscape for shippers and carriers alike. In this blog, we’ll explore the emerging developments surrounding carrier consolidation, shipping discounts from major players like FedEx and UPS, and the delicate balance of carrier diversification. Join us as we delve into the challenges and opportunities in the realm of parcel shipping.

Parcel Shippers Optimize Carrier Selection:
Parcel shippers have long embraced carrier diversification as a strategy to manage risk and ensure reliable deliveries. However, experts suggest that the tides are turning. Amid the pandemic-related challenges and an uncertain demand environment, shippers are increasingly considering consolidating their carrier selections.

“Will there be fewer delivery providers in 2024?” is a question that captures this shifting sentiment. With major carriers like FedEx, UPS, and the U.S. Postal Service offering attractive shipping discounts to counteract volume declines, customers find it harder to justify splitting shipments among a wide array of carriers. As a result, smaller, regional delivery providers are facing potential reductions.

Discounts Drive Market Share:
In the battle to secure market share, major carriers, particularly FedEx and UPS, are aggressively offering discounts. In an effort to draw additional volume and revenue into their networks, these carriers have implemented various strategies. For example, FedEx unveiled a small business discount program, allowing eligible shippers to tap into savings. Meanwhile, UPS is fighting to regain lost volume from contentious contract negotiations with the International Brotherhood of Teamsters.

As recently shared in an earnings call, UPS has managed to recapture roughly 40% of the volume it lost during the negotiation phase. However, FedEx maintains a solid grip on the 400,000 packages gained during the uncertainty. Both carriers have capitalized on their efforts to grab a larger share of the volume, particularly during the busy shipping week of Black Friday.

Challenges and Opportunities for Alternative Carriers:
While the discounting efforts by FedEx and UPS pose challenges for smaller delivery providers, experts suggest that shippers are unlikely to abandon alternative carriers entirely. The emergence of third-party tools has made it easier for shippers to diversify their carrier portfolio. Additionally, regional carriers have been quick to adapt to market dynamics by offering competitive rates and service improvements.

For shippers, service reliability is a top concern when diversifying carriers. They seek a delivery service that matches the expectations set by UPS and FedEx. However, they also desire a seamless experience without the complexities of managing multiple carriers. As one industry expert puts it, shippers want the “easy button” when it comes to managing their shipping needs.

The Role of Collaboration in a Changing Landscape:
Smaller parcel carriers are not sitting idly by as larger carriers vie for market dominance. Many are focusing on maintaining high service levels in existing markets while exploring new strategies for growth. One successful tactic has been collaboration between regional carriers. Partnerships like the one between GLS and Better Trucks allow customers to access the coverage area of both carriers, effectively combatting the efforts of national carriers to gain more volume.

As the parcel shipping industry continues to evolve, shippers face decisions about carrier consolidation, discounts, and diversification. While major carriers are offering attractive discounts to stay competitive, alternative carriers are showcasing their strengths in service reliability and competitive pricing. Finding the right balance between cost-effectiveness, service quality, and carrier selection will be crucial for shippers navigating this changing landscape.

Join us as we explore the trends and strategies that are shaping the future of parcel shipping. Together, let’s navigate the challenges and opportunities in this dynamic industry.

Source: https://www.supplychaindive.com/news/shippers-consolidate-regional-carriers-fedex-ups-discounts/704657/