FedEx and UPS’s diverging pricing models offer new challenges to shippers.
FedEx and UPS, the two giants who dominate the
parcel delivery business in this country, have long moved in lockstep on how
they price their services. Recently the “duopoly” have instituted vastly
different pricing models in areas such as fuel surcharges and list rates,
resulting in more challenging price comparisons between the two companies.
For the first time in a long time the two
carriers are operating under very distinct pricing models that no longer match,
including accessorial charges like fuel surcharges and list rates, which now makes it much more difficult for
shippers to meaningfully compare prices between the two. The diverging rate
structures stem from their respective rate announcements
for 2017.
Not only do the carriers’ published rates not match up, accessorials,
dimensional or DIM rates, and the methodology for calculating fuel surcharges
have gone their separate ways. FedEx Express and FedEx Ground fuel surcharges
are now adjusted on a weekly basis instead of the previous system, in which
adjustments came on a monthly basis with a two-month lag between
government-published fuel indexes and the surcharge being calculated.
Each carrier has detailed information on the shipments for their own customers,
putting them in the driver’s seat when it comes to negotiating individual
rates. And the new standards mean no two shipments are necessarily affected to
the same degree.
To maintain some leverage with the carriers, it becomes increasingly important
for shippers to have access to information on their options. A TMS
(transportation management system) with dynamic pricing capabilities, that
allows shippers to do least cost routing between the two parcel giants, and
also with LTL carriers, can markedly help a shipper’s ability to best allocate their
logistics dollars.
In one respect, though, the FedEx and UPS pricing announcements remained in
tandem, and true to form; each carrier took a healthy general price increase as
a starting point.
Kirk Shearer
President
TOTALogistix
800-989-0054 x103
No comments:
Post a Comment