Category: Industry News

Why prices are going up
The pricing increases will grab the headlines, but in reality they are part of a series of actions both companies have been taking to maximize profitability. In short, FedEx and UPS need to take these measures because they are seeing margin pressure as a result of burgeoning e-commerce delivery growth. That pressure shows up in different ways.

• The need to expand capacity to deal with increased costs brings about higher operational costs — at least initially eating into gross profit margins.
• E-commerce demand during peak season is putting pressure on both companies to have the right capacity in place at the right time — UPS in particular has had issues with this subject.
• E-commerce vendors are packaging inefficiently and increasingly shipping large, difficult-to-deliver items, such as trampolines or gym equipment.

The collapse of Hanjin Shipping will boost the cost to U.S. businesses and consumers of a wide range of imported goods, from furniture and clothing to fresh fruit and frozen meat, according to federal agencies, shippers and retailers.

United Parcel Service Inc said on Thursday it is seeing a bump in demand for its freight services and is working with customers in Asia to shift goods from Hanjin containers to other ocean freight operators or air freight services. About $14 billion worth of cargo was stranded by the collapse of the seventh largest container carrier in the world.

With 1.3 million members, the Teamsters are the largest transportation union in North America. As the US economy continues to reshape itself around the sprawling logistics industry, whoever is elected the next Teamster leader will face the daunting task of organizing this vast, nonunion workforce — one that will determine much of the future of the labor movement.

Teamsters will make that decision this October, in an election contest that pits the seventeen-year incumbent general president James P. Hoffa against challenger Fred Zuckerman, the president of the fifteen-thousand-member Teamsters Local 89 in Louisville, Kentucky, and his Teamsters United reform slate.

Baird analyst Benjamin Hartford says all leading trucking companies are experimenting with autonomous truck technology.

“UPS would be the most logical. I know they have looked at the possibility,” Hartford told IBD.

UPS already employs driver-assistance systems on many trucks, but says full autonomy is further off, with regulation being a key issue.

Truck drivers are in short supply now, and self-driving trucks would fill that gap. But if large numbers of self-driving trucks roll out — with no human in the cab — Teamsters and other unions would likely resist.