Transportation Issues for 2020: UPS, FedEx, Truckload, IMO 2020
Jan 8, 2020
BY MIKE REGAN, TRANZACT CO-FOUNDER
It’s a new year and a new decade for transportation. While there are a lot of changes underway throughout the industry, we’d advise you to pay attention to three areas in particular since they could have a large impact on your overall costs:
- Pricing in the parcel sector with FedEx and UPS
- Pricing in the truckload marketplace
- How IMO 2020 will impact diesel pricing
For several years now, while inflation has hovered around 2%, FedEx and UPS have been issuing general rate increases around 5% before negotiations. At the same time, changes in dimensional pricing and weight breaks have pushed shippers' packages into more expensive categories, often times making the overall parcel cost increase much higher than 5%. In 2020, expect more of the same.
In the spirit of offering an encouraging or “pick me up” moment, one of our customers took advantage of the advice in our recent Two Minute Warning and interview with Jerry Hempstead, and they went back to negotiate their rate increase for packages in the 50-70 pound range. Guess what? Success! They got a significant discount that will save them a couple hundred thousand dollars. If you have some big parcel numbers, we encourage you to do the same thing and listen to our interview with parcel expert Jerry Hempstead and remember: “Everything is negotiable.”
Moving on to the truckload marketplace, we’re seeing rates start to rise once again. Whether this was a short time increase due to record sales this holiday season or a longer term trend due to a tighter market is yet to be seen.
When it comes to IMO 2020, the experts have forecast an increase in diesel prices for motor carriers as Ocean Carriers have to change the blend of fuel to respond to the Low Sulfur Mandate. We’ll be watching diesel prices to see if the new regulation increases demand and results in increased fuel surcharges.
Throughout the year we'll monitor these issues and draw on our network to share unique insights on these areas and more.