The 2:00 Minute Warning

FedEx has announced that effective June 21 they’re going to implement some new “peak” season surcharges. The surcharges, as detailed in a FreightWaves article, include:

• Residential delivery surcharges on domestic air and ground deliveries will double from 30 cents per package to 60 cents
• Ground Economy surcharges will rise from 75 cents per parcel to $1
• Additional handling surcharges on domestic air and ground deliveries, as well as international ground deliveries, will go from $3 per parcel to $3.50

This mid-year pricing change tells us three things:

First, the system is flush with freight. Virtually every carrier is operating in excess of 100% capacity. That’s why we’re seeing service issues, and a variety of actions that carriers are taking to get their network back in balance.

Second, you need the carriers more than the carriers need you—if you take nothing else away from this message, at least remember this!

Years ago when I was building a house in Wisconsin, my father in law wisely told me “Remember Mike, you’re not really the customer here. You may think you’re the customer but you need them more than they need you, and if you upset them, they’re not going to show up and your house won’t get built.”

Folks, if you’re not working with your carriers in a collaborative way and striving for Shipper of Choice status, don’t be surprised when they don’t show up.

Third, you need great data to quantify the pricing decisions that the carriers are making. If you could use help analyzing all the current and future parcel pricing changes, tools like our Parcel Toolbox can help.

UPS has yet to follow suit, but based on past patterns, we won’t be shocked if a similar announcement from them comes soon.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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