Shareowners of UPS elected a Board of Directors for a one-year term and ratified the appointment of Deloitte & Touche LLP as the company’s independent registered public accountants.
Ten directors stood for election to the Board of Directors and all were overwhelmingly elected. The appointment of Deloitte & Touche to serve as the company’s independent auditors for 2008 also was ratified by a wide margin.
Read MoreThe largest player in the U.S. overnight package delivery business is attempting to increase its market share in the fast-delivery business next month. USPS is barely holding on to its 32 pct market share in the business, as FedEx and UPS continue to push the envelope at 31pct and 25pct market share, respectively. For the first time, shippers using Express Mail, Priority Mail, and several other parcel services will be able to get lower rates for large- and medium-volume contracts, according to the agency. Will UPS and FedEx need to cut their prices further to compete with the USPS?
Large Rate Increases For 2008
This year, FedEx and UPS announced that rates for ground packages would increase an average of 4.9pct on the ground and 6.9pct in the air (minus a 2pct cut in fuel surcharges, creating a 4.9pct increase in the air as well). So what does this mean for you? The key term we need to acknowledge is averages. Rates for certain packages will increase more than 4.9pct, while other shipments will increase less than 4.9pct , all depending on the characteristics of the package, the distance traveling as well as the service you use (ground or air).
Fuel Surcharges
If you’ve studied the fine print of the pricing that both FedEx and UPS use, the key is in the fuel surcharges. Don’t let the 2pct cut in air fuel surcharges trick you into thinking you’re saving, because you’re not. In a nutshell, carriers tack on a 0.5pct surcharge for every four cents of an increase in jet fuel prices — starting at the base price of $1.14 a gallon. With jet fuel prices up nearly 70pct since April of last year, you’re going to be paying more to for air delivery regardless of which company you use. For every eight cent increase in standard fuel prices, there is a 0.25pct jump in the fuel surcharge — starting at the base price of USD 1.50 a gallon. The price of gas has jumped nearly 50 cents over the past year, so going ground will also hurt your wallet.
The data clearly shows a significant increase from last year’s rates. But what really grinds my gears is that both FedEx and UPS have exactly the same rates for four out of six delivery services. So where can you find a cheaper overnight service?
A Possible Alternative
The fourth-largest overnight service is DHL, owned by Deutsche Post World Net AG, and holds a 9pct market share in the United States. In the same 2008 study, DHL’s prices to Huntington Beach were slightly cheaper than UPS and FedEx. Earlier this year, however, there were reports that DHL might leave the US shipping market due to considerable losses since 2004. One industry expert believes the U.S. shipping industry needs DHL to stay; fearing competitor prices would rise with DHL out of the picture.
The Bottom Line
With pricing so similar, choosing a delivery service really depends on who you can trust getting your product where it needs to be on time.
Reaching out a helping hand to Canada’s small business market, UPS Canada today announced the launch of a new advice-oriented podcast series called Logistically Speaking. Hosted by Canadian small business expert, journalist and blogger, Rick Spence, the podcasts will be available for download through iTunes and other podcast directories, as well as on UPS.com.
In a pilot series of three 10- to 15-minute episodes, Logistically Speaking addresses key issues affecting the SMB market with a strong focus on helping businesses reach beyond Canada’s borders. Throughout the series, host Rick Spence interviews expert guests about hands-on issues that affect entrepreneurs – from tips on how to survive the credit crunch, to sourcing the perfect shipping partner. The Logistically Speaking roster features the following topics and guests:
– Episode 1 – Why Go Global? – Justine Hendricks, Regional Vice
President of Small Business Sales, Export Development Canada
Available today, April 30, 2008
– Episode 2 – Surviving North America’s Current Economic Climate –
Amgad Shehata, Vice President of Government Relations, UPS Canada
Available May 28, 2008
– Episode 3 -Getting to Know Your Market – Hylton Karon, President,
Coconut Grove Intimates
Available June 25, 2008
UPS announced the launch of UPS Expedited – a service specifically designed for customers with less urgent shipments to major international destinations, irrespective of size or volume.
UPS Expedited is the perfect balance between economy and reliability, and is a scheduled, day definite delivery service aimed at simplifying global trade for companies conducting business internationally.
Faster than traditional airfreight, UPS Expedited ensures door-to-door delivery in two to five days.
Exporting to more than 70 countries and territories worldwide, the service is available for one-time customers as well as account holders.
Other shipping services that UPS offers to the region are; UPS Express and UPS Express SaverSM, the ideal choice for urgent shipments.
UPS Express is a faster shipping service with guaranteed delivery by midday the next business day, throughout the world, while UPS Express Saver has guaranteed delivery by the end of your next business day.
With the addition of UPS Expedited, customers now have a range of tailored product offerings to choose from depending on their individual needs and service level requirements.
During 2007, the company delivered a record 3.97 billion packages; an average of 15.8 million per day.
UPS Expedited service is now available in the United Arab Emirates, Saudi Arabia, Bahrain, Egypt, Kuwait, Oman, and Qatar.
Read MorePackage shipping giants FedEx Corp and United Parcel Service Inc are walking a narrow path between expanding their businesses overseas and scaling back in the United States, where the economy has slumped.
But industry analysts say the two rivals should be able to weather a short-term slowdown without hefty drops in profits, with only a prolonged U.S. downturn presenting a serious threat.
Recessions push companies and individuals to rein in expenses, which includes package shipping. But revenues are not the only wild card for UPS or FedEx profits. The record surge in fuel prices for trucks and airplanes is another.
Like many U.S. transport companies, UPS and FedEx have been routinely passing on higher fuel costs to customers. But in a recession, such surcharges are just one more reason for customers to cut shipments.
Rising fuel costs also present big challenges to the shippers just in managing cash flows and hedging.
While Graf says FedEx has leeway in allocating its capital expenditures, growing markets like China remain a priority.
FedEx’s total capex spending should be about USD 3 billion for the fiscal year beginning on June 1, he said.
As part of its expansion plans, FedEx will open a new air hub in Guangzhou, China, in 2009.
At UPS, overseas spending that includes the booming China market will also remain core to its strategy in 2008 and 2009.
UPS’s new airport hub in Shanghai will open this year.
In their latest quarters, net profit declined 12 percent at UPS and fell 7 percent at FedEx. Both cited the sluggish state of the U.S. economy and high fuel costs.
Both companies still derive about three-quarters of their business from the United States, said Morningstar analyst Keith Schoonmaker.
The good news, highlighted by both, was growth in international package shipments, including a boost from rising U.S. exports on the back of the weak U.S. dollar.
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