Can you remember a more troubling economic time for our country? Our economy is spiraling out of control. Home foreclosures, bilked investors and massive job loss tops every headline and touches someone in all of our lives. It seems like the soul is being taken out of a once great economy while we all stand around and watch in wide-eyed wonder.
Federal Express instituted self-inflicted pay cuts and retirement trimming. That was the right thing to do. They should be commended for their action. As of this writing, United Parcel Service has yet to weigh in with its initiative. Time will tell if they do. They will do something, if required. They will do it for the shareholders. FedEx understood that.
What amazes me through all of this misery and heartache is how the small package machine just keeps on… keeping on. Their ten-plus million customers are staggered by a financial punch in the midsection, really rocked. The bell for the end of the round can’t come soon enough. Instead of a lifeline, the carriers throw their customers a whopping rate increase. How do you like that, “partner”? I think partnership goes out the window during tough economic times. That must be written in the fine print somewhere.
Partnership is this decade’s industry buzzword. You will find it used liberally throughout carrier websites. It usually involves a testimonial that goes something like this: “When
It is certainly true that the parcel carriers service all industries in our country. It’s no secret that retailers are suffering from very disappointing sales, and we are watching that trickle down to suppliers and manufacturers throughout the land. Consumer purse strings are tighter than Oprah’s skirts (and ‘slack’ just left town). But there will be no relief from the carriers. The base rates just keep increasing every year. FedEx and UPS are responsible to their shareholders, not to you and your company.
So let’s predict the future, shall we? First, pull up a chair. Parcel shippers are predicting a drop in earnings as they do their best to ride out the economic whirlwinds. Despite a staggered economy, the carriers grab for more revenue. You swallow hard as your bottom line takes a further beating with the January rate increase. You think that is the end of it. But no, depressed volume levels drop you into a lower incentive tier, which results in a further drop in incentives, which effectively acts like a second rate increase in shipping fees. Are you seated yet?
I suspect the above scenario will play out for many shippers. It is a painful lesson in economic reality. Partnerships are a nice, feel good marketing idea until one party is asked to share some of the other party’s pain. That’s when it all falls apart.
The carriers are worried about their bottom line. In this case, they need more revenue, and you must pay. Remember, “It’s all about the shareholders!”
Joe Loughran is President of SmartTran, Inc. and an expert in small package pricing and carrier rate analysis. SmartTran, in its 14th year, is a transportation consulting company offering services in carrier rate negotiation, guarantee refund service and logistics planning. SmartTran’s management team has over 70 years of executive level experience in package transportation management. Joe can be reached by phone at 724-934-0626 or by email at loughran@smarttran.com.
