What’s new at FedEx and UPS? Plenty! Both carriers continue to develop new services and technologies to compete for your business. 

    FedEx
    Have you noticed your parcel reps pushing other divisions including FedEx Freight and FedEx SmartPost? The company has been training sales reps within traditionally distinct divisions to cross sell and promote business opportunities. 
    And with new compensation incentives, the reps finally care enough to bring it to your attention.

    Since 1998’s blockbuster acquisition of Caliber System Inc., FedEx has been on an acquisition spree to compete more effectively and capture new revenue sources by offering single source solutions throughout the supply chain.

    Between 1998-2006, FedEx acquired Viking Freight, American Freightways and Watkins Motor Lines (rebranded as FedEx Freight) to become the largest less-than-truckload carrier in the U.S. FedEx Freight raised its market share 58% between 2006-2010.

    In 2004, FedEx acquired Parcel Direct (rebranded as FedEx SmartPost) to provide an economic alternative to Ground shipping for lightweight, low value, residential shipments. FedEx handles pick up, sortation, consolidation, line haul, and induction to USPS for “final mile” delivery.

    FedEx reps are offering “bundled” solutions with FedEx Freight and FedEx SmartPost revenues contributing to Express and Ground revenue thresholds and incentives.

    Bundling is a corporate strategy to increase customer retention. If your Express and Ground incentives are reliant on LTL revenues (and vice versa), you are more likely to stick with one carrier.

    Regardless of motivation, shippers are wise to consider bundled solutions to leverage transportation spend and cut freight costs. Look for FedEx Freight and FedEx SmartPost to be added to FedEx Ship Manager and Café Systems, currently being beta tested.

    FedEx Freight is testing dimension based rating for LTL shipments. Depending on commodity, many shippers will find rating based on dimensional divisors an extremely attractive alternative to Class rating. If successful, the rating change could prove to be a significant advantage for FedEx Freight, shake up the LTL world, and eventually lead to industry-wide adoption. 

    FedEx offers several other new tools including a desktop tool for Ground Multiweight rating (download from FedEx.com).
    Talk to your FedEx sales rep about the “FXCT tool” which is a desktop tool for least cost routing.

    Finally, take advantage of the “Heavy Ship Day Desk” for off-contract quotes on heavy weight shipments at 800-253-3906.

    United Parcel Service
    Since early 2010, UPS has quietly been developing an alternative to FedEx SmartPost called UPS SurePost. Like SmartPost, UPS SurePost is an economy solution for non-urgent, low order value, lightweight and small-sized residential parcels under 10 pounds.

    However, UPS claims that time-in-transit will be faster, more consistent and reliable than competitor products because of scheduled movements within the UPS ground package network. Moreover, SurePost packages are not “staged” for consolidation, so packages move more quickly through the UPS network.

    While SurePost is not a guaranteed service, the estimated delivery date is provided. UPS SurePost provides full visibility from UPS.com with USPS exception and delivery scans available by the end of the day.

    Perhaps the biggest competitive advantage is the induction point to USPS. Approximately 93% of FedEx SmartPost shipments are inducted at the Destination Delivery Unit (DDU, the local post office that handles the “final mile” delivery to the home), whereas UPS SurePost intends to deliver all packages to the DDU reducing time in transit.

    UPS has offered a similar solution for several years called UPS Basic. UPS SurePost will actually replace UPS Basic once current contracts expire. 

    UPS Basic differs from SurePost in several key areas. Principally, with UPS Basic, UPS drivers handle about 30% of deliveries. SurePost aligns with USPS strategy of having more packages delivered at the DDU. 
    SurePost will leverage four mail classes (Parcel Select, Standard Parcel, BPM, Media Mail), Basic used only Parcel Select.

    Basic was available to the U.S. 48 and APO/FPO was not available. Geographic coverage for SurePost is all 50 states and APO/FPO addresses are included. PO Box deliveries are now available under a single shipper number, and various endorsements are available including Address Service Requested, Return Service Requested, Forwarding Service Requested and Change Service Requested.

    Like FedEx SmartPost, UPS SurePost uses Ground pricing 1 to 10 pounds as List Rates. Weights at 11 pounds and above use Ground List Rates plus 25%. Both services offer significant savings with no residential surcharges or Delivery Area Surcharges, but the Ground fuel surcharge applies.

    Although SurePost service has not officially been announced via press release, it is available as a contract service so check with your UPS sales rep.

    In summary, we’ve covered several new services and technologies from UPS and FedEx. However, there are dozens more offered by both carriers we don’t have time to cover in this article. Register for media releases on the UPS and FedEx websites, and instruct to your carrier reps to provide updates at least quarterly.

    These new service offerings provide significant value and cost savings opportunities, and are worthy of exploration. Good luck!


    Rob Martinez, MQC, CMDSS, is President & CEO of Shipware, LLC, a parcel audit, recovery and consulting firm that helps parcel shippers reduce costs 10-30%. Rob welcomes questions and comments, and can be reached at 858-538-3359 or rob@shipware.com.  

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