Shipping giants FedEx and UPS battle for small businesses ahead of holiday rush
As the peak holiday season looms, Fed Ex and United Parcel Service (UPS) compete for parcel volume from their smaller customers, according to a report from the Wall Street Journal on November 7.
The two shipping giants are now aggressively chasing small customers, giving those with less than $500,000 in annual shipping expenses double-digit percentage-point discounts and lower fuel surcharges, the report said.
The pricing war between the two parcel and freight rivals intensifies since the period between Black Friday and New Year’s Eve will be shorter as Thanksgiving is slated later than last year. Carriers will have to transport more parcels daily compared to the volume recorded in the peak shipping period in 2023.
UPS Chief Executive Carole Tome also told analysts that some retailers are expecting more consumers to shop in-store this year because of the later Thanksgiving date.
This is on top of the continuous decline of the total volume of holiday-season packages which peaked in 2021 during the pandemic which led to both carriers trimming their annual revenue expectations and cutting costs by massive layoffs and closing dozens of facilities.
According to AFS Logistics, a third-party logistics provider, the cost of shipping a ground parcel dropped by 2.5% in the latest quarter as compared with the same period last year due to steeper discounts from carriers. The packages are also shipped with a lower average weight.
In addition, FedEx and UPS are facing tougher competition for market share from other carriers such as the U.S. Postal Service which has been gaining shares in ground parcels, and Amazon, which now delivers more than two-thirds of its packages. Walmart is also gaining traction after establishing its same-day delivery service.
