We’re just about to ring in a new calendar year. But how new will it actually be for parcel shippers?
The short answer is “not very.”
Even though some market dynamics have shifted in parcel shippers’ favor, the national carrier landscape is still dominated by a strong duopoly. As a result, everything from General Rates to Fuel Surcharges will once again be on the rise. And shippers need to know when and where to push back.
Could Amazon or regional carriers come close to challenging this duopoly and shaking things up in 2024?
Only to a degree. Both Amazon and regional carriers have definitely become parcel delivery forces to be reckoned with – and they’re likely to become even more so as time goes on.
However, at the moment, both of these options have either a business agenda (like improving the economies of scale for their own parcel deliveries) or a geographic limitation (like not being able to deliver across the entire country) that the national carriers don’t. So, companies that want full national coverage will still largely find themselves using UPS or FedEx for a significant portion of their shipments.
Drat.
Sorry. Would it help to hear some good news?
Due to the fact that both UPS and FedEx have recently experienced volume shortages, many shippers should be in a position to negotiate more favorable contracts over the next 12 months, provided they know which particular rates, surcharges and terms to focus on.
Figuring out what those rates, surcharges and terms are won’t necessarily be easy, since many parcel carriers’ pricing models have become highly convoluted. However, it will almost always be worth it, because there are usually a lot of significant cost-cutting opportunities to be found amongst carrier contracts’ fine print or confusing language.
So basically, we can largely expect to see more of the same for parcel shipping in 2024 – with a slightly bigger window of opportunity to negotiate friendlier contracts?
Yes. Plus, you’ll have a lot more reason to do so, because more and more companies are taking an active interest in their freight spend and how to optimize it. They’re also getting more holistic – evaluating everything from their network size and contract terms to their carrier choices – and increasingly granular, looking at every little detail of their spend in order to see if they’ve left a cost-saving stone uncovered.
If your company isn’t doing the same, you could ultimately wind up paying considerably more for the same parcel services than your competitors, so be sure to keep that in mind as you make your own plans for 2024.
Drop AFS a line if you’d like to know more. We offer a myriad of parcel services and have helped our clients achieve $300 million in parcel savings over the past five years alone, and we’d love to discuss the possibilities with you.
