Parcel Rate Outlook 2009

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slides from Mid Year rate outlook Logistics Management July 29 2009

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Parcel Rate Outlook 2009

  1. 1. 2009 Parcel Outlook Jerry Hempstead 407-342-3825 [email_address]
  2. 2. Let the pains begin <ul><li>ATLANTA, Oct.17, 2008 - UPS (NYSE:UPS) today released new list rates for 2009, including an average increase of 5.9 percent for UPS Ground packages and an average net increase of 4.9 percent on all air express and U.S. origin International shipments. </li></ul><ul><li>UPS Freight announced a general rate increase of 5.9% for 2009. </li></ul><ul><li>The rate increase for air express and international shipments is based on a 6.9 percent increase in the base rate, less a 2 percent reduction in the air and international fuel surcharge index. </li></ul>
  3. 3. 2009 Largest announced increase in recent history
  4. 4. The Good News About Fuel
  5. 5. Some Bad News about Fuel
  6. 6. 2009 Air
  7. 7. 2009 Ground
  8. 8. More Important – Minimums Lets pretend a 35% Discount A D C B
  9. 9. So what does it really mean to that shipper For most of the business an 8.81% rate increase A C B
  10. 10. Accessorial Creep And you pay the Fuel Surcharge on these accessorial charges NEW AND IMPROVED 19,252 Rural and Super Rural zip codes now have a new premium charge added. This means that the charge for an ‘Extended’ DAS Residential package will increase $0.35 (15.2%) to $2.65.
  11. 11. Saturday & Address Correction et al <ul><li>Address Correction – up $2.00 to $8.00 </li></ul><ul><li>Saturday P/U & Delivery – up $2.50 to $15 </li></ul><ul><li>Additional Handling - up $1.00 to $7.50 </li></ul><ul><li>Hazmat – up $2.50 to $32.50/$22.50 </li></ul>
  12. 12. It’s a struggle out there <ul><li>UPS Oct. 23, 2008 announcement “Average daily U.S. domestic volume declined 3.4%, reflecting on-going weakness in the U.S. economy. Air products posted declines of 6.4% and ground volume decreased 2.8%.” </li></ul><ul><li>FedEx Dec 18, 2008 “Total combined average daily package volume in the FedEx Express and FedEx Ground segments was down 2% year over year, as the weak economy reduced demand for shipping services. FedEx Ground average daily package volume was down 1% year over year, as continued growth in the FedEx Home Delivery service was more than offset by a decline in commercial volume. Less-than-truckload (LTL) average daily shipments decreased 2% year over year, as market share gains were more than offset by the weakening U.S. economy. </li></ul>
  13. 13. What's a shipper to do <ul><li>Growth at both UPS and FedEx is, for all intents, non existent – They can’t afford to loose any customers </li></ul><ul><li>The DHL incremental business is not putting a dent into the lack of organic growth at UPS FedEx </li></ul><ul><li>The USPS can now be a player. Call them in. </li></ul><ul><li>Most shippers are in a “locked in” 3 year or 5 year – I’m in a contract mindset. </li></ul><ul><li>Everything is negotiable – so put your business out to bid. </li></ul><ul><li>An extra set of eyes looking at your invoices can and will help. www.hempsteadconsulting.com </li></ul>

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