small package shipping state of the industry presented by: mike erickson, president/ceo aimed fall...

www.afms.comwww.afms.com

Small Package Shipping State of the IndustrySmall Package Shipping State of the Industry

Presented By:Mike Erickson, President/CEO

AIMED Fall Conference - St. Louis

Friday, October 22nd 3:00 - 4:00pm

http://www.afms.com/index.htm


We Are Comparing The Four Integrated CarriersWe Are Comparing The Four Integrated Carriers

DHL Formerly Airborne

FedEx

UPS

USPS



Today’s Competitive MarketplaceToday’s Competitive Marketplace

Carriers are battling it out for market share and competition is greater than ever before

Why is this happening now?



Recent Industry Trend: Carriers Now Offer a Full Recent Industry Trend: Carriers Now Offer a Full Portfolio of ServicesPortfolio of Services

A number of factors have converged to create the most competitive small parcel marketplace ever

In prior years, each carrier had a unique market niche, and were content to concentrate on that area: there was little or no market overlap

UPS, FedEx, DHL, and the Postal Service now offer a full suite of air, ground, and international shipping options



Late 1990’s: Each Carrier Had A Market NicheLate 1990’s: Each Carrier Had A Market Niche

UPS was the ground carrier of choice FedEx was the air carrier of choice DHL was the strongest international carrier USPS concentrated on mail and residential small

parcel shipments Airborne-low cost express RPS-commercial ground shipments to metro

areas



Factors Contributing To Increased CompetitionFactors Contributing To Increased Competition

Economy Package volume growth has been flat Not as many new packages are being shipped Carriers must get their additional volume from other

carriers

Available Capacity New regional hubs, larger truck networks and enhanced

technology allow carriers to handle more volume




Technology Sorting Facilities Bar-coding Tracking Shipping Automation Interactive Websites EDI Billing Advances Data Capture Technology



UPS TechnologyUPS Technology

UPS CampusShip UPS WorldShip UPS OnLine Compatible Solutions ConnectShip UPS Toolkit UPS Address Validation The Quantum View Billing Format Options

Flat File Bill EDI-generated bill Paper bill



FedEx TechnologyFedEx Technology

FedEx Café FedEx Ship Manager FedEx.com - online shipping FedEx Insight Adhoc Reporting Billing Options

EDI Datalink Download invoices from Fedex.com




New Services Faster Ground networks Residential offerings Special freight services UPS store FedEx Kinkos

Portfolio Pricing – The single biggest factor! Carriers offer the maximum discounts only if you

give them most, if not all of your business



New Ground CompetitionNew Ground Competition

UPS and FedEx have enhanced ground delivery times; ground shipments are now day-definite and guaranteed

FedEx Home Delivery now serves the entire US

The merger of Airborne & DHL creates a new, strong competitor

USPS Parcel Select: new service enhancements, new partners



New Air CompetitionNew Air Competition

On-time performance is at an all time high for all carriers

Carriers have switched most customers from flat-rate (unzoned) pricing, to zone-based pricing

Carriers are now targeting specific segments of the air market (letters, heavier and larger shipments, industry groups, etc.)



New International CompetitionNew International Competition

While domestic growth is flat, international growth is in double digits

FedEx and UPS have added new overseas infrastructure, new hubs

Airborne, formerly weak in the international segment, has now become a key player thanks to the deal with DHL



KnowledgeKnowledge is Power is Power

Carrier Reports Equal KnowledgeCarrier Reports Equal Knowledge

and Opportunity!and Opportunity!



Common Add On Charges:Common Add On Charges:

Address corrections Residential delivery Oversize charges (ground) Dimensional charges (air) Saturday delivery Declared value (insurance)



New New AddAdd On Charges On Charges::

Fuel surcharges Delivery area surcharge on air shipments Excess tracking fee Package return charges Security surcharges At last count, there are more than 80!



UPS - 9.5% FedEx - 9.5% DHL - 9.8%

*These new rates were effective October 4th, 2004

Ground -- All carriers dropped fuel surcharge USPS -- No surcharge They’re no longer “temporary”

Fuel Surcharges - Are At An All Time High!Fuel Surcharges - Are At An All Time High!



Residential SurchargesResidential Surcharges

FedEx air & ground $1.75

FedEx Home Delivery $1.40

DHL $1.75

UPS $1.40



Rural SurchargesRural Surcharges

Carriers call them “delivery area surcharges” $1.00 Commercial $1.75 Residential $15.00 Alaska You can obtain DAS files from carrier websites AFMS can email you a DAS file we co-developed with

Postal World Magazine - has all carriers and includes zip, city and state



Ground Delivery - DelaysGround Delivery - Delays

UPS, FedEx Ground & Express, DHL: UPS, FedEx Ground & Express, DHL: Monday Through Friday

FedEx Home Delivery: FedEx Home Delivery: Tuesday Through Saturday

USPS:USPS:Monday Through Saturday



FedEx and UPS – Dramatically Improved

Ground Transit Time

DHL – Adding New Ground Hubs (to be completed in 2005)

Ground Transit TimesGround Transit Times



UPS, FedEx And DHL Have Essentially The Same Base Ground Rates

USPS-Has It’s Own Pricing

Ground PricingGround Pricing



Air Pricing: Air Pricing: Flat Rates VS Zoned RatesFlat Rates VS Zoned Rates

Carriers Are Moving From Flat To Zoned Rates

Big Change In Priority Mail Last June - Only 1lb is Now Flat Rate

Are You Better Off With Flat Or Zoned Rates?



What They What They SaySay

All All Air And Ground Commercial Packages Are Guaranteed To Be Delivered On-Time...

Or You Get Your Money Back!



What They Actually What They Actually DoDo

Many New “EXCEPTION CODES”

Some New Contracts Prohibit Refunds

New Penalty Charges

Shorter Audit Times



QUESTIONS?QUESTIONS?

THANK YOU!THANK YOU!

[email protected]@afms.com1-800-246-35211-800-246-3521www.afms.comwww.afms.com


small package shipping state of the industry presented by: mike erickson, president/ceo aimed fall...

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