Amazon Logistics Services

Amazon Going Head to Head With UPS, FedEx and DHL Abroad

According to the Seattle Times, e-commerce giant Amazon is entering the package-delivery market, and within several weeks, it will be competing directly with UPS, FedEx and DHL. Amazon is entering this space by way of acquisition of a French company named Colis Privé. This move is part of a larger, growing investment in numerous companies in the logistics industry, including a U.K. parcel delivery company – Yodel, for example.

With the opportunity to disrupt the market, what makes this investment so intriguing is that Amazon “may be developing a delivery service that meets more than its own shipping needs. He [Robert W. Baird & Co.] expects Amazon to ultimately offer any excess cargo capacity it has to other companies looking to transport goods.” These services would be open for use to even Amazon’s competitors.

The reason Amazon is going in this direction? Making money by improving infrastructure and then rolling it out as a service. The article explains that what would be considered as an expense right now can effectively be turned into a profit center. The additional profits can help drive competitive rates in its retail business, making them more competitive. Clearly Amazon’s ability to look at its entire portfolio strategically is one of its core strengths.

Interestingly, while FedEx has not publicly shown a lot of concern about this potential issue, UPS has been much more forthcoming and admits that there could be conflict ahead. We’ll have to see what happens in 2016.

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‘Most Preferred Carrier Survey’ of 2015 (Global Logistics Media)

Global Logistics Media did this survey, here are the results:


Watch Out For New Fuel Surcharges from FedEx and UPS This Holiday Season: ‘Jolting’ News

E-Commerce companies, retailers and other businesses that need to ship packages this Holiday season beware! According to a recent article by Laura Stevens of the Wall Street Journal, a fuel-surcharge increase is taking effect this November 2, 2015, and it could have serious consequences for shippers and their customers.

Earlier this year in February, FedEx previously increased its fuel surcharges, following UPS’ lead. The companies claim that the driving force behind the surcharge increase is the higher expense associated with delivering heavier packages and the ever increasing number of residential deliveries, according to the article.

Interestingly, some business owners have not yet noticed that the fuel surcharges, which were once included in base rates, are now a separate charge. This means that just negotiating reduced base rates will not help mitigate these increases.

Complicating the matter is that diesel fuel costs have decreased substantially (35% down from last year), so why are market prices essentially going up? One might ask UPS and FedEx, ‘why are savings not being passed onto their customers?’ The article does make clear that carriers have been faced with the challenge of finding new ways to improve margins—perhaps this is their solution, at least in the short run.

In addition to the net impact on shippers, who depend on volume sales during the Holiday, Stevens writes that the increase could ‘jolt’ customers. With new surcharges, what will happen when fuel prices themselves go up again? That could be “double trouble.” With many companies building the expected costs of fuel/shipping into their process, they may need to increase costs or take a hit on margins.

Asurchargenother interesting point brought up in the article is that both UPS and FedEx buy their fuel close to their actual need. Were they both more intent on buying spot futures, could they potentially find a way to further decrease fuel costs and pass savings to consumers?

We are left with many questions, one of which is “What’s next?”(quote from Brian Litchfield).

What fall out if any could UPS and FedEx experience downstream as they make these margin-making moves? How will business owners adapt to these surcharges? How will this impact how carrier rates are negotiated? How will business owners build this ‘volatility’ into their pricing to customers?

One thing is for sure: navigating through annual price increases and new and ever-increasing carrier surcharges has never been more important. The work of transportation and logistics consultants is vital to maintaining profitability for businesses and locking in the best possible shipping rates.

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Can Public Transportation Be Used To Ship Packages? Amazon Thinks ‘Yes.’

Amazon is always experimenting with new ways to optimize shipping efficiency, while reducing shipping time and costs. Earlier this week, an Amazon patent application to use public transportation such as buses, trains, and subways was made public. The patent would allow Amazon to either use public transportation as a delivery service, or as a roaming pickup location.

This innovation in shipping can be useful to commuters who ride the same form of public transportation on a daily basis, or people who live in rural areas, with no easy or cheap access to at-home delivery. They can choose to have their package delivered to them on public transportation, or at the transportation stop. This can be useful to both Amazon, and the package recipients, because Amazon can reduce the amount of delivery locations, and the recipient can specify exactly when and where they would like to receive their package.

This new service requires Amazon to have precise timing within their delivery services so that they can make sure packages are where they need to be at the previously specified time. This is essential to upholding their service model, yet also a challenge, as public transportation is subject to unforeseeable delays and disruptions. Other obstacles regarding the safety and size of the packages may also stand in the way of the success of this particular delivery service.

Can this new way of delivery overcome obstacles and become successful?

To find out more details about this possible delivery service by Amazon, read the original article:


UPS Shares Insights Into Global Trends After Interviewing High Tech Executives

During a time of rapid change and development in our turbulent global economy, high tech executives all over the world are still showing signs of optimism. According to a recent UPS commissioned independent research study surveying over 500 executives in 11 different countries, nearly 75% of high tech executives expect high tech exports to grow at the same or a faster rate during the next two years. This annual independent research study took a closer look at change, growth, and how high tech specifically is adapting to meet global demand.

The study reveals that the biggest trends in manufacturing consist of a combination of off-shore, near-shore and right-shore practices, with right-shore practices rising. Global businesses in emerging markets have found that the number one barrier to expansion is the local regulations in different countries. The countries that have been adding the most production capacity are Japan, China, and India. The countries that high tech manufacturers see as the largest opportunity for growth are Brazil, India and Russia.

With an increase in overseas manufacturing comes more complex supply chains and an increase the need for risk management. While companies put energy into assessing overseas risk management, few companies are taking action.

To find out more information about the UPS commissioned study, be sure to watch the original video:

Emerging markets road sign

Emerging Market Latest Trends

According to a July 14th article on the Supply Chain Management Review, a recent interview with Scott Williams, Manager of Global Forwarding Marketing at UPS, reveals some very insightful trends in emerging markets.

The following topics are discussed in this interview and we highly recommend reading the transcript here.
•    Near shoring, and its many benefits
•    Shifts in manufacturing overseas, from one emerging market to another e.g. Coastal China to inland China
•    Which emerging markets provide the best opportunities for U.S. exporters
•    How the “rise of the middle class and access to technology has empowered consumers in developing markets around the world “ to increase demand of American brands
•    Which countries are fueling growth and expansion in the global market

What trends do you see happening?

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