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ECommerce is booming, while brick and mortar continues its slow decline; within this context UPS has introduced Saturday Deliveries for Ground Services, an option the world’s largest carrier has already been offering on an experimental basis in Los Angeles, Philadelphia, and Atlanta since 2016. With Saturday delivery already being a FedEx staple and USPS making the occasional Sunday delivery for select Amazon shipments, UPS’s April rollout allows the carrier to not just stay relevant within the ever competitive ECommerce landscape, but also grow its business internally with minimal capital investments.
UPS has dominated the domestic Ground delivery market in recent years, but FedEx has been gaining ground with improved pricing and significant investments to update its infrastructure and streamline its networks. Time in transit is a common cause for abandoned carts, a key metric within the B2C world. With Saturday Deliveries expanding to 4,700 cities by November, just in time for the Holiday season, and up to 5,800 markets by the end of 2018, UPS is betting that it can better sell both its size as well as service flexibility to online shippers and put a halt to FedEx’s forward momentum.
Within 2017’s political focus towards the sustainability of the blue-collar economy, UPS’s move also allows the company to tout the creation of almost 4,000 jobs immediately and up to 6,000 jobs nationally by the end of the program’s implementation in 2018. A subsequent announcement of a new operational facility in Arlington, Va will create another 1,400 jobs and continues a macro industry trend of retail jobs shifting from in-store customer-facing positions to backend operational roles in a growing number of distribution and fulfillment centers.
While ECommerce captures all the recent headlines, the core business for both carriers is still B2B, whose concentration of volumes to limited locations makes it the vastly more profitable product. While last year’s holiday season broke retail records in terms of volume, UPS and FedEx both struggled operationally to handle the capacity while remaining profitable. Wall Street has continually been bearish on UPS’s margins, and with a rare earnings miss for FedEx just last month, the company has announced a shift in priority from growth to profitability for its ECommerce customers. This means that if you’re an online shipper, expect both your FedEx and UPS reps within this tightening climate to try every trick in the book to justify why he or she can’t sign off on the competitive pricing you are asking for.
The ECommerce boom has been a blessing and a burden for the parcel duopoly from a financial standpoint. UPS’s move may signal an overall industry shift from price wars between the carriers to competition based on expansions and improvements to their services. As USPS and Amazon both continue to challenge the industry from a long-term perspective, don’t be surprised to see either carrier introduce new products such as Sunday deliveries to keep market share amidst rising consumer demands and expectations. As shippers, you may get the flexibility to ship to your customers how and when you want to; all the carriers ask in return is for you to pay more to do so.