The Ground War Between FedEx and UPS

Spend Matters welcomes another guest post from Jon Winsett of NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom and transportation.

Over the last few years, a “ground” battle has emerged between FedEx and UPS.  At the low point of the Great Recession, many shippers traded in high-priced air delivery for more cost-efficient ground delivery. Many found that these ground services could be just as reliable and expedient as the costly air services they opted for in the past.

Today, growing demand for free shipping and same-day delivery services has effectively turned ground shipping into a Ground Zero in the battle for carrier profits. This can be seen in the predictable ground delivery rate increases and surcharges from UPS and FedEx that went into effect earlier this year. Is anyone really surprised?

Another trend we expect to see is continued consolidation among regional carriers, which will result in even less pricing competition in the marketplace. Combine this with rising fuel prices and economic uncertainty, and shippers are more vulnerable than ever to higher shipping costs.

Shippers must be prepared to mitigate higher shipping costs in 2013. I’d like to hear from fellow Spend Matters readers: Do you expect your shipping costs to rise in the year ahead? What will you do differently in 2013 to minimize the impact?

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