2017 Parcel Express Roundtable: Paying for peak performance

It can be hard to believe that very much happens in a year, but that theory is put to the test when it comes to the parcel express market.

In fact, over the past 12 months we’ve seen major changes in pricing from the parcel duopoly of FedEx and UPS; the accelerated emergence of regional parcel players; and don’t forget we’re all watching the increasing power and reach of e-commerce giant Amazon as it grows its own delivery capabilities globally.

These developments require parcel shippers to do whatever it takes to stay on top of their parcel game from both a financial and operational perspective. To help them along, Logistics Management has gathered Jerry Hempstead, president of Hempstead Consulting, a parcel advisory firm; David Ross, transportation and logistics director at investment firm Stifel; and Rob Martinez, president and CEO at Shipware, an audit and parcel consulting services company.

Over the next few pages, our experts offer their insight into what’s driving parcel market trends and offers some practical advice for how shippers need to re-adjust to ever-changing market conditions.

Logistics Management (LM): How would you describe today’s parcel marketplace?

Jerry Hempstead: All of the parcel carriers are doing well in volume and earnings—even the USPS is making money if you back out the Congressional mandates. And it’s clear that e-commerce is driving the volumes. To top it off, service levels this year are at record levels and are predictable and consistent.

My observation is that there’s no statistical difference between the service performance offered by FedEx and UPS across a year’s worth of activity, although FedEx offers a faster delivery on ground to about 25% more city pairs than UPS. This pressure on speeding up the promise and refining the networks to make the magic happen will only improve the consumer experience in parcel services.

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Two thirds of buyers not managing supply chain risk effectively

Almost two thirds of buyers think their organisations are not managing their supply chain risk effectively.

Responding to a mini-poll held during a webinar organised by Supply Management in association with business information publisher Bureau van Dijk, 63 per cent of listeners said they didn’t believe their organisations managed threats in the best way.

Ted Datta, BvD’s strategic account director – London, said a majority of negative response underlined the increasing awareness among companies and buyers of the key importance of good supplier risk management. This was increasingly important because legislation was covering new and wider areas, said Datta.

“Know your suppliers, business partners and third parties,” he said, emphasising buyers needed to be up-to-date with new risks as situations changed every month. Datta said as there was so much information to monitor, companies could segment their supply base to identify key strategic suppliers and monitor those suppliers ‘in real time’ or as frequently as possible depending on their resources. Others could be reviewed in a more structured way, he said.

David Lyon, head of procurement at Cancer Research UK, told the webinar, Enhanced supplier due diligence: the implications for supplier risk management, reputation was vital for a charity and it had to ensure suppliers were aligned with its core purpose. “As an organisation that spends 80 per cent of every pound donated on our core mission of research, we must work hand in hand with all our suppliers,” he said.

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