The Business Of Independent Service Provider Contracting

Walking In The Spider Webs

Posted by Ben Weil on Feb 10, 2020 2:15:00 PM

Did you pay attention to the CEO's quotes in last week's press release? Maybe the rhetoric sounded familiar.Important - Inscription on Red Rubber Stamp Isolated on White.

"We demonstrated once again the power of our unrivaled network and our ability to provide solutions for our customers while growing package volumes during our peak period."

"We will continue to aggressively pursue opportunities to generate profitable revenues and drive greater operational efficiencies under our current structure..."

No, the above quotes weren't from FDX. In fact, those were quotes from the U.S. Postmaster General and CEO Megan J. Brennan last Thursday.

The US. Post Office reports their financial results quarterly, and the latest quarter showed a decrease of $363 million in revenues (-1.8%), compared to the same quarter last year.

Wait, what?

"...demonstrated once again...while growing package volumes...a decrease of $363 million (in revenues), or 1.8% (less), compared to the same quarter last year."

Package volume increased and revenues decreased? Yep.

Blue Mailbox with Mails Isolated on WhiteThen, Barron's, the financial news reporting company, published an article titled "What the Post Office's Earnings Mean for FedEx and UPS" the next day.

The article states, "Actions the USPS takes—such as pricing or investment decisions—impact the entire U.S. logistics network. What’s more, USPS package volume numbers are an important data point for the e-commerce industry."

In December, Barron's quoted an industry analyst, Fadi Chamoun of the brokerage firm BMO who wrote, “Surging e-commerce volumes threaten to reduce profitability in the small package delivery business. The incumbents have built large networks based on efficiently delivering business-to-business (B2B) volumes, but rising business-to-consumer (B2C) volumes present a meaningful headwind to operating margins and returns on invested capital."

The struggle is real.

FXG is a single strand of the intricate retail, transportation, and logistics web. This isn't your delicate, dewy morning web. This is the nature trail variety that sticks to your face and arms.Closeup of sheer synthetic webbing used to create the illusion of a massive cobweb in a Halloween haunted forest, in black and white (shallow depth of field)

Suddenly, you're flailing and looking for the spider.

It's not the spider's fault. It's how they survive. Don't blame the spiders.

Lots of "spiders" are spinning these e-commerce webs. You've walked into a few webs, and more await you on your journey.

Pay attention to your metrics.

At eTruckBiz, we can't stop spiders from building their webs. We teach you how to avoid them.

Don't turn back. Keep moving forward, and if you're interested in finding a trail guide to knock down the webs in your path, call us.

Topics: Business Outlook, FedEx, Ground, FedEx Ground, vendor

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