FedEx and UPS have almost gained dominance in the US. delivery market for years, and few competitors to challenge their command. This authority allows prices and surcharges to be increased with minimal consumer backlash. However, recent trends suggest that this parcel dominion is under threat.
Amazon surpassed FedEx in market share by parcel volume by 2020 and continues to grow its domestic delivery network. Crowdsourcing is taking over last-mile deliveries, especially for e-commerce. Local couriers now account for 30% of shipments, up from just 4% by early 2020. The United States Postal Service is developing a competitive approach to delivering small packages.
These changes are forcing FedEx and UPS to adapt. In the second quarter of 2024, UPS reported that customers are reducing service levels to cost options like Ground and SurePost, squeezing margins. To compensate, carriers are using almost double-digit inflation for 2024, with some fares increasing by more than 20%.
Still, shippers are pushing back against rising costs and a “take it or leave it” mentality from FedEx and UPS. This outrage could open the door to new disruptive competitors, such as Roadway (now FedEx Ground), which emerged in the 1970s after UPS refused to give discounted rates.
To remain competitive, FedEx and UPS must find ways to reduce costs, improve efficiency, and provide better value for customers in an evolving parcel environment. Travelers who adapt quickly will be best placed to succeed in the face of increasing competition.
By leveraging their expertise and resources, Lading Logistics aims to provide efficient and reliable international shipping and logistics solutions for their clients.
