Posted: October 29, 2019 | Newsletter
News is dominated by the duopoly of FedEx and UPS. This is where the similarity stops – Fedex’ revenue is flat while UPS’ revenue increased 9% from the same period last year. Last month we reported that FedEx is moving away from Amazon ground service. Both showed net income from operations: FedEx a meager 4.4% and UPS showing nearly 10%. FedEx is planning on raising rates overall by 5% in 2020 and will also be looking to trim costs as well.
The two LTL carriers making news are YRCW and Old Dominion (ODFL). ODFL has been the envy of the LTL market place with its operating ratios in the high 70’s to low 80’s while YRCW has been struggling to make a profit. The LTL market, as well as most freight markets, has shown significant slips in volume compared to last year. The market has shifted back to the Shippers after last year’s perfect storm where freight volumes went above capacity. Revenues – YRCW has dipped 4% while ODFL’s slipped 1%. Profits have also declined: YRCW dropped from $51M to $14M and ODFL’s dropped $173M to $164M. Both companies will be looking for cost savings initiatives to bolster profit levels.
The two behemoth International forwarders making news are Maersk and Kuehne and Nagel (K & N). Maersk has been profitable during this volatile decade and they were able to increase revenue and profits compared to last year: 3% increase in revenue and a 25% increase in profits. K & N saw revenue rise 3.5% year over year while profits rose 48%. We believe that K & N’s profit improvement is a direct result of their improved contracts with carriers. Last year was a tough market with capacity constraints and hyper-inflated prices.
Market stability and return of capacity is great news for Shippers, this is the time to secure long-term deals with carriers to enjoy low rates and great service for the upcoming year where the future is uncertain. Call CPC today to get this started.