What Is a Logistics Operating Model and How to Build One
FedEx isn’t having a good run of luck lately. And we don’t just mean the negative publicity the carrier earned after losing actor Kevin Bacon’s package, sending it on a whirlwind tour of Europe and the Middle East. Or the theft of nearly $1 million in trading cards from an unattended FedEx truck in Santa Ana, California.
A federal judge just cleared the way for a class-action lawsuit filed by retired FedEx pilots who claim they’ve been shortchanged hundreds of dollars each month in their pension payments. If the suit succeeds, it means FedEx may have to recalculate monthly payments for all its retirees — and make reimbursements as needed.
In addition, at least 10,000 individual lawsuits have been filed across the U.S. since late summer, alleging that FedEx failed to fairly compensate drivers for overtime pay. Barred from filing a class-action suit, instead the plaintiffs are failing the exact same claim thousands of times, across various states. These suits join a long list of wage settlement, discrimination, and tariff settlement claims facing FedEx.
Whether or not these lawsuits ultimately succeed or fail, it’s clear the carrier will be spending millions in legal fees alone.
The carrier’s Q3 earnings call on October 28 had some positive highlights, including quarterly profits that were larger than expected. But the takeaway for some analysts is that FedEx’s margins are slipping as it grapples with higher costs, including hiring extra truck drivers — an expense that will only grow during peak season. FedEx shares fell by 3.2% following the announcement.
Compare those results to the UPS Q3 earnings call held just a day earlier. With growing per-package revenues and margins — based on a more carefully curated parcel mix —UPS shares spiked by 6% after the call.
Don’t Let FedEx — or Any Carrier — Determine Your Financial Results
Again, it’s not the best of times for FedEx. But that doesn’t mean you have to accept higher rates and surcharges when FedEx inevitably passes its own rising costs on to customers.
It’s important to remember that, as the shipper, you’re in control. And Redwood can help you exert your power as you negotiate rates with FedEx, UPS, or the smaller regional carriers who are gaining ground.
Redwood’s Parcel Advisory experts, including former FedEx and UPS employees, can help significantly improve your carrier mix and overall costs. In fact, the Parcel Advisory team drives 23% cost savings for our customers, on average.
It begins by assessing your current parcel shipping behaviors — including typical package sizes and weights, services used, delivery timelines, and destinations. The Redwood team uses proprietary tools and analytics to understand your parcel shipping profile, match you with the right carriers, re-negotiate contracts as needed, and optimize your carrier network. Redwood also helps you benchmark carriers on an ongoing basis, according to their cost and service performance— so you can see when your carrier partners no longer meet your expectations.
In an increasingly expensive and confusing parcel-shipping landscape, Redwood uses data, technology, internal expertise, and hands-on experience to support your success.
While FedEx is currently having a run of bad luck, we’re confident you can elevate your own results by looking beyond the status quo — and refusing to simply accept sky-high cost increases. Redwood Parcel Advisory can help you achieve the best possible cost and service levels, even in tough times. Contact us to learn more.
