|Wed Aug 24 2016 23:23:18|
Small Shippers Punished by Shipping Duopoly Pricing?
By: Ina Steiner
A new article refers to FedEx and UPS as a "near duopoly" (same concept as a monopoly but with two companies rather than one) and says they have used their market power to move in virtual lockstep when setting published rates for ground shipping.
Mark B. Solomon, executive news editor of DC VELOCITY, points to data that seems to prove that supposition: "Over the past 10 years, the average cumulative list rate increases on the two companies' ground delivery services have been identical across the board."
The data was compiled by consultancy Supply Chain Optimizers and obtained by DC Velocity.
Here's the clincher for online sellers:
"The ground-delivery price increases do not affect the many FedEx and UPS shippers who tender parcels under contracts with their providers. Rather, the increases, combined with recent moves by both companies to base all ground parcel pricing on a shipment's dimensions rather than its weight, tend to "punish small shippers who aren't covered by contracts, and have applied no science to their packaging," Ampuja said."
(referring to Jack T. Ampuja, Supply Chain Optimizers' president)
Be sure and read the article and let us know what you think.
It won't be long before the two companies announce their annual rate hikes that go into effect each January.