Will UPS and FedEx Ditch Guarantees Forever?
Deemed essential transportation service providers by the US government, shipping companies continued to operate, but it was not business as usual. According to the UPS website, “The Novel Coronavirus pandemic has created unprecedented complexities, which have required us to constantly reassess our operations. Our highest priority is to help ensure the health and safety of our employees, customers, and suppliers.”
By March 26, 2020, both UPS and FedEx announced the suspension of their service guarantees.
Broken Promises and Booming Profits
In the past, UPS and FedEx took responsibility for late deliveries, service failures, and incorrect charges by offering refunds or credits. After March 2020, the two delivery companies revoked refunds and credits, with a statement on FedEx’s website announcing that “COVID-19 has disrupted the air cargo market and generated a surge in residential delivery in the U.S. As a result, we’ve had to adjust our networks to best serve our customers.”With “stay at home” mandates varying by state, disruptions in the supply chain, and with the health of employees and customers in mind, the suspension remains nearly one year later.
According to reports by Macrotrends on the annual revenues of FedEx and UPS, “FedEx annual revenue for 2020 was $69.217B, a 0.68% decline from 2019” and “UPS annual revenue for 2020 was $84.628B, a 14.22% increase from 2019.”
As the carriers’ bottom lines bounce back, you may be wondering whether we’ll see a reinstatement of service guarantees. Our prediction? We won’t see a return of the pre-COVID service guarantees anytime soon. Nevertheless, despite being an effective duopoly, UPS and FedEx are fierce competitors regardless of the circumstances, guaranteed performance will once again become a competitive differentiator. And where one goes, the other soon follows.
What can you do about it?
As a business that counts on reliable shipping, the suspension of UPS and FedEx’s service guarantees to protect their bottom line is likely impacting yours. Now is a great time to reevaluate the pricing you have with your parcel carriers.The team at ShipRx has worked for the major carriers, and we know how to get you the lowest rates possible. Most customers who come to us end up saving 20-30% on their shipping costs.