Is the (very possible) UPS Strike Causing You to Consider a Multi-Carrier Strategy?
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Jul 07, 2023
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With the clock ticking down on labor negotiations at UPS and animosity building between the two sides, the potential for a Teamsters strike is growing. We don’t have a crystal ball and can’t predict whether the two sides will come together and hammer out their differences in time to prevent what would be a devastating work stoppage. We hope they do because the fallout won’t be good for UPS customers.
However, we can predict one thing with certainty: on August 1, we’ll still be here providing best-in-class next- and two-day deliveries.
We know shippers are becoming more anxious each day about the potential disruption a UPS strike would bring. Shippers can’t replace that capacity overnight, even with all the other available options.
We’re reaching out to support our existing clients and help ease the potential burden of a work stoppage. The good news is that our model allows us to flex and scale on the fly.
Is it time to diversify delivery carriers?
Given what’s happening at UPS, has there ever been a better time to consider the value of diversifying your delivery carrier mix? Deloitte recently recommended diversification as a way to “support growth and delivery performance.” That makes sense to us — our on-time delivery rate is 99%, which is better than any of the national carriers, and our technology allows us to personalize the delivery experience for your customers. Not to mention our highly visible tracking and simplified pricing.
Many of our customers learned the hard way during the pandemic that relying on a single carrier can easily become a single point of failure. We’re concerned that many more shippers will learn that lesson in the coming weeks. But that’s not the only reason to consider a diversified carrier strategy. And it may not even be the best reason.
Why diversify your delivery carrier mix?
The national carriers are really good at delivering a diverse mix of packages to various locations scattered across the country, but there’s a cost associated with that. UPS, FedEx, USPS, and other traditional carriers have a huge fixed-cost base — they’re managing large real estate holdings, vast fleets of large, inefficient vehicles, and a large unionized permanent labor force. Those costs are baked into the pricing structure and passed on to customers through rising base rates, fuel surcharges, residential surcharges, and peak season surcharges.
When you ship with AxleHire, you won’t be paying for an air freight hub, millions of square feet of warehouse space, or a low-MPG delivery van that is going out at 60% capacity. Our asset-light business model means you’ll only be paying for the resources that you use. We lease our warehouse facilities on a short-term basis, meaning we only pay for the capacity we need when we need it. We use a mix of gig-sourced drivers and delivery service providers (DSPs) to match each day’s supply of drivers and vehicles to parcel demand. Our technology provides the most efficient routing in the industry, meaning we can reduce the miles traveled and optimize the utilization of each vehicle.
The result is that AxleHire can provide next- and two-day deliveries at a rate comparable to legacy carriers’ ground rates. Your customers get their orders sooner, and our on-time delivery rate of 99% is better than any of the national carriers.
Our technology provides shippers and consumers with a level of transparency that national carriers can’t match. Because our vehicles are more fuel efficient and better utilized, we create fewer CO2 emissions per package than the big guys. And 15% of our deliveries are made by alternative fuel vehicles, further reducing our carbon footprint.
The time to diversify your delivery carrier is now
AxleHire’s technology and delivery model give brands a distinct advantage — we can scale faster than our competitors because of our technology. That could be a huge advantage in the weeks and months ahead. It’s also pretty much a given that when UPS and the Teamsters finally settle, UPS’ labor costs will rise. At least some of that cost will likely be passed on to shippers, either in higher base rates or as another new surcharge.
We hope that the UPS situation can be resolved without a strike and the ensuing chaos that would be inevitable. Regardless of the outcome with UPS, there has never been a better time to consider diversifying your carrier mix. It just makes sense in today’s environment. If you haven’t already begun that process, the time to start is now. A good place to start would be to contact one of our logistics experts for advice. If you have begun diversifying, AxleHire can be a valuable addition to your carrier mix.