U.S. retailers and other delivery customers for the first time in more than four years are easily winning discounts from United Parcel Service and FedEx, according to industry data and interviews with seven professionals who advise shippers in price negotiations.
- awash with volume from the early pandemic's online shopping surge - rebuffed discount requests and cherry-picked the most profitable customers. Now, those same companies are fighting to fill trucks as demand shrinks.
That's because soft demand created an environment that is "very juicy" with opportunities for customers to squeeze out savings, said Deyman Doolittle, co-founder of data-driven consulting firm ShipSigma, which helps them cut shipping costs.Rates for ground delivery services favored by online retailers dipped below 2022 levels during the second quarter and are forecast to be down for the entire third quarter, according to the TD Cowen/AFS Ground Parcel Freight Index.
- both UPS customers - told Wall Street they were reaping savings thanks to recently negotiated delivery deals, including a 50 basis point reduction in the second quarter at Macy's. Both declined to comment for this story. While those savings are far from offsetting years of price hikes, a return to past discount levels "feels like a windfall," said Taylor, a former FedEx Ground project manager.A yawning supply-demand mismatch is threatening to exacerbate carrier profit pressures.
While such a move may not be significant for small companies, it can result in meaningful savings for large customers, said Micheal McDonagh, president of parcel services at AFS Logistics.
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