• UPS posts solid Q2 earnings results, denies losing business to Amazon

• FedEx doubles down on trailer loading robots, expands Dexterity partnership

• Peak surcharge announcements are coming soon from UPS and the USPS

US PACKAGE DELIVERY MARKET

Say what now?

Amazon has not won any volume from UPS. According to UPS CEO Carol Tome, on the UPS Q2 earnings call: “I am not aware of any volume we have lost to that competitor.”

OK, so she’s not aware of it. Sounds like someone should probably tell her. Not that it would matter. As UPS’s trademark arrogance, err confidence, has returned.

Let’s look at a few Q2 earnings highlights.

1. Amazon glidedown is done … now what?

This was the theme of several questions, as well as UPS’s prepared remarks. The glidedown, and overall network rightsizing, hit the target. Capacity is aligned with market demand, and the network is more agile to flex with demand due to increased automation.

As for Amazon, it represents 9% of UPS revenue [down from 10% YoY]. and UPS will continue to partner with Amazon to optimize the volume.

Oh, and the not losing business comment, was preceded by Tome describing all the reasons UPS is better than Amazon.

UPS creates strong relationships with customers. [implying Amazon doesn’t]

UPS builds trust with customers. [implying customers don’t trust Amazon]

Sounds like a great relationship with its biggest customer. One that may grow contentious in short order. [not that we would see it publicly]

2. FedEx going after SMB’s is some funny sh*t

Tome was asked about FedEx competing with UPS DAP. She went on to describe DAP’s success, nearly laughing. Then got a bit more serious about the competition.

Starting with: “I don’t mean to poo-poo the competition …”

I can’t argue with this one. UPS is about a decade ahead of FedEx here.

3. Q2 results and full-year guidance

US Domestic Q2

•ADV down 3.3%, driven mostly by Amazon

•Revenue: $14.9B, up 6% Operating profit: $1.19B, up 21%

•Yield: up 9.3% [Base rates + customer mix = 50%, FSC = 50%]

•FSC revenue “covered” increased fuel costs

•SMB volume up 4.4%, 34.5% of total

•UPS Digital: revenue up 30% [incl Roadie and Happy Returns]

2026 guidance [raised] - Revenue: $91.2B, operating profit: $8.65B

——

UPS posted solid Q2 earnings results and raised full-year guidance. So, its trademark confidence is back, as it completely dismissed all competition.

Including from its biggest customer.

The robots are coming

FedEx announced it is scaling use of a specialized robot for loading truck trailers at its Hagerstown, Maryland, hub after validating the technology from startup Dexterity Inc. over several years. The expansion in Hagerstown will allow FedEx to continue evaluating Dexterity’s AI-enabled trailer-loading system at a larger scale.

This follows FedEx’s announcement earlier this year of plans to deploy trailer unloading robots from Berkshire Grey. Features of the autonomous robot, named Scoop, include:

•Enhanced safety and maintainability: Supports human assistance for exception handling.

•Continuous flow: Designed to deliver consistent inbound flow, not just optimize for individual pieces.

•Minimal facility impact: Integrates seamlessly into existing FedEx facilities.

•AI-driven autonomy: Recognizes and adjusts to a variable package mix, makes real-time decisions to maneuver inside trailers, empties trailers at high throughput, and autonomously exits the trailer.

FedEx continues to invest in trailer loading/unloading robots, partnering with Dexterity and Berkshire Grey, as it consolidates its network and reduces labor hours.

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Nothing to see here: USPS Raises Package Rates for Marketplaces Sellers

Cleared for take off: DoorDash’s in-house drone program receives FAA approval

Just kickin’ it: Stepping into Back-to-School: Shipt and DSW Team Up to Deliver Fresh Kicks Right to Your Door

HEADS-UP

What to watch for this week (Aug 3 - Aug 9)

Friday, August 7th: The USPS Board of Governors will meet, likely followed by the USPS releasing its peak rate increase.

Any day now: Expect UPS to release its holiday demand surcharges soon, although it may be after the USPS announces its peak rate increase.

• FedEx kicks off peak surcharge season

• Veho continues expansion in Tucson and Grand Rapids

• UPS and FedEx fuel surcharges continue to hit customers’ bottom line

US PACKAGE DELIVERY MARKET

Sneak peak

For the second year in a row, FedEx beat UPS to the punch with its peak (demand) surcharge announcement on July 22nd.

Here’s a quick look 👇

➡️ Residential surcharges

Non-volume-based surcharges continue in 2026. Increases are “modest”, ranging $0.10-$0.50 [not so modest 11.9%-25.0%], with Ground Economy taking the largest increase.

Home Delivery and Ground Residential

•$0.50 (Oct 26-Nov 22 and Dec 28-Jan 17), $0.80 (Nov 23-Dec 27)

US Domestic Express (Resi)

Overnight Services

•$1.30 (Oct 26-Nov 22 and Dec 28-Jan 17), $2.55 (Nov 23-Dec 27)

2 Day, 2 Day AM, Express Saver

•$1.20 (Oct 26-Nov 22 and Dec 28-Jan 17), $2.35 (Nov 23-Dec 27)

Ground Economy

•$2.55 (Oct 26-Nov 22 and Dec 28-Jan 17), $4.05 (Nov 23-Dec 27)

➡️ Volume-based surcharges (Residential)

Just a slight increase over the baseline (105%) will cost shippers $1.70 for Ground and $3.05 for Express, but ship >400% over the baseline during a 1-week period and the charges jump to $8.00 and $9.35, respectively [$0.50 and $0.60 more than in 2025].

The peak surcharge for that top tier Ground package in 2020 was “only” $4. Seems like a bargain now.

➡️ Peaking factor calculation: baseline period

Again, similar to the last few years. Volume shipped during certain holiday periods is compared to a baseline period. The baseline period is Jun 1 – Jun 28, 2026.

➡️ Residential surcharge tiers

The same as 2025, with six tiers of a peaking factor [% increase over baseline].

➡️ Weekly volume threshold

The same as 2025: 20K residential packages in a calculation week.

➡️ Peaking factor calculation/surcharge application periods

Similar to 2025: A weekly calculation begins Oct 5. Any applicable surcharges hit 2 weeks after the end of the calculation period, for a period of 12 weeks, calculated and applied weekly.

FedEx’s version of dynamic pricing. Get used to it.

-----

It’s demand surcharge season. FedEx is celebrating early, with, “standard” surcharge increases and continued non-volume-based surcharges

Happy negotiating.

Slow and steady wins the race?

The tech-enabled carrier playbook the past 5 years:

1. Raise a pile of cash

2. Expand at a breakneck pace

3. Buy business with below market rates

4. Raise more cash

5. Stand up bi-coastal, automated facilities

6. Continue rapid expansion

7. Repeat until scale is attained or cease operations

In 2022, it looked like Veho was following the playbook, raising nearly $300M over a two-year span. Rapid expansion was there initially, but over time, Veho has reigned it in, instead choosing to expand methodically, while focusing on service quality and customer experience.

For example, its latest expansion included Grand Rapids and Tucson, not exactly large markets. But it’s part of Veho’s playbook over the last couple of years, expanding delivery coverage to smaller markets near sort centers.

It remains to be seen whether Veho’s playbook will allow them to survive and thrive in a price-competitive market, but it’s looking good so far.

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Not delivering for America: USPS launches smart locker service for local transactions

• Jitsu continues its Midwest expansion

• Is delivery reliability more important than delivery speed?

US PACKAGE DELIVERY MARKET

Kicking it in the Midwest

Jitsu recently announced expansion in the Midwest, adding Kansas City, Dayton, and Akron to its coverage area. Kansas City is a new market for Jitsu, while Dayton and Akron represent ZIP code expansions in its existing Cincinnati and Cleveland markets. In total, this expansion will reach an additional 3.2M people.

While it’s not a huge impact, it continues Jitsu’s methodical expansion approach over the last few years. In 2025, Jitsu added 7 markets, 800+ zip codes, and 14.4M consumers to its coverage. Its Midwest expansion has connected Texas and East Coast markets within its network.

The deliberate expansion approach comes during a period of intense competition, which has seen several carriers expand aggressively, led by low pricing. It will be interesting to see whether Jitsu can maintain its methodical expansion strategy, or if competitive pressure will require a change in its approach.

No so fast?

Delivery reliability > delivery speed, according to a Supply Chain Dive piece summarizing thoughts from Macy’s and Ulta Beauty executives during a recent panel at Home Delivery World.

But is it really that simple? I don’t think so. We have seen retailers drive top line results with fast delivery, and it’s not just the obvious ones, like Amazon, Walmart, and Target. Tractor Supply, Home Depot, AutoZone, and Nordstrom have invested in fulfillment and delivery capabilities to drive revenue and customer loyalty. Fast delivery matters.

According to a 2024 McKinsey survey covered in the article, consumers preferred a promised arrival window over fast delivery, and fast delivery ranked as the fifth-ranked delivery priority (down from #1 in 2022). But the last time I checked, consumer surveys on delivery priorities aren’t used to measure actual consumer behavior.

Is providing a promise date, and meeting it with consistency, important? Absolutely. Is it more important than delivery speed? I’m not convinced, but I also don’t think retailers have to choose one or the other. Instead, retailers should invest in providing a personalized delivery experience, with clear promise dates early in the shopping experience, while optimizing delivery speed at the appropriate cost.

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Fast food: Walmart is getting into restaurant delivery, beginning with Subway

O Canada: Walmart+ arrives in Canada, with unlimited delivery

Those in favor, say AI: Can AI gains give alternative delivery providers an edge?

• Amazon puts US logistics providers on notice, launches Amazon Supply Chain Services

• Veho continues expansion, takes a shot at FedEx in the process

US PACKAGE DELIVERY MARKET

Sorry, not sorry

Amazon has done it again, this time by opening its logistics network to every business, taking aim at two of its partners, UPS and FedEx, with no apologies.

It’s a playbook Amazon that has run for years. Build world-class capabilities to meet internal needs, productize it, and offer it commercially. Portions of its logistics network have been available to non-Amazon sellers. Now, Amazon Supply Chain Services provides end-to-end capabilities to businesses of all types and sizes.
And a few notable companies have already been using ASCS:

➡️ Procter & Gamble is using Amazon’s freight services to transport raw materials to production facilities and move finished goods across its distribution network.

➡️3M is using Amazon’s freight services to move products from its manufacturing sites to distribution centers worldwide.

➡️Lands’ End is using a unified inventory pool within Amazon’s network to fulfill orders across multiple sales channels.

➡️ American Eagle Outfitters, Inc. is using Amazon’s parcel shipping network to deliver online orders from its American Eagle and Aerie website directly to customers nationwide.

Amazon Supply Chain Services is here.

Punching above its weight

Well, the gloves are off, and Veho is taking a swing at an industry giant. Veho continued its expansion with two new markets announced this week, including Memphis (also Birmingham).

Adding Memphis to its coverage isn’t necessarily newsworthy, but Veho’s announcement of it was: “You know Memphis — the city that literally invented modern logistics, but somehow still can't get a package delivered on time?
We figured it was time someone raised the bar.”

Veho is one of several alternative carriers that continues to expand its coverage area and services offered, with an asset-light model focused on lightweight ecommerce delivery. It remains to be seen whether this model is sustainable and, if so, which alternative carrier(s) will emerge from a delivery market flooded with similar providers (at least on the surface, some may offer differentiating value and/or execute better than others).

One thing is certain: Veho is not lacking confidence. But inferring that Memphis-based FedEx “still can’t get a package delivered on time”?

Not so sure about that approach.

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Beauty and the Eats: Ulta Beauty adds new delivery partner

HEADS-UP

What to watch for this week (May 11 - May 17)

Any day now: The USPS will likely announce a July package services rate increase this week, maybe as soon as May 11th.

• The USPS 8% “time-limited price increase” kicks in, with another increase likely on the way in July

• The UPS-Amazon “glide down” is almost complete

• Tractor Supply is the latest example of retailers insourcing delivery

US PACKAGE DELIVERY MARKET

ICYMI: Your USPS rates just went up

USPS customers: Your rates went up on Sunday, April 26th, due to an 8% “time-limited price increase.” [effective through 1/17/27, for now]

Your rates will likely go up in July, too. [check out “Heads Up” below to find out why]

And again in October. And again in January. And that 8% might not be temporary.

If it sounds familiar, it should, after seeing near-monthly increases for more than a year from UPS and FedEx. Maybe that was a reason you moved volume to the USPS. Because their rates are simpler and more predictable. While that’s still true, it’s becoming less so. This is a structural shift in USPS pricing. Slowly, it has introduced charges/criteria to better align with costs, such as:

-Temporary peak rate increases, dimensional fees, not discounting rural zip codes

But its “no FSC” claim is likely a thing of the past, which should prompt shippers to take a long, hard look at their parcel costs. The truth is, there is no such thing as a “set it and forget it” carrier. Shippers have to closely manage their parcel program, monitor service, pricing, and costs, and make adjustments when needed.

ICYMI: The USPS is becoming more like UPS and FedEx, with an 8% price increase on package services. It’s effectively, a fuel surcharge, and it won’t be the last UPS/FedEx-like pricing change.

Doing more with less

UPS’s “glide down” of Amazon volume, a process aimed at cutting it by 50% over 18 months, is almost complete. In parallel with the volume reduction, UPS continued to right-size its network and workforce, closing 23 buildings and cutting 25,000 operational positions in Q1.

So, now what? Well, technically more of the same. UPS plans to focus on winning more profitable volume in the SMB, B2B, and healthcare segments. It’s been the UPS narrative for years, and it happens to mirror FedEx’s focus as well.

So, with UPS and FedEx battling it out over premium volume segments, everyone else (e.g., USPS, OnTrac, Amazon Shipping, DHL eCommerce, regionals, etc.) should have no problem taking ecommerce market share. And UPS and FedEx seem to be just fine with that, for now.

Betting the farm on fast delivery

BREAKING: Fast, efficient delivery drives bottom line results

Yet another retailer is insourcing delivery, extracting value from what many treat as a line item on the P&L. OK, it’s not breaking news, but it’s nice to see delivery getting recognized.

Tractor Supply continues to see results from its final mile build out, using delivery as a core part of its digital strategy. Per CEO Hal Lawton:

“In final mile, we’re scaling our delivery network, adding hubs and increasing delivery volume, supporting the continued strength in our digital business while improving efficiency and reducing our cost to serve.”

A few Q1 highlights:

-Double-digit YoY delivery volume growth

-Opened 200 final mile hubs in 2025 [another 176 are planned for 2026]

-Planned $10M in final mile savings in 2026

Imagine that, delivery as a competitive advantage.

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Closing time: UPS to close 27 additional parcel facilities in 2026

Thank you, thank you, Sam I am: Sam’s Club adds one-hour option to Express Delivery

Catch me, if you can: Walmart is racing to become Amazon before Amazon can become Walmart

Happily ever after: UPS-owned Happy Returns expands network to 10,000 drop-off locations

Let’s GOFO!: GOFO Unveils Its 2026 North American Expansion Plan, Powered by Automation and Network Intelligence

HEADS-UP

What to watch for this week (May 4 - May 10)

May 8th: The USPS Board of Governors meets and the USPS will likely announce a July package services rate increase.

Any day now: Expect FedEx to respond to UPS’s March 9th fuel surcharge increase, and the April 13th FSC table adjustment, with an increase of its own.

• Adding fuel surcharges to the parcel costs fire

• Mail Innovations is still around, right?

• Heads up: USPS 8% rate increase takes effect April 26th

US PACKAGE DELIVERY MARKET

Adding fuel surcharges to the fire

Ground parcel rates keep moving up and to the right, due in part to a 26.7% YoY fuel surcharge increase in Q1, according to the TD Cowen/FAS Freight Index. And Q2 doesn’t offer any relief for package shippers. While UPS and FedEx fuel surcharge table adjustments, and subsequent surcharge increases, are the most notable, the USPS is also implementing an 8% fuel surcharge on April 26th (technically a “transportation-related time-limited price change”).

So, how are shippers responding? They’re digging into the FSC impact. According to AFS, “Everybody is concerned about it and just trying to do some kind of modeling to predict their cost increase.”

While understanding the impact is a necessary first step, it doesn’t do much to mitigate the impact. Here are a few suggestions for shippers that are getting hit with FSC increases.

1. Negotiate FSC discounts
   A % discount can only help so much, as changes to the FSC table still result in a net increase. But a discount can mitigate part of the increases.
   There are other, more effective options [rate cap, custom FSC table, etc.] that should be explored as well.

2. Reduce the spend FSC applies to
   Lower base/surcharge rates = lower FSC amount

3. Move volume to other carriers
   Obviously, there’s more to consider than a FSC increase, but alternative carriers may offer savings. [and many offer more rate certainty, simpler pricing]

The bottom line: fuel surcharges will continue to increase, due to elevated fuel costs, carrier FSC table adjustments, or both. Shippers need to take action now to mitigate the short-term impact, while negotiating contract terms to offer protection going forward.

What would you say you do here?

So, what’s the deal with UPS Mail Innovations? It still seems to be a solution in limbo, even after UPS reached a new Parcel Select deal with the USPS.

I was surprised UPS maintained MI in 2025. After failing to reach a new Parcel Select deal in late 2024, MI issued two 25%+ rate increases in 2025, in January and May of 2025. A year ago, I thought 1 of 2 scenarios was likely:
1. UPS winds down MI and ends the service
2. UPS reaches a new USPS Parcel Select agreement

But it took a year for number 2 to happen. In the interim, UPS somehow kept MI alive, using UPS-owned Roadie (+other carriers) for delivery. But there was no differentiating value with MI. Pricing wasn’t competitive. And there was nothing special about the service. [except the oxymoronic product name]

I’m not sure much has changed in 2026, despite the fact that MI is now utilizing the USPS again for delivery [partially, it still has other delivery providers in place]. So, I still don’t see MI having a clear market position. At least not yet.

Maybe UPS is trying to morph MI into a viable lightweight ecommerce service offering, with plans to shrink Ground Saver due to the high cost structure, eventually making MI the primary lightweight ecommerce service.

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HEADS-UP

What to watch for this week (Apr 20 - Apr 26)

April 26th: An 8% temporary price increase is effective for several USPS package services, including Ground Advantage and Priority Mail.

-Expect FedEx to respond to UPS’s March 9th fuel surcharge increase, and the April 13th FSC table adjustment, with an increase of its own.

• Amazon and the USPS reach a new delivery deal

• More UPS fuel surcharge changes are coming, but it’s not what you think

• It’s official: USPS package rates to increase 8% on April 26th

US PACKAGE DELIVERY MARKET

Let’s make a deal

Now, this makes sense. Amazon and the USPS reached a new deal, cutting package delivery volume by only 20%, not the 66% reported in March.

Per an Amazon spokesman:
“We’re pleased to have reached a new agreement with USPS that furthers our longstanding partnership and will let us continue supporting our customers and communities together.”

The USPS averts disaster, for now, and Amazon buys more time to insource delivery of most of its package volume.

Pretty sneaky, UPS

Really, UPS. Did you think we wouldn’t notice?

UPS is adjusting its FSC table again, effective April 13th. At first glance, it looks the same.

•Last week’s diesel price/gal = $5.64

•Using the prior Ground FSC table, that would be a 27.75% FSC.

•Using the April 13th Ground FSC table, that would be a 27.75% FSC.

Soooo … where’s the change? It’s on the lower end of the table. [lower as in lower $/gal]UPS is extending the $/gal range increments, from $0.09 to $0.27, starting at $4.45 instead of $3.55. Once diesel $/gal drops below $4.36 in the future, the FSC will be higher than it would be now at the same price. So, while the FSC technically will go down as diesel cost drops, it won’t go down as much as quickly.

Pretty sneaky, UPS.

Stamp of approval

Not a surprise, but now it’s official. The PRC approved the USPS 8% rate increase.
[on certain package competitive products] The “temporary” increase is effective 4/26/26 – 1/16/27.
USPS customers:
Now is a good time to reassess your parcel program.
There are more carrier options than ever.
Options that are more accessible than ever.
Technology is available to optimize a diverse carrier base.

Don’t accept rising carrier rates as inevitable or the cost of doing business.
Assess your program. Set cost, transit, and delivery reliability goals. Explore alternative carriers. Build a program with carriers that meet your needs.

Not so trendy

Ecommerce growth = parcel volume growth. Except when it doesn’t.

US ecommerce sales grew 5.4% in 2025, the fourth straight year of single-digit growth.[yes, that follows 42% growth in 2020], and the second-lowest growth rate since 2010. On the surface, that would point to modest parcel growth. But US parcel volume has been close to flat for the last few years.

Consider the Amazon (and Walmart) effect, and the market has contracted.

•2025 US ecommerce growth

AMZN+WMT = $69.5B

Rest of market = $6.5B decline

Total market = $63B

So, literally AMZN+WMT accounted for the net growth. And that growth didn’t translate to parcel market volume, as both retailers continue to insource delivery.

-----

Ecommerce growth = parcel volume growth. It used to be a given. That’s no longer the case. As ecommerce growth slows, Amazon and Walmart take ecommerce market share and deliver more of their own volume.

This is a trend that will continue to constrain parcel market growth, as carriers compete in a sluggish, albeit saturated, market.

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HEADS-UP

What to watch for this week (Apr 13 - Apr 19)

Any day now:

-Expect FedEx to respond to UPS’s March 9th fuel surcharge increase, and the April 13th FSC table adjustment, with an increase of its own.

• What shippers can do to combat rising fuel surcharges

• UPS reaches an agreement with the Teamsters on its driver buyout program

• One retailer’s ship-from-store growth is emblematic of parcel market shifts

US PACKAGE DELIVERY MARKET

Resistance is fuel-tile

Fuel surcharges are increasing across the board, so there’s no sense in fighting it, right? Not exactly, according to a piece from Supply Chain Dive, titled ‘How FedEx, UPS shippers can limit fuel surcharge pressures.’

Here are a few tips from Supply Chain Dive (also covered similarly here in March).

1. Limit parcel costs elsewhere

Fuel surcharge discounts can only help so much, especially when the cost of fuel is actually increasing. One way to limit the impact of fuel surcharges is to reduce the costs that fuel surcharges apply to, such as base rates and a range of other surcharges. A few ways to cut, or limit these costs, include reducing the delivery distance (and pricing zone) and cutting dimensional weight impact through packaging optimization.

2. Explore alternative carriers

Many alternative carriers offer lower rates than UPS and FedEx, offer simpler pricing with fewer surcharges, and/or assess a lower fuel surcharge (or none at all). Even carriers with a similar fuel surcharge structure to national carriers, may have a lower fuel surcharge. For example, while OnTrac’s fuel surcharge table, which assigns fuel surcharge percentage to ranges of fuel costs, is structured like that of UPS, OnTrac’s fuel surcharge remains lower than UPS and FedEx (even when factoring in upcoming changes to its fuel fee calculations).

The bottom line for package shippers is that, while it may seem that resistance is futile, there are options to limit the impact of rising fuel surcharge costs.

Take it, to the limit, one more time

UPS has reached an agreement with the Teamsters union to limit its voluntary driver buyout program to 7,500, in exchange for being able to offer severance packages nationwide. The agreement follows UPS temporarily withdrawing the buyout program from 13 states on March 24, as a response to a Teamster grievance.

In addition to the 7,500 accepted offer limit, UPS has agreed not to pursue or offer any other severance programs for the life of the current Teamster agreement (expires July 31, 2028).

The driver buyout program is part of UPS’s plan to cut 30,000 jobs in 2026, as it rationalizes its network and staffing to a reduced volume baseline, following a planned volume reduction with Amazon. It’s a fine line to walk, tightly managing resources, assets, and labor while attempting to maintain service levels and improve profitability. It will be interesting to see how effectively UPS maintains this balance, while going head-to-head with FedEx on premium market segments like B2B and healthcare.

Twice as nice (unless you’re FedEx or UPS)

Ulta Beauty doubled its SFS capabilities in 2025. This is yet another example of why FedEx and UPS are pulling back on ecommerce.

Retailers continue to grow and refine SFS. There are obvious, long-standing examples, like Walmart, Target, and Dick’s. And other, more recent, examples like Ulta Beauty, PetSmart, Williams-Sonoma, and Kroger.

More accurate distributed inventory cuts split orders and reduces delivery distance, making more volume low-revenue for FedEx and UPS, as dozens of providers can support it. [very dependent on daily volume by store] So, national carriers look elsewhere, to customer segments that value a national, integrated network, like SMB’s that fulfill from one location. [not hundreds like omnichannel retailers]

According to FedEx CCO Brie Carere:

“Small and medium customers who generally don’t have multiple fulfillment locations and so they do tend to longer zones.”

“It will allow us to take market share in the … long distance e-commerce.”

This isn’t a new development, but it’s becoming more prominent, as several factors converge:

➡️ Inventory is moving closer to demand

➡️ The value of a national network is decreasing

➡️ Regional and final mile delivery capacity is growing

➡️ Technology can optimize a diverse carrier base

➡️ There’s price and service competition like we’ve not seen

Retailers continue to grow and optimize SFS, with Ulta Beauty being the latest example. It’s one of many factors driving a parcel market shift, where FedEx and UPS concede low-revenue, short-zone volume to focus on higher-margin, longer-distance volume.

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HEADS-UP

What to watch for this week (Apr 6 - Apr 12)

Any day now:

-Expect FedEx to respond to UPS’s March 9th fuel surcharge increase with an increase of its own.

• USPS proposes 8% temporary rate increase

• FedEx jumps into same-day delivery with OneRail partnership

• FedEx and Amazon grow their partnership with returns collaboration

• UPS driver buyout plan hits a snag

US PACKAGE DELIVERY MARKET

Temporary shmemporary

Initial take on the USPS 8% price increase/FSC:

•This was inevitable [likely overdue]

•It further complicates the USPS’s market position

The USPS has long touted its lack of surcharges and simple pricing, including no FSC. But its financial situation is dire, fuel costs are increasing, and competitors have monetized fuel for 30 years. [at least had a FSC … monetization has escalated recently]

So, what’s the impact to USPS customers? If/when the rate increase is approved by the PRC [more on this later], it will apply to most NSA holders as published, similar to the peak/Q4 temporary rate increases. But, this is likely not temporary [effective 4/26/26 – 1/17/27], as UPS/FedEx introduced FSC in the late 90’s as a temporary surcharge. And we know how that turned out.

This is a structural shift in USPS pricing Slowly, it has introduced charges/criteria to better align with costs, such as dimensional fees and not discounting rural zip codes, but its “no FSC” claim is likely a thing of the past. And it may open the door for more competition, from alternative carriers, including Amazon Shipping [a la the 2024 Parcel Select changes]. That is, if the PRC approves it, which is likely.

There will be pushback from shippers/industry groups, but if the USPS cost justification is sound [admittedly, haven’t reviewed it yet], the PRC will likely approve it, albeit maybe with modifications like a deferred effective date or a shorter effective date range. [requiring a re-assessment later in 2026]

-----

The USPS is becoming more like UPS and FedEx, by proposing an 8% price increase, which is effectively a fuel surcharge. If/when it’s approved by the PRC, it will have a significant impact on shippers’ costs. It may also put some USPS package volume at risk, as alternative carriers determine their response, by either holding pricing and grabbing share, or rising with the tide, and increasing revenue per package. [or maybe somewhere in the middle]

Samesies

Look who’s jumping into same-day delivery. FedEx will offer the service through a partnership with OneRail. Admittedly, I didn’t see this one coming, but it makes sense, and it’s relevant.

Amazon and Walmart are furiously pushing same-day delivery, which helps increase their retail/ecomm market share, and constrains parcel market volume. [at least the “traditional” non-same-day volume] Providers like DoorDash and Instacart are delivering more retail orders. FedEx has been behind here, as a direct comparison to UPS, who offers same-day delivery through Roadie and Delivery Solutions.

There are clear market opportunities for FedEx.

1. Growing retailer wallet share

In some cases, this might be reclaiming wallet share. Over time, FedEx has lost volume to DoorDash et al. [as has UPS, albeit maybe less due to Roadie], as some customers ramped and optimized ship-from-store. Now, maybe FedEx can claw some of that volume back and/or win new volume from existing large customers like Best Buy, Walgreens, Dick’s, GameStop, PetSmart, etc.

2. Same-day as an entry point with UPS customers

Similar scenario, only it’s UPS customers with material same-day volume. Maybe FedEx has a better same-day value prop, and wins same-day + traditional parcel volume from UPS.

So, on the surface this makes sense: FedEx leveraging the carrier network and tech of an established same-day provider, OneRail. One question I have is on price. It has to be competitive, or retailers have little incentive to make a change.

----

FedEx is getting into same-day delivery, through a partnership with OneRail.

The timing makes sense. [albeit a bit late] The market opportunity makes sense. The partnership makes sense. But will the pricing make sense? That answer might determine whether FedEx’s same-day delivery service matters.

Fueling up

OnTrac FSC will increase 1.5% on April 6th, but it will still be less than UPS/FedEx. OnTrac stopped matching the UPS FSC table quite a while ago, and its last FSC update was in October 2025. [UPS has had 2 FSC increases since then]

The revised table extends to higher diesel $/gal to account for rapidly rising diesel prices. While OnTrac’s $/gal will match UPS’s, its fuel surcharge will be 2.75% less than UPS’s, which is something for shippers to keep in mind as they consider how to address rising shipping costs.

BEST OF THE REST

Growing returns: Amazon and FedEx, together again, this time for e-commerce returns

Under pressure: UPS retracts driver buyout option in 13 states under union pressure

Healthy margins: FedEx ramps up healthcare push as part of profit-boosting strategy

All day, every day … and night: Amazon wants to ‘monetize’ speed as it tests a radical new all-day, 10-window delivery service

Fast dashin’: Four apparel retailers partner with DoorDash

HEADS-UP

What to watch for this week (Mar 30 - Apr 5)

Any day now:

-Expect FedEx to respond to UPS’s March 9th fuel surcharge increase with an increase of its own.

-Industry groups may submit filings with the PRC in the form of public comments, pushing back on the USPS’s proposed 8% rate increase on domestic package services. Filings can be found here. Public comments must be filed by April 2nd.

• Amazon takes top US parcel carrier spot from USPS, and plans to widen the gap in 2026

• FedEx delivers an earnings beat, raises guidance, and builds Network 2.0 momentum

• The USPS’s turnaround plan: follow the UPS and FedEx playbook

• Fast delivery battle intensifies, Amazon launches 1-hour and 3-hour delivery

US PACKAGE DELIVERY MARKET

I’ll take that

Amazon has taken the top spot from the USPS and is now the largest US parcel carrier (by packages delivered).

It was only a matter of time, given Amazon’s growth, as the math pointed to the USPS losing the top spot at some point, but it happened faster than expected. And it’s debatable whether Amazon qualifies as a true parcel carrier. After all, most of the volume they deliver is their own. [although Amazon Shipping is growing]

There are some interesting trends in the ShipMatrix report released on March 16.
Two key takeaways:
1. Amazon + Walmart are driving parcel volume growth.
And they’re consuming it, meaning “available” parcel volume growth is minimal.

2. Alternative carriers are taking share.
[Walmart GoLocal, OnTrac, Better Trucks, Jitsu, Veho, UniUni]
Granted, this is based on ShipMatrix’s analysis, but alternative carrier market share was 10.8% in 2025. [13% YoY growth, reaching 2.5B packages]
-----
I think the first takeaway has the broadest impact, and has been building over the last few years. Post-COVID, total market parcel growth has slowed to a crawl. [per SM, flat volume 2021-2023, 4% growth in 2024, flat in 2025] Ecomm sales growth has slowed, but it’s still mid-single-digits. Leading up to 2020, the rough correlation ratio was 1.3. [my crude math, ecomm sales growth to parcel volume growth]

In 2020, both growth figures were in the mid-high 30’s, but there’s been no clear correlation since, and I think SM’s numbers support this. AMZN+WMT have driven a disproportionate % of ecomm growth, increasing their collective market share. But that growth hasn’t translated to external parcel volume.

The impact: Carriers have been competing over stagnant volume for 4+ years, which has suppressed parcel pricing, along with a flood of alternative carriers and low-priced Chinese retailer volume. [which has likely propped up 2023-2025 total market volume] And, per SM, FedEx and UPS have lost share.
-----
Amazon and Walmart are driving parcel volume growth, but they’re consuming most of it. A trend that has been building since 2023, leaving parcel carriers to compete on stagnant volume. Oh, and alternative carriers are taking share … for now.

Feelin’ good, like I should

FedEx is feelin’ it, after delivering an earnings beat and raising guidance, and it’s starting to see the benefits of Network 2.0.

Not only did FedEx raise its on-time delivery performance to 95.3% (up YoY from 91.8% according to ShipMatrix), but peak season was also its most profitable ever, according to CEO Raj Subramaniam on its Q3 earnings call. FedEx sees the peak season improvements as permanent changes to how the company operates as the Network 2.0 overhaul advances.

FedEx is running about 35% of eligible volume through facilities optimized through Network 2.0, and it expects that number to reach 65% by the 2026 peak season. FedEx is forecasting $1B+ in permanent cost reductions in fiscal year 2026 (ending May 31), due in large part to Network 2.0. CFO John Dietrich said savings opportunities and process efficiencies will continue to build as the initiative moves forward.

FedEx appears to be firing on all cylinders right now, reporting strong earnings, executing its B2B and revenue quality strategy (instead of it just being a hollow narrative), while growing volume in a soft parcel market. It will be interesting to see how long FedEx can continue this momentum, and take share in a very competitive parcel market.

Oops, they did it again

Pissing off your largest customer, not a good idea when you’re losing billions annually. But the USPS has managed to do it with two of its largest customers in the past 15 months. First, it was UPS in late 2024, resulting in UPS walking away from a USPS parcel Select agreement.

Now, it’s Amazon, the USPS’s largest customer, that accounts for $6B in annual revenue and 1B+ in annual package volume, and has the ability to insource package delivery.

Amazon plans to cut its USPS volume by 2/3 in the next 6 months, as reported by the WSJ. There has been speculation that this was coming since the USPS announced a last-mile auction in late 2025. Apparently, the planned volume reduction was shared with the USPS through the auction process.

This wasn’t Amazon’s goal during negotiations on a contract that expires at the end of September. After the WSJ piece was published, Amazon responded by posting its account of the situation on its website (‘Setting the record straight on Amazon’s USPS partnership’). Amazon stated that the USPS cut off negotiations in December, choosing to instead introduce the auction, and Amazon chose to reduce volume with the USPS due to the uncertain outcome of the bidding process.

So, where will this volume go? The majority should be delivered by Amazon, depending on the transition pace and Amazon’s capacity. In the short-term, FedEx may take on a chunk of it, but will likely be selective and ensure the price is right. There are plenty of options for lightweight ecomm volume. OnTrac, Veho, UniUni, GOFO, etc. may see some of it.

As for the USPS, this is a big blow. One that is self-inflicted and potentially fatal, at a time when it could run out of cash by 2027.

The USPS tried to squeeze more revenue from Amazon through an auction-style last-mile bid process. It looks like that has backfired, as Amazon plans to dramatically cut its USPS volume.

Amazon will deliver as much of this volume as possible, while FedEx and a few alternative carriers benefit, at least in the short-term, until Amazon consumes it all.

Follow the leaders

The USPS is a bit of a mess right now, and it’s not just because they’re almost out of cash. Their package business lacks a clear strategy, to put it nicely.

Over the past year-and-a-half or so, the USPS has:

-lost its second-largest Parcel Select customer, UPS [temporarily, more on this below]

-eliminated Parcel Select Lightweight pricing [opening the door for alternative carriers]

-brought UPS back into the Parcel Select mix [at far lower volume, maybe at higher margins]

-introduced an ill-conceived DDU bidding process [which will cost them billions in Amazon revenue]

The latest example is pursuing heavier packages. According to PMG David Steiner:

“Our network was designed for lower-weight packages. We need to move that up. We need to go after those higher-value packages.”

Really? It sounds nice, but it isn’t realistic. At least not enough to materially improve the package business. One advantage the USPS has over all other carriers: the mailbox

This is only valid if a package fits inside. The more a mail carrier walks to a consumer’s door, the less efficient they are. There goes the margin on higher revenue packages.

Even if that’s not the case, how does USPS win volume here? They could beat UPS and FedEx on price, but the volume segment being targeted happens to be where UPS and FedEx are focused. And there are plenty of carriers in the market that are quite price competitive as well. Like, dozens of them. And the USPS knows this. Per Steiner, low-cost providers are creating “a dramatic change in how that market is being served.”

But, back to winning volume from UPS and FedEx. Service reliability must be competitive. And it’s not even close to UPS/FedEx residential Ground. [debatable compared to Saver/Economy]. The USPS appears to be grasping at straws here.

-----

The USPS’s package business is a mess. They’ve lost volume from their largest customers, which will accelerate this year. They’re in the middle of an odd last-mile auction, with no clear benefit/outcome. Now, the USPS wants to take a page from the UPS and FedEx playbook and focus on heavier, higher-revenue packages.

Good luck to them. They’re going to need it.

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Fast company: Amazon launches 1-hour, 3-hour delivery options

Can I get a little help here?: US Postal Service on brink of financial collapse, chief tells Congress

Fleet of foot: Foot Locker teams with DoorDash for on-demand delivery

Amazon’s Rivr: Amazon acquires startup Rivr to test robots for ‘doorstep delivery’

HEADS-UP

What to watch for this week (Mar 23 - Mar 29)

Any day now: Expect FedEx to respond to UPS’s March 9th fuel surcharge increase with an increase of its own.

• FedEx overtakes UPS in market cap for first time

• UPS joins FedEx in the t-shirt hate

US PACKAGE DELIVERY MARKET

FedEx’s new tagline: Better AND Bigger

For the first time, FedEx has overtaken UPS in market capitalization, punctuating a two-year trend of the delivery giants’ stock prices heading in opposite directions. During that time, FedEx shares have climbed nearly 40%, while UPS shares have dropped by about the same amount.

Market cap isn’t the only area where FedEx has toppled UPS. Over the past four reported fiscal quarters, FedEx’s revenue is $90.1B to UPS’s $88.7B, which will likely widen a bit in 2026, as UPS guides to $89.7B and FedEx guides to low single-digit revenue growth on a higher base. But UPS continues to lead FedEx in both operating profit and net income.

So, can FedEx keep the top spot (market cap), widen the revenue lead, and close the gap on profitability? It’s hard to tell, but the answer may come down to which carrier executes better on what appears to be very similar strategies.

Both carriers are cutting stuff, downsizing networks, and investing in automation to increase efficiency. Both carriers are focused (largely) on the same market segments: B2B, healthcare, SMB. And both claim to be pulling back from low-margin ecommerce volume.

Challenges exist for UPS and FedEx to execute this strategy. FedEx is consolidating Ground and Express networks, which will increase efficiency and reduce costs, but any missteps could affect service quality. UPS has to balance shrinking its network to align with a lower volume base (as they exit Amazon volume), while not cutting too deep and compromising service.

There is likely no winner in this race, or at least no finish line, but FedEx has pulled ahead of UPS in market cap and revenue, for the time being.

T-shirt, no service

It’s been a rough few weeks for retailers who sell t-shirts. First FedEx, and now UPS don’t want to deliver t-shirts, or at least not low-margin ecommerce packages.

“It’s a whole different ball game than if you’re talking about a T-shirt, right, going to a residence.” UPS CFO Brian Dykes

“If you’re shipping T-shirts, FedEx might not be for you.” FedEx CCO Brie Carere

Both statements are from investor events in the past month. Technically, this isn’t new information, but stating it this bluntly is, as both carriers have held the same narrative for years, declaring a focus on higher-margin volume segments like B2B, healthcare, and SMB’s.

But both carriers are now rightsizing their networks and cutting staff in an efficiency push. As far as the “we don’t want your t-shirts” statement [doubt they’re saying this to Gap or Dick’s], it underscores a strategy FedEx started a decade ago when SmartPost was a hybrid service with the USPS. FedEx pulled back on <1 lb volume, then completely insourced SmartPost delivery starting in 2019, basically conceding lightweight, low-margin volume. Like t-shirts.

Along the way, UPS took a different route, or maybe a temporary detour in 2023, after losing volume coming out of the Teamster negotiations. UPS bought low-revenue volume to fill capacity, a large chunk of which was Temu/Shein SurePost volume. That plan backfired, causing Ground yield to decline. In 2025, UPS started to exit low-revenue/margin volume, both from Amazon and lightweight Ground Saver volume.

Fast-forward to 2026, and delivering t-shirts is even lower margin, with dozens of providers offering cheap rates. So, FedEx and UPS will focus elsewhere. It seems like an obvious strategy, but executing it requires precision, and neither carrier can completely ignore this volume segment, as plenty of SMB’s ship apparel as a core product [or other lightweight, relatively low-value items].

While FedEx claims to make gains with SMB’s, I think they still trail UPS and USPS here, as both of those carriers have an extensive network of platform partners that enables better reach than FedEx, with fewer resources.

UPS and FedEx are going shirtless, shunning lightweight, low-margin ecommerce volume, while they focus on higher-margin volume segments and shrink their networks. On the surface, it makes sense: extract more margin from less volume. But there is only so much of this premium volume available, and pulling back on lightweight residential will affect delivery density. So it will be challenging for both carriers to succeed with this strategy.

Which begs the question: Can UPS and FedEx increase profitability, while ceding volume share?

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Positive returns: FedEx and Returnity Launch New Reusable Box Solution for B2B Shippers

Death, taxes, and surcharges: FedEx, UPS up fuel fees, levy Middle East surcharges amid Iran war

Signs of life: De minimis: Case aiming to revive exemption can proceed, court rules

HEADS-UP

What to watch for this week (Mar 16 - Mar 20)

March 19th: FedEx reports fiscal 2026 Q3 earnings

Any day now: Expect FedEx to respond to UPS’s March 9th fuel surcharge increase with an increase of its own, possibly before FedEx reports earnings on March 19th.

• To no one’s surprise, UPS increases fuel surcharge again

• UniUni receives new investment to continue its expansion

US PACKAGE DELIVERY MARKET

Fueling yield gains

UPS is cranking the FSC lever again. Domestic Ground FSC goes up 1% on March 9.
It’s the 11th domestic Ground FSC increase in <2.5 years. I’m shocked it took this long. UPS has trailed FedEx by 0.5% since Jan 5, and now they pull ahead of FedEx by 0.5%.

UPS and FedEx customers: FSC increases will keep coming.
And a 30% discount only helps so much. [or 40%, 50%, etc.]
So, what can you do about it? Here are a few options.

1. Negotiate custom FSC terms

A % discount is only a partial solution, as FSC table changes still result in a net increase. Other options, such as rate caps and custom FSC tables, may be more effective, but are more difficult to obtain. [although more attainable than in the past]
These options should be explored as well.

2. Reduce the spend FSC applies to
Lower base/surcharge rates = lower FSC amount

3. Move volume to other carriers

There’s more to consider than a FSC increase, but alternative carriers may offer savings, and many offer more rate certainty and simpler pricing.
-----
UPS and FedEx’s FSC have little to do with fuel cost these days.
[yes, diesel prices are climbing, but that’s not been the norm]
But instead is used to increase revenue several times per year.

Package shippers should expect this to continue, with more FSC increases coming this year, as UPS and FedEx pull the FSC pricing lever at will.

Mo money, no problem

UniUni has secured $30M in new investment, along with a $55M credit facility, which brings its total funding to $285M. The funding will support UniUni’s continued expansion and investment in automation, as it looks to expand North American market coverage, which sits at 65% of the US and 80% of the Canadian markets.

The investment comes at a time of intense pricing competition in the US market, especially in UniUni’s core volume segment, lightweight residential. It will be interesting to watch UniUni’s progress to see whether this model is viable long-term.

• Rapid expansion

• Aggressive pricing

• Investment in automated hubs

• Focus on low-margin ecommerce volume

They’re not the only ones in the market with this playbook, but if the service is reliable, the pricing is competitive, and network investment continues, UniUni can benefit from the shift occurring in the parcel market. A shift where UPS and FedEx focus on higher-margin segments, and continue to cede volume market share.

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Not so fast?: ‘We Got Hooked on Fast, Free Shipping. Now Retailers Are Taking It Away’

Add to cart: E-commerce startup Cart.com raises $180M to support growth plan

Playing catch-up: Target begins roll out of next-day delivery to 20 more cities

No money, mo problems: US Postal Service hiring restructuring advisers as it could run out of money in 2027

High auctane acquisition: Thoma Bravo to Acquire WWEX Group and Combine with Auctane to Form Global Logistics Leader

HEADS-UP

What to watch for this week (Mar 9 - Mar 15)

Any day now: Expect FedEx to respond to UPS’s March 9th fuel surcharge increase with an increase of its own, possibly before FedEx reports earnings on March 19th.

• Are UPS and the Teamsters headed toward an ugly 2028 contract negotiation?

• Veho continues to expand, despite intense market competition

US PACKAGE DELIVERY MARKET

Collision course

UPS may be headed toward an ugly Teamster contract negotiation in 2028, as it moves forward with a second round of driver buyouts. A Teamster lawsuit to block the buyouts failed, allowing UPS to continue deep job cuts, as it right-sizes its network and staffing post-Amazon volume glide down.

But I doubt the Teamsters will sit back and watch quietly while UPS cuts Teamster jobs, amidst the presence of its gig-based Roadie solution. The Teamsters have contended that Roadie takes work away from its UPS employees, but Roadie doesn’t touch a package that goes through Teamster-staffed facilities. Instead, it moves volume through its network and through the UPS Mail Innovations (MI) network [separate from the UPS network].

Roadie’s presence, along with MI’s use of other delivery providers, calls into question UPS’s long-term plans for lightweight residential volume, which is a volume segment FedEx is backing away from. Maybe UPS does this as well, to a certain degree, and shrinks the Teamster labor pool further, as it focuses on B2B and healthcare. Maybe, over time, UPS funnels more ecommerce volume to MI/Roadie.

UPS continues to cut Teamster jobs, in parallel with network right-sizing and Amazon volume reduction. In parallel, UPS is growing its gig-driver company, Roadie. But the Teamsters have pushed back, and will likely continue to do so, which makes for a contentious 2028 contract negotiation.

Wild, Wild West

Veho is expanding again on the West Coast. This time, it’s Phoenix, Scottsdale, Las Vegas, San Diego, and Los Angeles (from partial to full coverage). Veho also added coverage in Allentown, PA and Athens, GA. Its total network coverage stands at 66 markets and 42% of the US population. To support the expansion, Veho also opened two new regional hubs in Phoenix and Ontario, CA.

This is another example of alternative carriers expanding, while national carriers are contracting [or, at least, right-sizing to become more efficient], in a saturated, price-competitive parcel market.

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End of the road: UPS begins notifying delivery drivers about optional buyout program

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A picture is worth … : USPS tests picture proof of delivery capability

Bigger and better?: UPS overtakes FedEx to become world’s largest express air cargo hub

HEADS-UP

What to watch for this week (Mar 2 - Mar 8)

Any day now: Expect a domestic UPS fuel table adjustment/FSC increase soon

Note: UPS recently announced a fuel table adjustment for U.S. International Ground Export Import, effective March 2.

• FedEx goes shirtless

• UPS side steps Teamster lawsuit, can move forward with driver buyouts

• Delivery, convenience continue to drive Walmart’s ecommerce growth

US PACKAGE DELIVERY MARKET

FedEx goes shirtless

“If you’re shipping T-shirts, FedEx might not be for you.”

Apparel retailers: FedEx might not want your volume. This is according to FedEx CCO Brie Carere, when describing FedEx’s 3-year plan during its investor day on February 12th.

This strategy isn’t necessarily new, but stating it this bluntly is. Both FedEx and UPS have long held a similar narrative, focusing on higher-margin market segments like B2B, healthcare, and SMB volume.

But FedEx is stating it much more explicitly, and as for the “we don’t want your t-shirts” statement [doubt they’re saying this to Walmart or Dick’s], it underscores a strategy FedEx started a decade ago, when SmartPost (now Ground Economy) was a hybrid service with the USPS. FedEx pulled back on <1 lb volume, then completely insourced SmartPost delivery starting in 2019, basically conceding lightweight, low-margin volume, like t-shirts.

Fast-forward to 2026, and this volume segment is even lower margin, with dozens of providers offering cheap rates. So, FedEx will continue to focus elsewhere. It seems like an obvious strategy, but executing it requires precision. FedEx can’t completely ignore this volume segment, as plenty of SMB’s ship apparel as a core product [or other lightweight, relatively low-value items].

And while FedEx claims to make gains with SMB’s, I think they still trail UPS and USPS here. Both of those carriers have an extensive network of platform partners that enables better reach than FedEx, with fewer resources.

Time will tell if FedEx can grow revenue share while ignoring a large chunk of ecommerce volume.

No suit for you!

The Teamsters’ lawsuit to stop UPS from offering a second driver buyout program didn’t last long. A federal judge on Friday dismissed the Teamsters’ request, stating that union claims of harm were baseless and that arbitration can resolve any problems.

UPS can now continue to offer the buyouts, which include a $150,000 lump sum payment, along with previously earned benefits, in exchange for drivers resigning, agreeing not to work for UPS again, and waiving their rights to union representation should any grievances arise over the agreement.

It will be interesting to see the final results of UPS’s network right-sizing and staffing reductions, while shrinking Amazon volume, to establish a new baseline. There is risk in cutting too deep and compromising service quality, but UPS has to take cost out of the network, and expensive Teamster labor is an effective way to do it.

One has to wonder if the driver pool will continue to be reduced while UPS figures out how to best leverage non-Teamster drivers via Mail Innovations (MI). Maybe MI develops into UPS’s primary service to support lightweight residential volume over time, utilizing Roadie, the USPS, and other delivery partners, orchestrated by Delivery Solutions.

ECOMMERCE LOGISTICS

Delivering results

Walmart continues to invest in delivery and apply pressure to Amazon.

A few delivery/eCommerce-related highlights from its Q4 earnings call.

1. 27% US ecommerce growth [8 straight quarters 20%+ growth]

2. On more than 30% of orders, customers opted for paid expedited delivery

3. Expanded same-day pharmacy delivery, integrating prescriptions into grocery and merchandise orders

4. Store-fulfilled same-day delivery now reaches 93% of US households

5. Net 20% reduction in US delivery cost per order

6. 180% YoY growth of <1 hour and <3 hour delivery

Walmart continues to deliver faster, and customers are responding, fueling continuous 20%+ eCommerce growth, while reducing delivery cost per order.

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Always be closing: UPS identifies 22 package facilities for closure

Kind of a big deal: Amazon Is Now America’s Biggest Company. Its 17-Year Journey to Surpass Walmart.

HEADS-UP

What to watch for this week (Feb 23 - Mar 1)

Any day now: Expect a domestic UPS fuel table adjustment/FSC increase soon

Note: UPS recently announced a fuel table adjustment for U.S. International Ground Export Import, effective March 2.

• FedEx calls out top customer volume growth as a yield headwind

• The Teamsters sue UPS to block the next round of driver buyouts

• GOFO finalizes CIRRO acquisition

US PACKAGE DELIVERY MARKET

The big squeeze

“The biggest customers in the market do get bigger.” FedEx CCO Brie Carere

This was part of a response to a question about the forward-looking pricing outlook during FedEx’s Investor Day on Feb 12. It was framed as a headwind, which makes sense.

Granted, I’ve always thought of UPS having more risk here. Not just with Amazon, but by being disproportionately heavy at the top of its customer base. There are obvious unit economics benefits. These shippers provide reliable delivery density, but they command incredibly aggressive pricing, which pressures margins.

Carere went on to say that the mid-market is shrinking, as the largest retailers gain share [this was implied, collectively]. This also increases the value of higher-margin market segments, which UPS and FedEx are focusing on, while allowing low-margin residential volume to exit [at least outside of those top-tier customers].

It’s a difficult balancing act. And one that may have a huge impact on profitability, for both UPS and FedEx, in the coming years.

P.S. Obviously, not all large retailers are growing, but collectively, the volume share seems more concentrated at the top, as some medium-large retailers have exited.

Bye-bye buyout?

“We are in compliance with the terms of our contract.” UPS CEO Carol Tome [Q3 2025 earnings call]

The Teamsters are suing UPS for breach of contract related to UPS’s voluntary buyout program for package car drivers.

This can’t be good for UPS, regardless of the result, but I can’t imagine UPS would cut so many jobs and offer the driver buyout program if there was a material risk of violating the Teamsters contract.

But here we are. Interested to see how this progresses, or if it simply fades away.

Let’s GO(FO)!

GOFO has closed its acquisition of CIRRO, resulting in a network that is approaching the size of OnTrac’s, but it has been built/acquired in less than three years.

The combined entity looks like this.

CIRRO’s front-end and support [sales, customer service, integration]

+

GOFO’s network

•8,500 zip code coverage, 49 of the top 50 US metros coverage, 120 hubs and stations, 100+ linehaul routes, 98.5% on-time delivery

Total market impact thus far is small [100M packages delivered in 2025], but it opened two large, automated hubs in Q4 [$150M investment - EWR, LAX], and GOFO did not increase rates for 2026.

It will be interesting to watch GOFO’s progress, to see whether this model is viable long-term.

-Rapid expansion, aggressive pricing, investment in automated hubs, focus on low-margin ecommerce volume

They’re not the only ones in the market with this playbook, but if the service is reliable, the pricing is competitive, and network investment continues, GOFO can benefit from the parcel market shift that is occurring. A shift in which UPS and FedEx focus on higher-margin segments, and continue to cede share to a contingent of alternative carriers.

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Keeping an AI on it: FedEx launches AI tools to answer customers’ last-mile questions

Flipping the script: Amazon expanding same-day prescription delivery to 4,500 cities & towns

HEADS-UP

What to watch for this week (Feb 16 - Feb 22)

Any day now: Expect a UPS fuel table adjustment/FSC increase soon

• Veho releases a new feature, FlexSave, catering to cost-conscious shippers

• Robots are taking over at FedEx and UPS

• Amazon records fastest Prime delivery speeds ever … again

US PACKAGE DELIVERY MARKET

We’re going to pump you up

Veho just released a new feature called FlexSave. It enables flexible delivery windows, instead of fixed delivery dates, at a lower cost. It isn’t a new service, but a new feature, and can be enabled for existing services:

-Ground Plus: 1-5 day delivery

-Premium Economy: 2-8 day delivery

The delivery date range allows Veho flexibility to hold and consolidate volume, reducing costs, which are passed along to customers via lower rates.

The concept is interesting, but not new. UPS Ground Saver and FedEx Ground Economy operate similarly, with no committed day-definite delivery, allowing both carriers to maximize asset utilization. Where it differs is that these are entirely separate services, as opposed to a feature to enable on existing services. At one point, UPS also offered this feature with Ground [to select customers], allowing customers to pass a flag in the rate call, which triggered the feature (+1 day) at a set $ amount off the contractual rate.

On the surface, Veho’s FlexSave makes sense, but I have a few questions.

1. How does FlexSave affect pricing?

➡️ Is there a flag the shipper can set at the package level in the rate call, which returns a (potentially) lower rate for that service when FlexSave is flagged?

➡️ Is it a variable rate based on real-time and forecasted network conditions, like a step toward dynamic pricing?

➡️ Or is it a set amount reduction from the contractual rate for that service?

2. How does the delivery date range affect retailers’ ability to provide an accurate EDD to the customer in/prior to checkout?

I could see this being a challenge for retailers who provide a clear, day-definite EDD.

Either you present an EDD at the farthest date in the range [and maintain the day-definite EDD], or you provide a date range and depart from the day-definite EDD presented with non-Veho/non-FlexSave orders.

-----

Veho just released a new feature called FlexSave, which is a new/better version of an old concept: Delivery date ranges, at a lower rate.

Interested to see if/how this feature gets traction.

Scoop, there it is

The robots are coming … to unload packages from trailers and cut manual labor hours. FedEx announced that it will deploy trailer unloading robots from Berkshire Grey this year, following a multi-year collaboration.

Features of the autonomous robot, named Scoop, include:

•Enhanced safety and maintainability: Supports human assistance for exception handling.

•Continuous flow: Designed to deliver consistent inbound flow, not just optimize for individual pieces.

•Minimal facility impact: Integrates seamlessly into existing FedEx facilities.

•AI-driven autonomy: Recognizes and adjusts to a variable package mix. Makes real-time decisions to maneuver inside trailers. Empties trailers at high throughput and autonomously exits the trailer.

This move by FedEx follows UPS’s recent purchase of 400 trailer unloading robots, at a $120M price tag from Pickle Robot Co. The robots can lift boxes up to 50 lbs. and unload a trailer in about 2 hours. UPS will deploy the robots in 2H 2026, into 2027.

This is another step in UPS’s planned 4-year, $9B investment in automation, with a $3B cost savings target by 2028. In parallel with the automation investment, UPS is closing facilities and reducing headcount.

The headcount reduction is especially interesting, as UPS is nearly halfway through an expensive 5-year Teamster agreement, which includes new job creation commitments. But even with large staffing cuts [48K in 2025, 30K planned in 2026], UPS says it is/will be in compliance with the Teamster agreement. It will be interesting to see how this plays out heading into a 2028 Teamster agreement negotiation.

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FedEx is rolling out trailer unloading robots. UPS is rolling out trailer unloading robots. As both carriers increase automation and decrease dependence on manual labor.

ECOMMERCE LOGISTICS

For the record

Amazon delivered faster in 2025, for a third straight year. We’ve become conditioned to this by now, but if we pause to consider the speed gains at scale, it’s impressive.

US Prime delivery - 2025

🚚 8B items delivered same or next day [30%+ Y/Y increase]

🚚 4B groceries + essentials delivered same or next day

🚚 Rural area investment and delivery

-$4B investment in rural delivery, expanded same/next-day delivery in 4K+ small communities, average number of rural Same-Day customers nearly doubled

🚚 70% Y/Y increase in items delivered in <1 day

Amazon continues to deliver faster, and it’s not done investing in delivery speed, which will continue to apply more pressure to US retailers to deliver faster.

BEST OF THE REST

Time to mail it in?: USPS quarterly parcel volumes fall 12% as e-commerce plan implemented

Going once, going twice: USPS last-mile bidding process: What shippers should know

If you want something done right: Tractor Supply readies next phase of final-mile delivery plan

In sort order: FedEx preparing major sort center expansion at Memphis air hub

That’s AI: FedEx to Offer Access to AI-Powered Post-Purchase Solutions for Enterprises

HEADS-UP

What to watch for this week (Feb 9 - Feb 15)

Any day now: Expect a UPS fuel table adjustment/FSC increase soon

• UPS posts solid Q4 earnings, announces more job cuts

• American Eagle is closing Quiet Logistics

US PACKAGE DELIVERY MARKET

Winter Ozempics

UPS keeps shrinking, while posting solid earnings, as it transforms its network and continues deep cost and job cuts.

Here’s a recap of Q4 earnings.

1. Deep cost cuts + yield gains = solid operating margin

Operating margin (11.8%) declined slightly Y/Y (12.3%). US domestic volume again dropped double-digits: Total: -10.8%, Ground: -10.6%, Next Day Air: -12.5%

The volume decline was partially offset by a healthy 8.3% RPP increase.

•3.4%: Base rates + package characteristics, 3.2%: Customer + product mix, 1.7%: Fuel

This is similar to the Q3 trend. In addition to the Amazon glidedown effect, which organically lifts yield, a 27.7% Ground Saver decline improved mix. The 1.7% FSC contribution is painful for customers, as FSC continues to diverge from fuel pricing.

Quick callout: Don’t let the RPP increase fool you. It doesn’t mean UPS is dramatically more price-disciplined, or commanding a premium price. The majority of this increase is due to Amazon and Ground Saver volume reductions. While UPS is more price-disciplined, aggressive discounts can still be had.

2. Amazon glidedown

Related cost reduction was $3.5B in 2025. UPS reduced Amazon ADV by 1M in 2025, and will do so again for the full-year 2026. [although at a greater pace, ending after Q2] Associated cost savings = $3B in 2026.

3. Ground Saver changes with USPS deal

Volume will be ramped up in 1H. Although not explicitly stated, the % of USPS volume will likely be lower than before the hiatus. Higher USPS rates were cited, implying lower % volume; “we’re going back at a different rate than what we had before with the USPS.” It was also stated that UPS will utilize DDU’s. This will protect UPS from being subjected to the USPS DDU auction process.

4. Another 30K jobs will be cut in 2026

This follows 48K jobs cut in 2025. One has to wonder whether cuts will be too deep, affecting service and/or customer relationships, which would ultimately cost UPS customers and revenue.

5. 2026 guidance

US domestic full-year revenue and operating margin are expected to be flat Y/Y. ADV will be down mid-single-digits, driven by the Amazon glidedown. 1H results will be impacted by Ground Saver transition costs, and the timing of cost reductions associated with the Amazon volume decline. 2H results will improve over the 1H, and are expected to be “more indicative of our go-forward financial algorithm.”

6. Additional data points

•93 building closures in 2025 [24 planned 1H 2026]

•DAP revenue increased 25% to $4.1B

•31.2% SMB penetration [3.4% Y/Y gain]

7. UPS is the best!

UPS was the on-time leader during peak season for an 8th year in a row. UPS wants this burned into our memory, so they can cite it when they try to justify higher rates than the competition.

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UPS delivered solid Q4 earnings. As it cost-cuts its way to operating profit growth in the second half of 2026.

No thank you

UPS is doing everything possible to push bulky/heavy volume out of its network. Part of this volume isn’t compatible with automated sortation. UPS is increasing automation in its network.

There’s a mismatch here, and UPS would prefer to either let this volume go, or extract an inordinate amount of yield from it.

This was the case with part of the Amazon volume decline. Bulky/heavy volume that FedEx picked up. And FedEx has leaned into this volume segment, relatively speaking, compared to UPS. [it still presents elevated unit costs]

So, for regional and final-mile carriers willing/able to support this volume segment, there is a revenue opportunity.

ECOMMERCE LOGISTICS

Leaving the nest

American Eagle is closing its Quiet Logistics business, less than five years after the acquisition. Quiet, which offers fulfillment and delivery services, never got off the ground as a third-party service. American Eagle bought and combined it with delivery startup AirTerra (also acquired in 2021). Quiet’s third-party operations will wind down over the next several months, while its Atlanta fulfillment center will remain open and continue to support American Eagle’s business.

News of the closure comes in the same week that reports surfaced that Office Depot’s third-party logistics service, Veyer Logistics, is also shutting down operations. The decision comes after Office Depot’s recent acqusition by Atlas Holdings.

Remember Gap’s failed attempt to offer 3PL services with its GPS Platform Services, launched in 2022? There was hardly any information shared after the initial announcement, and it quietly faded away (not even sure when Gap pulled the plug). The closures are a reminder that retailers operating a 3PL service isn’t as simple as selling excess capacity.

BEST OF THE REST

How low can they go?: UPS preps 30K job cuts, more driver buyouts in 2026

Oh ship!: Exclusive: Some TikTok Shop sellers are pulling back as the platform moves to end independent shipping in the U.S.

The price is right: Dynamic Pricing Is Changing the Parcel Shipping Industry

Going, going, gone: Amazon to Shut Down All Amazon Go and Amazon Fresh Stores

Did we just become best friends?: UniUni Partners with Enveyo to Strengthen Data-Driven Last-Mile Delivery for E-Commerce Brands

HEADS-UP

What to watch for this week (Feb 2 - Feb 8)

Any day now: Expect a UPS fuel table adjustment/FSC increase soon

• The USPS officially opens its last-mile bidding platform

• Will Amazon actually walk away from the USPS this year?

US PACKAGE DELIVERY MARKET

Going once, going twice …

Sold! The USPS “bid solicitation platform” is officially open for business. Aside from the description of the process that the USPS has announced, which still leaves so many open questions, I have yet to talk with anyone who knows how this will actually work. I still have my doubts.

According to the USPS, “there has been a substantial increase in interest from many companies who wish to take advantage of the reliability and reach that only USPS can provide.” Initially, I thought this was an attempt to squeeze more revenue from Amazon, albeit a very risky attempt.

But that’s not how it’s being framed. The USPS is saying it will “open up entry” to its network for “shippers large and small.” The network has always “been open” to shippers of all sizes, but very few have enough volume density to efficiently leverage it. This has not changed, so what companies is the USPS targeting?

We’ve heard similar ideas from the USPS before, like Regional Connect, Local Connect, and Priority Mail Next Day. Why haven’t those products taken off?
[or even gotten off the ground] Because it rarely makes sense for retailers, outside of the very largest, to directly induct into the USPS network, due to:
-sortation requirements
-managing first/middle mile
-a long list of available cost-effective carrier options
-customer experience/package tracking development

The USPS has a valuable asset in its DDU network. It is an asset they should absolutely monetize. It is an asset they used to monetize, and it seemed to work pretty well, under a structure in which custom pricing was negotiated with companies (most often carriers) that had the volume and resources to induct into the USPS network.

But how will conducting a bid process maximize the price/revenue generated from its network? It won’t be from greater competition amongst more customers, and it could accelerate Amazon’s delivery insourcing.
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The USPS is re-opening access to its DDU’s, but doing so through a bizarre bid process, in an attempt to monetize its final-mile network. [which it once did pretty well] If this process is carried out as planned, and it includes current large partners like Amazon, regardless of who the auction winners are, the USPS will be a loser.

Breaking up is hard to do (especially if you’re not actually breaking up)

Amazon is done with the USPS, according to a recent MSN article, titled “Amazon ends USPS partnership after $9.5 billion loss; 100,000 workers affected.” This potential breakup isn’t new, as it was reported in December by the Washington Post. Shortly after the Post article was published, Amazon went on record to refute the story, maintaining that the USPS will continue to be a valued delivery partner.

So, is Amazon kicking USPS to the curb or not? In my opinion, nothing has changed since this initially surfaced in December. The MSN report cited no sources and appears to be an interpretation of the December reports of this potential breakup (this article was also released twice by MSN, nearly three weeks apart).

Amazon is not going to end its delivery relationship with the USPS in 2026, unless it is out of necessity. Amazon still needs the USPS (though not as much as the USPS needs Amazon) to deliver well over one billion packages a year. That type of volume can’t be absorbed by Amazon in under a year. Amazon needed to partner with FedEx to support volume being exited from the UPS network, which is “only” 300 million packages a year (very rough estimate). That said, it’s no secret that Amazon intends to deliver as much of its own volume as possible, and dramatically reduce its dependence on partners like the USPS for delivery. If the USPS tries to squeeze more revenue from Amazon, maybe it accelerates the pace of insourcing, but I highly doubt that Amazon walks away from the USPS in 2026.

BEST OF THE REST

Remote control: Dollar General takes on Amazon with same-day rural delivery

You can discount on it: UPS, FedEx discounts heat up, but shipping costs still surging

Size matters: FedEx, UPS tweaks could spur more large package fees

Door-to-DoorDash delivery: Hibbett, DoorDash launch delivery partnership

HEADS-UP

What to watch for this week (Jan 26 - Feb 1)

Monday, January 26: Changes to UPS Additional Handling and Large Package Charge are effective

Tuesday, January 27: UPS reports Q4 2025 earnings results

Any day now: Expect a UPS fuel table adjustment/FSC increase soon

• UPS and FedEx surcharge barrage continues

• UPS trims US sales team amidst deep cost cuts

• UPS, FedEx, USPS improve holiday season on-time delivery performance

US PACKAGE DELIVERY MARKET

Surcharging ahead

According to the Q4 TD Cowen/AFS Freight Index (summarized by Freightwaves), UPS and FedEx surcharge increases drove ground rates per package to a record high, which will continue in 2026 on the back of GRI’s.

This isn’t new for either carrier, as they try to increase revenue per package in a highly price-competitive US parcel market. A few highlights from the Q4 index include:

• A 13% sequential increase in average surcharge amount per package

• A change in residential demand surcharge criteria, which expanded the amount of volume impacted by these surcharges

• Ground fuel surcharge and diesel cost divergence: Q4 ground fuel surcharges increased 1% over Q3, while diesel cost per gallon declined 1.5%. On a year-over-year basis, fuel surcharges grew 26% while tracked diesel prices only increased 4.7%

UPS and FedEx continue to attack the bottom lines of their customers, with a continuous barrage of surcharge criteria changes and rate increases. This will continue to be a near-monthly occurrence until/unless customers defend against these changes by introducing competition, intelligently negotiating contracts, and closely managing their parcel spend.

A shrinking feeling

UPS continues its attempt to shrink its way to improved profitability which, according to a recent Supply Chain Dive piece, includes layoffs and a restructuring in its sales organization.

Unsurprisingly, UPS put a positive spin on the changes, stating: “The updated structure sharpens the focus of our U.S. sales team, enabling them to build stronger customer relationships, better meet the needs of our customers and deliver the world‑class service they expect from UPS.”

The article includes reports from parcel consultants that the sales team changes have led to customer friction and frustration, and could potentially cost UPS business if it continues.

I agree with this take. Over the past year, several clients and contacts have voiced concerns over UPS’s transactional account management approach, citing longer response times, less collaboration, and account rep turnover. Several large shippers have also shared frustration over UPS instituting an account management fee (for lack of a better term), charging for account support that was previously included in UPS’s standard account management resources.

UPS is attempting to rightsize its organization and network, as it cuts Amazon volume and allows low-margin residential volume to exit. But they run the risk of cutting too deep and losing customers and revenue, even though they will never admit it.

BEST OF THE REST

Right on time: Large parcel carriers improved on-time delivery during 2025 peak season

A game of inches: USPS eyes expanding package dimension reporting requirements

Happy holidays: USPS Reports On-Time Delivery Gains, Higher Customer Satisfaction for Holiday Surge

What can Brown do for you?: OnTrac Appoints Mike Brown as Chief Executive Officer Following Record 2025 Volumes and Continued Market Expansion

A human touch: FedEx's CEO explains why regular humanoid robots can't get the job done in its warehouses

Positive returns: What DHL Supply Chain has gained with its new returns network

HEADS-UP

What to watch for this week (Jan 19 - Jan 25)

Any day now: Expect a UPS fuel table adjustment/FSC increase soon

In today’s edition:

• FedEx drives results with BMW revenue expansion

• OnTrac and ShipStation look to increase their addressable market with expanded partnership

• Amazon plans a “Walmart-like” retail store near Chicago

US PACKAGE DELIVERY MARKET

The ultimate margin machine

FedEx and UPS are locked in a battle for higher-margin B2B business, and FedEx appears to be winning (at least according to FedEx). The latest example comes from FedEx winning additional commercial business from BMW, which it cited on its latest earnings call in December.

As part of its B2B strategy, FedEx has recently established an automotive vertical, as well as a data center and infrastructure vertical, and it’s driving results. B2B contributed to nearly half of FedEx’s revenue growth in its most recent quarter (Sep-Nov), which is typically a heavier D2C volume period. In addition to automotive B2B wins, FedEx also cited wins in healthcare, which is a highly competitive segment, as both UPS and DHL are focused on growing their respective healthcare businesses.

This is a trend worth watching, as consistent B2B gains by FedEx could drive sustained market share growth.

Meet me halfway

OnTrac and ShipStation have announced an expanded partnership, as both companies look to expand to different parts of their respective markets.

OnTrac’s customer base has traditionally been comprised of large retailers and marketplaces, but with its growing coverage area expansion (now at 75% of US population, 48 of the top 50 US metros) and upcoming service expansion (Express and deferred Ground), OnTrac looks to expand down market to mid-size retailers and 3PL’s.

The partnership with ShipStation, which offers shipping and fulfillment technology to SMB’s, is a good fit. It allows mid-size retailers and 3PL’s easier access to OnTrac’s services, which include 7-day-a-week delivery. ShipStation will also benefit, as it continues to build new capabilities in an effort to expand its addressable market to medium-large retailers.

RETAIL + ECOMMERCE

Thinking inside the box

Amazon is planning a big-box retail store near Chicago.

The store will offer groceries, general merchandise, and prepared food items. In-store kiosks are planned that enable customers to purchase items not on the sales floor and have them brought to a designated pickup area.

I have to think that the value of the initial store would be the consumer behavior data gained, to determine if/how Amazon can refine and expand it to compete with Walmart.

Definitely something to watch.

BEST OF THE REST

Let’s make it official: UPS, Postal Service lock in renewed Ground Saver deal, deliveries starting soon

Getting into the wing of things: Wing to expand drone delivery to another 150 Walmart stores

Remote control : Amazon expands rural delivery with Oklahoma last-mile station

Getting lean in the new year: UPS to close or trim operations at 4 locations in ongoing network shakeup

Positive returns: For FedEx, returns a key piece in growing digital toolkit

3…2…1… liftoff: Streamlane Launches Shipping Intelligence Platform to Help Retailers Optimize Shipping Spend Amid 2026 Carrier Rate Hikes

HEADS-UP

What to watch for this week (Jan 12 - Jan 18)

Monday, January 12: Changes to FedEx Additional Handling and Oversize surcharge criteria are effective.

Sunday, January 18: 2026 USPS package rates are effective