The Wall Street Journal says that as UPS approaches its busiest day of the year next Wednesday, the outlook for the company is anything but rosy:

UPS is grappling with stubbornly high overall costs, diminishing growth prospects in its U.S. package-delivery business, and acquisitions that have been slow to accelerate profit growth. At the same time, sky-high fuel prices and a freight-industry slump are pinching profits at major transportation providers, with few signs of a rebound before mid-2008.

The delivery giant has tightened its belt in anticipation that the current peak season will be the slowest since 2003. UPS trimmed its 2007 capital-spending plans by $200 million, or about 6%, put off vehicle purchases, and shifted some package volume to cheaper railroads. UPS’s 3.7% increase in third-quarter profit was its slimmest rise in nearly three years.

And investors are wary:

UPS shares have been lackluster since the 100-year-old company went public at $67.25 a share. Shares of rival FedEx Corp. have more than doubled in that span.

One of our customers is shocked when one of his customers reveals shocking news about the USPS! (Whatever you do, don’t tell him about FedEx- it may just put him over the edge!)

Sacramentune: One of my customers…

Shipping Digest reports today that parcel shippers expect ”rate increases of about 2 to 3 percent on most products … as the industry waits for UPS, FedEx Express and DHL to unveil their 2007 rate cards.”

The story is based on a Morgan Stanley survey of “more than 250 of the largest U.S. parcel shippers”.

The survey also found that shippers continue to “shift more loads to lower-cost ground from air”, and that

“…shippers projected the fastest growth in shipment volume for the U.S. Postal Service at 4.4 percent, reflecting service improvements by the agency and cost savings because ‘USPS cannot charge a fuel surcharge.’”…

… Shippers said USPS “has a long way to go” to make up the quality gap it has with UPS and FedEx…

… Since USPS is the biggest customer for FedEx, Morgan Stanley said the postal rate increase also has the potential to dampen FedEx volume to the benefit of UPS.

An article in Aviation Daily says that Southwest Airlines’ freight revenues in the third quarter were down $30 million “partly because the airline will not renew its contract with the U.S. Postal Service”. But the airline apparently doesn’t feel that’s a bad thing- the article quotes Southwest CEO Gary Kelly as saying that the USPS is a “difficult customer”, that it “had a list of demands that would have impacted the integrity of our operation”. Servicing the USPS, according to Kelly, “would have resulted in a significant amount of investment for low yields”, so the company is seeking other commercial customers. Another factor cited by Kelly was the shift of postal business to FedEx, UPS, and ground transportation.

Transport Intelligence reports that UPS will cut a “substantial” number of positions in its Supply Chain Solutions division. The cuts would focus on ”SCS headquarters in Kentucky which employs around 2000 people, and not operational facilities”. The story cites “superior efficiencies” at newly acquired Menlo Forwarding and at UPS Freight as driving the reductions, but also mentions “mild disappointment with the performance of SCS by shareholders.”

Understandably enough, FedEx and UPS have changed their collection schedules in Boston to account for the airport tunnel closings.

The postal service hasn’t, which just demonstrates the difference between the PO and the private carriers. If the USPS had moved up collection times by an hour, there would no doubt have been congressional investigations, legislation delaying any change until full OIG and GAO reports had been filed, and editorials in the Boston Herald calling for the privatization of the Postal Service. 

FedEx outlets move up last daily collection time- Boston Globe

From the Guardian’s consumer column: 

‘At least rail companies can usually give you a time for their trains, even if they don’t stick to it. That is a feat delivery firms have not yet achieved, despite the miracles of modern communication, and Nia Williams wonders why. “UPS tried to deliver a laptop without warning when we were at work,” she writes. “We asked them to try on a Wednesday after 4pm, but they couldn’t guarantee a time or day. They called round on the Tuesday, again when we were at work. Then they agreed to try to deliver late on Wednesday, so I took the afternoon off work and arrived home to find they had already been. That was their third and final attempt.”

‘UPS claims it can’t offer exact delivery times, or even four-hour windows of opportunity, because of “the unpredictability of road conditions, changing shipment volumes and the planning of driver routes”. It points out that customers can arrange to receive a parcel at work or elsewhere.’