Core Points - UPS plans to close 22 facilities staffed by Teamsters union members across 18 states in 2026, as part of its strategy to adjust to reduced package volume from major customer Amazon [1][3] - The closures will affect operational positions, with up to 30,000 positions cut and 24 buildings closed in the first half of 2026 [6] - A voluntary driver buyout program is being introduced, but it faces legal challenges from the Teamsters, who argue it violates their labor contract [7] Company Actions - UPS is reducing its U.S. network footprint due to decreased package volume and is transitioning some deliveries to the U.S. Postal Service [5] - The company has notified applicable local unions about the closures and their expected impacts, although specific employee numbers affected were not detailed [4] - The voluntary severance package of $150,000 for eligible drivers is set to be available from February 13 to March 12 [7] Legal Context - The Teamsters have filed a lawsuit seeking a temporary restraining order against the driver buyout program, claiming it violates their labor contract [7] - UPS has responded by asking the court to deny the Teamsters' request, asserting that the court lacks jurisdiction in this matter [7]

Core Viewpoint - United Parcel Service (UPS) is implementing a significant restructuring plan that includes closing 22 package sortation centers across 18 states to enhance profitability through network consolidation and automation [2][4]. Group 1: Closure Plans - UPS plans to close 22 sortation centers with union employees, including locations in Dallas, Miami, Baltimore, and Atlanta [1]. - This is part of a broader strategy to close 200 sortation centers over the next five years as part of the "Network of the Future" optimization plan [3]. - The company has already reduced 48,000 frontline jobs and closed 93 distribution centers in the previous year [3]. Group 2: Job Reductions - UPS aims to eliminate 30,000 jobs in the first half of the year, with 22 of the closures affecting union-represented employees [4]. - The company plans to reduce warehouse workers through attrition and delivery drivers through a buyout program, with potential involuntary layoffs if not enough drivers accept the severance package [6]. Group 3: Financial Incentives - UPS intends to offer $150,000 plus accrued benefits to over 100,000 drivers as an incentive for voluntary resignation [7]. - The Teamsters union is contesting this voluntary separation program in court, arguing it violates the contract by altering employment status without union consent [7]. Group 4: Relationship with Amazon - UPS is on track to decouple 50% of its business with Amazon by June due to unprofitable deliveries, and has agreed to outsource last-mile delivery for certain economy shipments to the U.S. Postal Service [2].

Core Insights - The U.S. parcel volume is projected to grow significantly, reaching 22.37 billion shipments in 2024, a 3.4% increase from 2023, with expectations to hit 30 billion by 2030 [1] - Revenue growth for shipping companies has not kept pace with the increase in parcel volume, with total revenue rising by only 2.7% from $197.9 billion in 2023 to $203.2 billion in 2024 [2] - Major carriers like FedEx and UPS are facing challenges due to rising consumer expectations for faster, cost-free shipping, leading to significant operational cuts [3] Industry Trends - FedEx's Network 2.0 plan aims to streamline operations and reduce delivery costs, involving the closure of over 200 stations [4] - Analysts express skepticism about whether FedEx's Network 2.0 will alleviate pricing pressures, citing competitive rate pressures and freight headwinds [5][7] - Rising parcel volumes outpacing revenue growth, along with increasing labor and energy costs, may lead to higher shipping costs for consumers [6] Company Actions - FedEx plans to close more than 475 stations by the end of 2027, representing about 30% of its facility footprint, in response to competitive pressures [9] - UPS is also implementing significant cuts, including facility closures and workforce reductions, as part of its Network of the Future initiative [10][12] - Both companies are focusing on automation and efficiency to handle higher volumes and improve profitability [13] Competitive Landscape - Smaller independent carriers are gaining market share from FedEx and UPS, with a nearly 40% volume growth in the last five years [15][20] - UPS has reduced its reliance on low-margin business, notably cutting its volume from Amazon by over 50% [16] - The U.S. Postal Service's new low-cost shipping option is contributing to pricing pressures in the market [15] Consumer Impact - Despite efforts to lower operational costs, FedEx and UPS are not expected to reduce prices for consumers, potentially leading to higher shipping costs [17] - A survey indicates that shipping and logistics are likely to see significant price increases, with 22% of procurement professionals reporting cost rises of over 10% by the end of 2025 [19][21]

This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. The U.S. Postal Service's last-mile facilities are open for business — at the right price. The agency is enabling shippers to reserve capacity at thousands of locations nationwide via an online bidding process, part of Postmaster General and CEO David Steiner's efforts to better monetize the USPS network. Winning bidders will be able to inject volume into ...

Core Insights - The U.S. Postal Service has launched a bidding platform for last-mile delivery services, aiming to increase revenue under the leadership of new Postmaster General David Steiner [1][2] Group 1: Business Strategy - The new bidding platform allows e-commerce shippers of all sizes to access last-mile delivery services, which were previously limited to large customers [2] - The Postal Service is adapting its business strategies to meet the evolving needs of American commerce and consumers, particularly in response to trends in the shipping marketplace and post-pandemic conditions [3] Group 2: Financial Expectations - The Postal Service anticipates generating billions of dollars in revenue from last-mile deliveries, which would help mitigate a $2.8 billion operating loss from the previous fiscal year [4] - The new process enables shippers to reserve capacity at over 170 local processing units and 18,000 local post offices across the country [4] Group 3: Market Dynamics - Customers can propose combinations of volume, pricing, and tender times for same-day or next-day delivery, allowing for pricing that reflects supply and demand [5] - There is speculation that higher prices may lead Amazon to reduce its reliance on USPS for last-mile delivery services [5] - The Postal Service has seen increased interest from e-commerce businesses wanting to utilize its extensive delivery network, which is particularly valuable in less densely populated areas [6] Group 4: Contractual Agreements - The Postal Service plans to formalize accepted bids for its Parcel Select product through negotiated service agreements, which offer customized pricing based on volume and mail preparation requirements [7]

Core Insights - Extra fees for parcel shipping significantly contributed to higher-than-expected rates in Q4 last year, with projections indicating further rate increases in 2026 [1] Group 1: Rate Increases - Ground parcel rates per package rose 34% above the 2018 baseline during the peak delivery season, driven by increased package volumes and accessorial charges, with average surcharges increasing 13% from Q3 to Q4 [2] - Ground parcel rates are expected to rise again this year due to general rate increases (GRI), which will include hikes in base rates and surcharges, as well as new rating logic for certain package dimensions [8] Group 2: Factors Influencing Charges - A significant increase in residential shipments led to higher residential delivery surcharges, with major carriers like FedEx and UPS introducing a "blanket" demand surcharge despite forecasts for muted demand growth [3] - The blanket surcharge policy marks a shift from previous demand charges that targeted specific delivery costs, such as volume surges and large packages [4] Group 3: Surcharges and Competition - Large parcel carriers are using surcharges to compensate for slower revenue growth and are deemphasizing less profitable segments like residential e-commerce delivery, which may drive retailers to seek cheaper alternative carriers [6] - Ground carriers raised fuel surcharges by about 1% even as diesel prices declined, with year-over-year fuel surcharges growing 26% while tracked diesel prices only increased by 4.7% [7]

Federal Services - Non-essential federal offices, including Social Security Administration field offices and passport agencies, will be closed on New Year's Day [2] - IRS services will also be unavailable, requiring individuals to wait until the following day for assistance [2] Financial Markets - Major U.S. exchanges, including the New York Stock Exchange and Nasdaq, will be closed for trading on New Year's Day, with operations resuming on January 2 [3][6] Mail and Delivery Services - The U.S. Postal Service will not operate on New Year's Day, with only Priority Mail Express deliveries being made [4] - FedEx and UPS will also pause operations, with limited services available for urgent shipments [5] Banking Sector - Most major banks, including Bank of America and Wells Fargo, will be closed for the holiday, although mobile banking and ATMs will remain accessible [7] Retail and Grocery - Major retailers like Walmart and Target will operate on New Year's Day, while grocery stores show a mixed picture with some chains open and others closed [8][9] - Discount grocers such as Aldi and Trader Joe's will remain closed, while convenience stores and pharmacies like CVS and Walgreens will generally stay open [10] Restaurants - Fast-food chains, including McDonald's and Starbucks, will have many locations open, although hours may vary by franchisee [12]

Store Operations on Christmas Day - A limited number of stores and gas stations will remain open on Christmas Day, including Albertsons, CVS, 7-Eleven, Circle K, Safeway, Walgreens at select 24-hour locations, and Vons [2][10] - Most major retailers and grocery chains will be closed, including ALDI, Costco, Dollar General, Kroger, Target, Walmart, and Whole Foods [5][9][10] - Several national restaurant chains will operate on Christmas Day, such as Starbucks, Krispy Kreme, Fogo de Chão, IHOP, and Waffle House, though availability may vary by location [6][10] Postal and Delivery Services - The U.S. Postal Service will be open on Christmas Eve but all post offices will be closed on Christmas Day with no mail delivery [7][10] - UPS and FedEx will also be closed on Christmas Day [7][10] Financial and Market Operations - Banks will not operate on Christmas Day, adhering to the Federal Reserve holiday schedule [7][10] - Stock markets, including Nasdaq and the New York Stock Exchange, will be closed on Christmas Day [8][10] - All federal, state, and local government offices, including courts, will also be closed on Christmas Day [8][10]

Core Insights - Amazon's same-day perishable grocery delivery service has expanded to over 2,300 communities, indicating significant growth in its logistics capabilities [1] - The company is on track to achieve its fastest delivery speeds for Prime members globally for the third consecutive year, with a focus on fresh groceries and everyday essentials [2] - Fresh groceries now account for nine of the top ten most-ordered items, highlighting a shift in consumer behavior towards fast delivery of perishable goods [3] Delivery Strategy - Amazon is utilizing specialized smaller facilities for efficient order fulfillment, strategically located near customer residences and workplaces, which enhances delivery speed and employee safety [4] - The company is testing ultra-fast grocery delivery within 30 minutes in two U.S. cities, further emphasizing its commitment to rapid service [3] Relationship with USPS - Amazon is committed to maintaining its relationship with the U.S. Postal Service (USPS), although discussions have stalled, which could have significant implications for both parties [5] - The USPS relies on parcel delivery revenue from Amazon to mitigate declines in traditional mail, and a potential separation could disrupt existing delivery arrangements with other carriers [6] - Amazon has invested billions in its own logistics infrastructure, allowing it to deliver at a lower cost compared to USPS, with its logistics handling nearly as many packages as the postal service last year [7]

Dec 4 (Reuters) - Amazon's investments in new fulfillment centers and delivery stations have gradually cemented the online giant's position ​as a key player in the nearly $193 billion U.S. ‌parcel industry, long dominated by UPS, FedEx, and the U.S. Postal Service. The company said ‌on Thursday it was in discussions with the U.S. Postal Service about the relationship and was considering its options before the current contract expires next year. Here's a snapshot of the U.S. delivery market: * The ⁠U.S. ...