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The FedEx-UPS Duopoly

It gets a lot of supply chain professionals riled up: FedEx and UPS. That is, the duopoly, at least in North America, of the two dominant shippers.

The electronics supply chain leans mostly on parcel ground shipping for its parts, and so price increases or capacity issues with the Big Two cause widespread ripples. Just as Danny Stephens, Avnet's vice president for global transportation, points out in a recent interview with EBN, the two shipping giants raise their prices about 4 percent to 5 percent every year. They attribute the increases partly to their continued investments in technology.

But smaller companies — and even some larger ones — that do business with the two dominant shippers might question how much technology they really need. The bigger companies can absorb that 4 percent to 5 percent impact or negotiate to lessen it, but it's much harder for small to midsized companies to absorb the increase or pass it on.

Of course, one opposing view of the shipping duopoly holds that UPS and FedEx, as two strongly positioned players, can be much more cost-effective and provide better services (plus the ever-improving technology they tout).

Which side of the argument do you fall on? While you ponder that, take a look at this infographic that offers a compare and contrast of the Big Two:

(Source: PackageFox via Visua.ly)

(Source: PackageFox via Visua.ly)

5 comments on “The FedEx-UPS Duopoly

  1. Mr. Roques
    April 19, 2013

    Can the Federal Trade Comission investigate the two companies? Shouldn't the prices go down? 

    Sadly, its very expensive to enter that market and they probably estimated users absorb that 5% increase without jumping ship. 

    Although, I must say, FEDEX and UPS provide a service that we can't live without anymore. We want our things ASAP, and now a week doesn't cut it.

  2. _hm
    April 20, 2013

    I love fedex next day delivery. They offer vrey good service. UPS is good too.

    Fedex works very good with parts supplier. For Digikey it is only $8 per shipment and it is free if order is $200 or more.

     Both are quite reliable and provides good service. I encourage more service provider for niche market.

     

  3. Ariella
    April 21, 2013

    @Mr. Roques very true. We want things now, or the next day at the latest! Sometimes it's not a matter of plain impatience but of a real need to go forward in business.

  4. HM
    April 22, 2013

    FedEx and UPS both are equally professional. They have made a strong mark in logistics business. Its like brand name. 5-6 percent increase every year is really high, does their cost increase at that percentage every year.

  5. Daniel
    April 23, 2013

    “The electronics supply chain leans mostly on parcel ground shipping for its parts, and so price increases or capacity issues with the Big Two cause widespread ripples.”

    Brain, I think bulk volume of goods/products can decrease the shipping cost per piece. Now a day's some of the shipping companies do regular service in certain routes, so that companies can make use of their shipping service at an economical rate.

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