For years, high-volume shippers have felt caught between the duopoly of UPS and FedEx, with little room to negotiate. But the ground is shifting. With potential labor strikes, fluctuating carrier profits, and increased competition, the balance of power is tilting back in your favor. The question is, are you prepared to capitalize on it? This is a crucial moment to re-evaluate your shipping strategy. This article will guide you through the current market dynamics, showing you how to leverage this shift to secure better rates and terms, and how to assess different strategic approaches you might hear from Shipware competitors.

By Paul Yaussy “Here’s the reality. Let’s say you’re in charge of supply chain for a large company and you need to go in front of your boss or your board to say, ‘I guarantee there won’t be a work stoppage.’ They may say, ‘how do you know there won’t be a work stoppage?’ There’s no guarantee.” This quote from Carol Tomé, UPS CEO, was delivered in a follow-up interview to the Q1 2023 UPS earnings call on April 25, 2023. As a supply chain leader for over 25 years, I had to answer questions like this about the parcel carriers daily. Some questions were simple: “How should I ship this?”. Others were much more complex: “What’s going on with the UPS strike?” or “How much should I put in the budget for a parcel increase next year?” If you’re responsible for your company’s shipping operations, here are some more complex questions you can expect to answer over the coming months.

Understanding the Broader Shipping Landscape

When one carrier faces uncertainty, it sends ripples across the entire industry. That’s why having a clear picture of the major players—and the alternatives—is so important. It’s not just about having a Plan B; it’s about building a resilient and cost-effective shipping strategy from the ground up. Knowing the strengths and weaknesses of each carrier helps you make smarter decisions, whether you’re negotiating contracts or diversifying your carrier mix. Let’s break down the key players in the shipping world, from the parcel titans to specialized logistics providers.

Comparing the Titans: UPS, FedEx, DHL, and USPS

For most high-volume shippers, the “big four” are the foundation of their parcel strategy. Each has a distinct profile, and understanding their core offerings is the first step toward optimizing your shipping spend. While they all move packages from point A to point B, their networks, pricing structures, and specialties vary significantly. Choosing the right mix of these carriers can be the difference between a streamlined, affordable logistics operation and one that constantly leaks money and causes headaches. This is where a deep dive into their individual characteristics becomes essential for any business looking to master its supply chain.

Key Strengths and Weaknesses

UPS is a global giant known for its extensive ground network and early adoption of technology. It’s a reliable choice for domestic shipping, but that reliability often comes with a premium price tag. FedEx, its primary competitor, is renowned for its express air service, but can also be one of the more expensive options, especially for smaller businesses. For international needs, DHL is a powerhouse, particularly for e-commerce logistics in Europe. Then there’s the USPS, a government agency with the unique advantage of delivering to every single address in the U.S., often at the lowest rates. Understanding these nuances is critical for effective carrier diversification and ensuring you’re not over-reliant on a single provider.

A Look at the Numbers: Annual Revenue

The sheer scale of these companies is staggering, and their revenue reflects their market dominance. In 2021, UPS reported revenues of $97.3 billion, while DHL was close behind at around $90 billion. FedEx posted an impressive $84 billion, and the USPS brought in $77 billion. These numbers aren’t just trivia; they represent immense negotiating power. When you’re a high-volume shipper, you’re negotiating against decades of pricing science and market control. This is why having expert support to optimize your contracts is so crucial—it levels the playing field and ensures you get the best possible terms and discounts based on your unique shipping profile.

Beyond the Parcel Giants

While the big four dominate parcel shipping, they aren’t the only players in the logistics game. A truly optimized shipping strategy often involves looking beyond standard parcel services to find more efficient and cost-effective solutions for different types of freight. This is where Less-Than-Truckload (LTL) carriers and Third-Party Logistics (3PL) providers come into play. These specialists can handle shipments that don’t fit neatly into a parcel network or manage your entire supply chain, offering flexibility and expertise that can significantly reduce costs and improve service levels. Integrating these options requires a strategic approach to what’s known as modal optimization.

Less-Than-Truckload (LTL) Carriers

What happens when your shipment is too large for a parcel carrier but too small to fill an entire truck? That’s the sweet spot for Less-Than-Truckload (LTL) shipping. Companies like XPO Logistics specialize in LTL, consolidating shipments from multiple customers onto a single truck. This is a fantastic way to reduce distribution costs for larger, palletized orders. The key is knowing when to shift from parcel to LTL. This decision, a core part of modal optimization, can save you a substantial amount of money, but it requires careful analysis of your shipment data to identify the right opportunities and carriers for the job.

Third-Party Logistics (3PL) Providers

Sometimes, you need more than just a carrier; you need a strategic partner. That’s where Third-Party Logistics (3PL) providers like C.H. Robinson come in. A 3PL can manage your entire supply chain, from warehousing and fulfillment to transportation management, often using advanced technology to streamline operations. They act as an extension of your team, handling the complexities of logistics so you can focus on your core business. While partnering with a 3PL offers immense benefits, it also introduces another layer of contracts and costs to manage, making 3PL contract optimization a critical step to ensure you’re getting the most value from the relationship.

What’s Your Game Plan for the UPS Teamsters Strike?

Technically, it would be the Teamsters, representing about two-thirds of the UPS workforce, including drivers, pilots, dock workers, and more, whose contract expires July 31. If the two sides do not come to an agreement, the Teamsters have declared there will be a work stoppage beginning August 1. UPS shippers should be planning for this now. Some pundits have said there will not be a strike and have gone so far as to say the agreement will be reached by early June. In my estimation, if there were to ever be a repeat of the 15-day 1997 strike, this would be the year. Both organizations’ leaders are new to the mix – Carol Tomé for UPS, and Sean O’Brien for the Teamsters – and neither wants to return to their side with a loss. UPS has been quoted often that a “win, win, win” agreement is their goal. The claim is that UPS shareholders, the Teamsters, and UPS shippers will all share in the “win.” Keep in mind, however, that while the Teamsters generally benefit from a chaotic storyline, the opposite is true of UPS. If they can convince the market that it’s business as usual, they minimize the loss of clients and investor capital. But the truth is that a strike is a real possibility. UPS reports having a contingency plan but has yet to deliver its customers the full details. What we know is that, as early as this past December, UPS managers were asked to cancel PTO for July and August in case parcels needed to be moved. UPS sales reps are now telling some longtime UPS shippers the company will continue to carry 10% to 20% of their normal volume as a result of these contingencies. Rather than rely on UPS’s contingency plan, it’s in shippers’ best interests to prepare themselves for the possibility of a 4-to-15-day work stoppage. If the Teamsters strike, a shipper’s potential workarounds will be largely dictated by their specific shipping profile, but here are the basic options:

Talk to FedEx. FedEx said volumes implemented by March 31 would be the only shipments protected in the event of a strike, but it continues to negotiate with shippers. Even UPS conceded during their last earnings call, “It would be naïve of us to think there wouldn’t be some volume diversion.”
Ship with USPS. The Post Office must accept and deliver your packages. Unless you are a lightweight shipper, this option will come with a hefty premium, but at least your packages will move.
Ship with Regionals and Alternative Carriers. The regionals and alternatives should be chomping at the bit to add volume (until their networks are full). Reach out to them now. You may be able to shift volume to them without any incentive tier penalties with UPS, and this could be the push you needed to get the rest of your organization on board with onboarding a new carrier. If you find your company is having trouble navigating minimum commitment and early termination clauses in your UPS contract, reach out to the Shipware team to explore your options.
Create a peak-season-like plan. Like peak, you plan for slower transit times by having adequate inventory levels on hand and incentivizing your customers to order early, thereby mitigating the impact of any stoppages.

Why Carrier Diversification is a Smart Long-Term Strategy

While the potential UPS strike is the immediate concern, it highlights a much larger strategic vulnerability: single-sourcing your shipping. Relying on one carrier puts your entire operation at the mercy of their network stability, labor relations, and pricing decisions. A multi-carrier approach is your best defense, building resilience directly into your supply chain. It also creates powerful leverage. When carriers know they have to compete for your business, you’re in a much stronger position to negotiate favorable contract terms and secure better rates. Ultimately, a proactive carrier diversification strategy is about more than just risk mitigation; it’s about building a more agile and cost-effective shipping operation that can adapt to whatever comes next, ensuring your packages keep moving and your customers stay happy.

Why Do UPS’s Earnings Matter to You?

UPS’s comments during the Q1 earnings call hint that they may not have aggressively pursued new business, perhaps as a way to influence the impending negotiations. CEO, Carol Tomé said, “There are many folks that want to ship with us but are sitting on the sidelines waiting to see how the negotiation goes. Our pipeline is very full ($6B) and we’ll have that contract done by the end of July. When we do, we’re going to hit it hard from a sales perspective.” Also stated during the call, revenue was down 6%, profit was down 22.8%, and the average daily volume was down 5.4%. What wasn’t down? Revenue-per-piece (RPP) was up 4.8%. As a shipper, this should matter more to you than volume or revenue. UPS’s revenue-per-piece is your cost-per-piece. RPP is up because of record-setting rate increases to start the year. Those increases were implemented with a higher than normal “keep rate” by UPS, meaning most shippers are taking on the full brunt of the rate increase. Looking past Q1’s volume/revenue/profit report, these measures are poised to rebound immediately once the need for these bargaining chips expires. Q1 Earnings Call Quick Guide:

Total Revenue
- Q1’23 = $22.9B
- Q1’22 = $24.3B
- Revenue down 6%
Operating Profit
- Q1’23 = $2.5B
- Q1’22 = $3.3B
- Profit down 22.8%
Margin
- Q1’23 = 11.1%
- Q1’22 = 13.6%
- Margin down 250 bps
Revenue
- Q1’23 = $15.0B
- Q1’23 = $15.1B
- Revenue down 0.9%
- Revenue Per Piece (RPP) up 4.8% (2023 = $12.60, 2022 = $11.10)
  - Why? A combination of base rates, customer mix, and fuel. Higher “keep” rate on 2023 GRI (lower discounts for shippers!).
- Average Daily Volume
  - Down 5.4% in Q1’23 (19.7M to 18.6M per day)
    - The decline is equal for both B2B and B2C
  - SMB’s account for 29.6% of ADV, up 120 bps over last year
    - Why? This suggests UPS is leaning into SMBs because they do not negotiate discounts to the appropriate levels, resulting in higher margins.
  - Full Year Outlook & Guidance
    - January volume down 3%, February volume down 5%, March volume down 7%
    - ADV expected to be down 3% YoY
    - Revenue expected to be on low end of guidance – $97B
    - Margin expected to be 12.8%
    - 56% of full year profits to come in second half 2023

Is the Balance of Power Shifting Back to Shippers?

While UPS adjusted its guidance to the “downside” case for the rest of the year, what matters most to you is what it means to your business. What do you need to plan for and what will the impact be on your budget? Your customers aren’t going to blame UPS for high freight costs or undelivered packages; they’re going to blame you. As Shipware Co-founder, Rob Martinez, stated to FreightWaves in February, “Few think UPS will actually strike, but the logistics manager’s job is to have a contingency plan in place.” And it’s not just UPS; FedEx also plays a role here. Parcel pricing at the two shipping giants has evolved in virtual lockstep for the past two decades. In Q1’23, however, FedEx has been noticeably more generous with discounts, winning parcel volume from shippers fearing a UPS strike. UPS acknowledged the attrition and vowed to win it back once the new contract was signed. That should be good news for shippers. If UPS does “hit it hard” in August, shippers should feel confident that the pandemic-fueled era of nearly one-sided carrier conversations may be coming to an end. Once UPS and the Teamsters reach an agreement, capacity concerns should ease, competition should return, and the balance of power should shift in shippers’ favor. When asked about the second half of 2023 during their Q1 call, UPS echoed a familiar talking point: “Our service is better than any competitor in the marketplace. Value is defined by what the customer is willing to pay, and they are willing to pay for our services.” This suggests that part of UPS’s sales plan when the Teamsters negotiation is complete is to highlight their service levels in comparison to competitors. What you should know, as a shipper, is that how carriers report on service levels is not standardized and varies from carrier to carrier, making direct comparisons difficult. While UPS regularly claims broad superiority, the reality is more nuanced. FedEx Ground, for example, is consistently faster on average to more locations, while UPS delivers more consistently on its promise to deliver slower. What’s more important is how each carrier and service fits into your unique shipping profile and whether or not they meet your customers’ needs. While service levels are nice-to-knows, they are actually so similar that they should not be a focal point of your next carrier negotiation. Instead, analyze your shipping data to uncover any spend inefficiencies, opportunities to reduce costs, and areas where time in transit can be optimized. For a complimentary analysis of your data, schedule time with a Shipware consultant to learn more.

The Pros and Cons of a Multi-Carrier Strategy

Relying on just one shipping company can be a risky move, especially for growing businesses. A single point of failure leaves you vulnerable to unexpected fees, delays, and major disruptions if that carrier faces issues like strikes, severe weather, or sudden price hikes. Adopting a multi-carrier strategy helps you sidestep these problems and gives you more control over your logistics. You can diversify your carriers to select the best option for each package based on cost, destination, or speed. This flexibility often leads to happier customers, as their orders arrive faster and more reliably. However, managing multiple carriers isn’t without its challenges. Juggling more contracts, coordinating pickups, and processing separate bills can create more administrative work. Splitting your volume might also mean you don’t ship enough with any single carrier to qualify for their best discounts, which is a critical factor to weigh.

How to Negotiate with Carriers Using a “Win-Win” Approach

When you decide to bring on a new carrier, it doesn’t have to be a contentious conversation with your current one. Instead, frame it as a “win-win.” You can approach your primary carrier and ask if they’d be willing to let you shift some of your less profitable packages—like oversized, lightweight, or rural deliveries—to a new provider. This move can actually make their remaining business with you more profitable. In return, you can ask them not to penalize you for the volume shift by adjusting your discount tiers. It’s also effective to be transparent. If their rate increases are making certain parts of your business unprofitable, explain the situation. This honest approach can open the door to a more collaborative partnership and better contract optimization that benefits both sides.

The Importance of Technology for Managing Multiple Carriers

A multi-carrier strategy can quickly become overwhelming without the right technology. Manually comparing rates, tracking shipments across different portals, and consolidating data for analysis is inefficient and prone to error. This is where shipping management platforms become essential. The right software automates complex decisions, like rate shopping for the cheapest or fastest option for every single package. It also provides a single source of truth for tracking all your shipments, regardless of the carrier. By bringing all your shipping data together, you can gain clear visibility into your spending and performance, making it much easier to manage your logistics and make informed decisions. Centralized reporting and KPIs are crucial for turning raw data into actionable insights.

Types of Shipping Software Solutions

The world of shipping software is diverse, with tools designed to solve different problems. Generally, these solutions fall into a few main categories. All-in-one shipping platforms aim to handle everything from label printing to analytics. Rate comparison tools focus specifically on helping you find the best price for each shipment. Other tools specialize in auditing invoices and recovering refunds for service failures. You’ll also find solutions built to integrate with specific business systems, like your ERP or ecommerce platform, as well as specialists that focus solely on the complexities of international shipping. Understanding these different types of software helps you identify what your business truly needs to streamline its operations and cut costs effectively.

Recovering Costs with Invoice Auditing

One of the most direct ways to reduce shipping costs is by ensuring you only pay for the services you actually receive. Carrier invoices are notoriously complex and often contain errors, such as incorrect surcharges, duplicate billings, or charges for late deliveries that were guaranteed. Manually checking every line item is nearly impossible for high-volume shippers. This is where automated invoice audit and recovery software comes in. These tools automatically scan every shipping bill for mistakes and service failures. When an error is found, the software manages the claim process with the carrier on your behalf, recovering funds that would have otherwise been lost. It’s a simple way to reclaim a significant portion of your shipping spend without lifting a finger.

Frequently Asked Questions

If I split my volume between carriers, won’t I lose my high-volume discounts? This is a common and completely valid concern, but it’s often not the case. The key is to be strategic. A smart multi-carrier approach doesn’t mean randomly dividing your packages. Instead, you can negotiate with your primary carrier to offload your least profitable shipments, like oversized or rural packages. This actually makes their remaining business with you more valuable. This new leverage, combined with the fact that carriers know they have to compete for your business, puts you in a much stronger position to protect your discounts and negotiate better terms overall.

A potential strike seems like a short-term problem. Is it really worth overhauling my entire shipping strategy for it? Think of the potential strike less as a one-time event and more as a stress test for your supply chain. It highlights a critical vulnerability: what happens when your single provider has a problem? The goal of diversifying isn’t just to survive a few weeks of disruption. It’s about building a resilient, long-term strategy that protects your business from any future issue, whether it’s a labor dispute, a natural disaster, or a sudden capacity crunch. It’s about taking control so you’re never caught off guard again.

Why should I care about a carrier’s profits or their ‘revenue-per-piece’? It’s easy to see those numbers as just corporate metrics, but they directly impact your budget. A carrier’s “revenue-per-piece” is just a different name for your “cost-per-package.” When you see that number climbing, even as their overall volume declines, it’s a clear signal that they are successfully passing higher costs on to their customers. Paying attention to these trends helps you understand their pricing strategy, anticipate future rate increases, and enter negotiations with a clearer picture of what’s happening.

My team is already stretched thin. How can we manage multiple carrier relationships effectively? Adding more carriers without the right support system would definitely be overwhelming. This is precisely where technology becomes a game-changer. Modern shipping management platforms consolidate everything into a single place. Instead of juggling multiple websites and reports, your team can compare rates, track packages, and analyze spending from one dashboard. This automation handles the heavy lifting, freeing up your team to focus on strategy rather than getting bogged down in administrative work.

Besides getting better rates, what are the other benefits of a multi-carrier strategy? While cost savings are a major driver, the benefits go much further. A multi-carrier strategy gives you the flexibility to choose the best service for every single package, which can significantly improve transit times and your customers’ experience. It also reduces your risk by eliminating a single point of failure in your supply chain. This creates a more agile and reliable operation, which is a powerful competitive advantage that keeps your business moving and your customers happy.

Key Takeaways

Leverage market shifts for better terms: Factors like potential labor strikes and increased carrier competition are giving shippers more negotiating power. Use this moment to re-evaluate your contracts and secure more favorable rates.
Build resilience with a multi-carrier strategy: Relying on a single shipping provider is a significant risk. Diversifying your carriers protects your business from disruptions and creates healthy competition for your volume, which helps you control costs.
Take control with data and technology: Proactively manage your shipping operations by using software to audit invoices for errors and gain clear visibility into your spending. This data-driven approach allows you to make smarter, more cost-effective decisions.

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