Business

Package deliverers adjust to hard times

When Wall Street collapsed, the paper stopped. Memos, invoices and order forms were left unsent.

At package delivery behemoths FedEx and UPS, last fall's meltdown and the worst recession in a generation has meant a sharp drop-off in the number of documents and packages sent overnight. And it's not just the delivery companies' biggest customers. Small businesses and consumers are opting for slower shipments to save money. In doing so, they're embracing an often-forgotten virtue -- patience.

Like with so many things in this new era of frugality, it isn't clear if people will remain practical after the economy recovers. For now, though, the desire to save a buck is leaving its stamp on the country's expansive delivery network.

At FedEx, the loss of millions in overnight documents and packages helped drag sales at the company's express unit down 25 percent to $4.8 billion in the fiscal year 2009 that ended in May. But at FedEx's unit where the slower packages and documents move mostly by truck rather than air, revenue fell just one percent to $1.7 billion.

The average number of packages carried by UPS per day in the U.S. dropped 5 percent to 12,465 from April to June compared with the same period last year. The average amount it collected from each of those packages dropped 8 percent to an average of $8.51, as packages got lighter and moved slower.

Bob Brummond, the chief financial officer of SunStar, an Alexandria, Va.-based media relations firm, said he started to look at the small firm's shipping costs late last year. He wanted a way to cut costs so he could avoid shedding any of his 13-member staff.

"The value of our company is in our employees -- they are our assets," he said. "And we are trying to keep our assets."

Until last year, the company spent much of its $20,000 annual mailing budget on overnight documents. After evaluating clients' needs, the company began instructing employees to slow things down. The guidelines were simple: Choose e-mail whenever possible. When that's not an option, send materials by way of the slowest postal service alternative. For those employees that use FedEx to ship: Choose two- or three-day service instead of overnight.

The result? SunStar's mailing budget is expected to be $6,000 this year, a $14,000 savings.

UPS and FedEx are adjusting, too.

UPS spokesman Norman Black said the company is helping its customers "trade down" because it's better than the alternative.

"It impacts our revenue, but we do everything we can to help our customers do that," he said. "We would rather help them do that than lose them as a customer."

  Comments