What's new

TForce | Why isn't UPS Freight making more money? Loss leader pricing.

N

No port

Libertarian free thinker
Credits
561
corporatefinanceinstitute.com

Loss Leader Pricing

A loss leader pricing strategy, a term common in marketing, refers to an aggressive pricing strategy in which a store prices its goods below cost to
corporatefinanceinstitute.com corporatefinanceinstitute.com

The nerve of UPS brass to complain about ups freight not making any money. They are the ones in charge of this practice. I know of shippers I suspect will either be paying more to ship with TFI or we will no longer be shipping. One of these shippers was getting up to a 93% discount and not having to pay accessorial fees. Why?
 
Now that it’s ‘after the fact’ and news articles are coming out on what we suspected.
It’s become clear that they used us as bait to enhance their package division after they couldn’t run LTL

We had customers with perfect LTL freight and weight wanting to use us, but because they were not much of a package shipper, they were limited to what they could ship. (Explains why salesman shook heads and said to drivers UPS doesn’t want to grow freight)
We also had customers who receive humongous LTL discounts for increasing their package shipments.
Customers usually got pennies on the dollar for claims. Sometimes claims got dragged out that he customers gave up and ate the damages.

Even though covid buying enhanced their package business, Amazon is still creeping up UPS’s ass and they don’t like the feeling...they want to focus and invest ex-freight money on their core business with fresher technology and faster delivery times.
 
No port said:
corporatefinanceinstitute.com

Loss Leader Pricing

A loss leader pricing strategy, a term common in marketing, refers to an aggressive pricing strategy in which a store prices its goods below cost to
corporatefinanceinstitute.com corporatefinanceinstitute.com

The nerve of UPS brass to complain about ups freight not making any money. They are the ones in charge of this practice. I know of shippers I suspect will either be paying more to ship with TFI or we will no longer be shipping. One of these shippers was getting up to a 93% discount and not having to pay accessorial fees. Why?
Click to expand...
I work for ABF, I had a customer tell me he got a 91% discount on his LTL shipments since he gave UPS all his parcel.......
 
ABF381 said:
I work for ABF, I had a customer tell me he got a 91% discount on his LTL shipments since he gave UPS all his parcel.......
Click to expand...

"Loss leader", stores/businesses do it all the time to attract customers to shop/ship and they make it up on other items.
 
The more I learn, the more glad ups sold us
Triplex said:
"Loss leader", stores/businesses do it all the time to attract customers to shop/ship and they make it up on other items.
Click to expand...
As article stated.
Problem for we who work at UPS Freight is that UPS claimed that they were making no money with freight and shut us down when we voted down their contract(the trust level is just about zero with management)
Now the truth comes out that UPS drove freight profits into the ground, to up parcel profits.

The good news is that TFI will have a profitable freight company, because ups won't be giving away the profits we do the work to earn, to parcel.
 
Dockworker said:
Now that it’s ‘after the fact’ and news articles are coming out on what we suspected.
It’s become clear that they used us as bait to enhance their package division after they couldn’t run LTL

We had customers with perfect LTL freight and weight wanting to use us, but because they were not much of a package shipper, they were limited to what they could ship. (Explains why salesman shook heads and said to drivers UPS doesn’t want to grow freight)
We also had customers who receive humongous LTL discounts for increasing their package shipments.
Customers usually got pennies on the dollar for claims. Sometimes claims got dragged out that he customers gave up and ate the damages.

Even though covid buying enhanced their package business, Amazon is still creeping up UPS’s ass and they don’t like the feeling...they want to focus and invest ex-freight money on their core business with fresher technology and faster delivery times.
Click to expand...
Since UPS is enormously successful and profitable, how can you argue with their business plan.
 
Razorblade said:
Since UPS is enormously successful and profitable, how can you argue with their business plan.
Click to expand...
I guess you haven't bothered to read anything in these threads.
A virtual monopoly in package business is certainly a sure success. Fedex ground is a joke, the us mail isn't a threat, and Amazon is in its infancy.
UPS couldn't compete with the other ltl companies, not because they could not, because they chose not too. They didn't believe the lower margins of ltl were worth the effort. So they used ups freight as a loss leader to try to hoodwink us into a contract concession in 2018 and make more money at the parcel side.
 
No port said:
The more I learn, the more glad ups sold us

As article stated.
Problem for we who work at UPS Freight is that UPS claimed that they were making no money with freight and shut us down when we voted down their contract(the trust level is just about zero with management)
Now the truth comes out that UPS drove freight profits into the ground, to up parcel profits.

The good news is that TFI will have a profitable freight company, because ups won't be giving away the profits we do the work to earn, to parcel.
Click to expand...
Yes UPS sold Freight, but i think UPS will still be lingering around.

Im sure the same customers will be shipping LTL, which might mean that the operations will still be the same unfortunately. I would hope TFI would bring back our next day freight. the first thing UPS cut in 2006 here.
 
In my opinion, I think that UPS with all their money could have dominated the LTL market if they had chosen to. Buying Overnite was just a completion of their Portfolio. Running P&D Driver's ragged
Trying to get more with less and causing
them to miss pickup's with poor service
( Freight sitting on customers docks for days waiting to be picked up) has put UPS in this position. So they have a new owner and things could not get any worse???
 
No port said:
corporatefinanceinstitute.com

Loss Leader Pricing

A loss leader pricing strategy, a term common in marketing, refers to an aggressive pricing strategy in which a store prices its goods below cost to
corporatefinanceinstitute.com corporatefinanceinstitute.com

The nerve of UPS brass to complain about ups freight not making any money. They are the ones in charge of this practice. I know of shippers I suspect will either be paying more to ship with TFI or we will no longer be shipping. One of these shippers was getting up to a 93% discount and not having to pay accessorial fees. Why?
Click to expand...
Do you think they will raise the rates immediately or keep them the same for a little while?
 
It says they will retain the relationship with UPS for several years, hopefully they get their price and UPS makes up the difference.
Good luck with that...
 
There's so much competition in ltl that you can only raise your rates so much before you lose to cheaper rates charged by other carriers. The question is can TFI raise rates enough and retain enough customers to meet what profit numbers they want and still cover all the obligations that are imposed by a contract compared to lower cost companies that don't have those cost. Easier said then done, there's only ABF that seems to be a profitable union ltl company.
 
Last edited:
No port said:
I guess you haven't bothered to read anything in these threads.
A virtual monopoly in package business is certainly a sure success. Fedex ground is a joke, the us mail isn't a threat, and Amazon is in its infancy.
UPS couldn't compete with the other ltl companies, not because they could not, because they chose not too. They didn't believe the lower margins of ltl were worth the effort. So they used ups freight as a loss leader to try to hoodwink us into a contract concession in 2018 and make more money at the parcel side.
Click to expand...
Sounds like a business plan to me!
 
Razorblade said:
Since UPS is enormously successful and profitable, how can you argue with their business plan.
Click to expand...
UPS has been the shipping King forever. However, when they began UPS Freight they thought they could run it like the parcel shipping. When realizing they could not account for step by step delivery in the LTL business, they decided to use UPS Freight for bundling purposes. Use our parcel and we will give you 90% discount on your freight shipping. Ah la, we have another LTL losing money.
 
Volnuck1 said:
UPS has been the shipping King forever. However, when they began UPS Freight they thought they could run it like the parcel shipping. When realizing they could not account for step by step delivery in the LTL business, they decided to use UPS Freight for bundling purposes. Use our parcel and we will give you 90% discount on your freight shipping. Ah la, we have another LTL losing money.
Click to expand...
Again, that sounds like a business plan
 
You must log in or register to reply here.
Top