Sponsored by

UPS Pulling Away From Amazon; Crackdown Hits Small Importers By Paul Page

Amazon's rapid growth as a logistics business is exerting a bigger impact on parcel carriers. United Parcel Service plans to phase out more than half of the business it does with its largest customer over the next 18 months, a move plainly addressing the volumes from Amazon that provided nearly 12% of UPS's total revenue last year.

The WSJ's Dean Seal reports UPS is now projecting a 2.3% decline in revenue next year, a drop that amounts to hundreds of millions of dollars and suggests both the scale of Amazon's impact on the market and the changes that are churning through the parcel sector. UPS CEO Carol Tomé says UPS is looking to wean itself from Amazon because profit margins on that business are tight and eat into its profitability.

UPS rival FedEx pulled away from Amazon service in 2019, a move that came as FedEx was wrestling with the scale and structure of its network. Amazon funneled big volumes of packages to the carriers, but its weight also commanded lower pricing and its service demands haven't necessarily fit into the package carriers' efforts to maintain efficient operations based on economies of scale.

The scaled-down business with Amazon will trigger broad changes in UPS's operations. UPS plans to reconfigure its U.S. network, including cutting work hours and the size of its vehicle and aircraft fleets. It will launch an efficiency drive that the company expects to generate $1 billion in savings.

ShipMatrix says on-time delivery for parcel carriers in December deteriorated compared to the same month in 2023. (Logistics Management) FedEx is changing its earnings schedule so that its fiscal year ends on Dec. 31. (Dow Jones Newswires) Quotable CONTENT FROM: PENSKE LOGISTICS Gain X-Ray Vision. Gain Ground with Penske Logistics.

You weren't born with superpowers. But Penske's industry-leading technology helps you track all of your inventory, across every distribution point, all in one place. So you gain total visibility.

Learn More Government & Regulation

Efforts to target the enormous growth of Temu and Shein are landing hard at some U.S. e-commerce retailers. The American apparel importers say they've been caught up in the varying and still developing regulations that aim to crack down on the tariff exemption that's boosted the China-founded retailers. The WSJ Logistics Report's Liz Young writes that some smaller importers are holding back shipments and resetting inventories as they await more clarity on the rules.

The trade provision known as the de minimis exemption has been crucial to the growth of Temu and Shein since it allows them to avoid import levies and keep down costs. Ministry of Supply and 33 Threads are among retailers that have been caught up in the turmoil as the U.S. wrestles with a crackdown and Mexico tightens restrictions on the use of warehouses there to take advantage of the tariff exemption.

Number of the Day In Other News

The U.S. economy expanded 2.5% last year as growing consumer and government spending offset declining imports. (WSJ)

Eurozone output was flat in the fourth quarter and expanded 0.7% for all of 2024. (WSJ)

U.S. goods imports by value surged 3.9% in December to the second-highest level on record, while exports dropped 4.5%. (MarketWatch)

Authorities believe there were no survivors in the collision of an American Airlines plane and a military helicopter at Reagan Washington National Airport. (WSJ)

Hapag-Lloyd's revenue expanded 6.7% last year to $20.7 billion on a 5% gain in container volumes. (WSJ)

Leste Group is investing in Billor, a fintech and freight company that helps truck drivers become vehicle owners. (WSJ)

Apple's iPhone sales slipped 1% in the crucial December quarter. (WSJ)

Tanzania signed a $2.15 billion deal with two Chinese firms to build a railway linking the Dar es Salaam port to a nickel mine in Burundi. (Bloomberg)

Nissan is cutting production in the U.S. by 25%. (Nikkei Asia)

Asian trading in Russian oil for March delivery has almost ground to a halt as tanker rates and oil prices jump in the wake of new U.S. sanctions. (TradeWinds)

Ship-to-ship transfers of Russian-linked oil have surged this month following a large U.S. sanctions package aimed at Russia's shadow fleet. (Splash 247)

Some European shippers are postponing contract talks for the Asia importing season until the potential use of Red Sea routes becomes clearer. (The Loadstar)

Americold is setting up a 300,000-square-foot cold storage hub at Canada's Port Saint John. (Journal of Commerce)

The Bangladesh government will permanently close a dozen factories operated by embattled apparel manufacturer Beximco. (Sourcing Journal)

Walmart will spend some $4.15 billion in the next five years to add stores and distribution centers in Canada. (Supermarket News)

Canada Cartage is acquiring Walmart Canada's fleet and will operate the business on a dedicated basis for the retailer. (Trucking News)

Schneider National's net profit improved nearly 20% in the fourth quarter despite a 2% slip in the trucking and intermodal carrier's revenue. (Dow Jones Newswires)

Tractor Supply is building an 865,000-square-foot distribution center in Nampa, Idaho, to serve the retailer's Pacific Northwest stores. (Store Brands)

British supermarket chain Morrisons says the November 2024 cyberattack on supply chain tech provider Blue Yonder dented its Christmas sales. (TechMonitor)

U.S. forecasters expect ongoing supply issues to drive up egg prices another 20.3% this year. (Supply Chain Brain)

A World Bank study says women make up 12% of the global transportation sector workforce. (DC Velocity)

Executive Insights

Here is our weekly roundup of stories from across WSJ Pro that we think you'll find useful.

DeepSeek's new AI model spells uncertainty for Big Tech and U.S. competitiveness, but for enterprise CIOs looking to keep their AI costs down, it's just good news. Large U.S. companies are cutting or diluting the link between diversity goals and executive compensation as a flood of American businesses retreat from DEI. Soccer, the world's most popular sport, faces rising threats from climate change . Now, the industry is working to address its own emissions contributions. Heavy-duty truck makers and dealers are caught in a swirl of shifting and conflicting rules over zero-emissions big rigs, undercutting the commercial prospects of the vehicles. About Us

Paul Page is editor of WSJ Logistics Report. Reach him at [paul.page@wsj.com].

Follow the WSJ Logistics Report team: @PaulPage , @bylizyoung and @pdberger . Follow the WSJ Logistics Report on X at @WSJLogistics .

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

January 31, 2025 07:11 ET (12:11 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.