Introduction
The recent announcement of layoffs at UPS along with the potential sale of their brokerage division Coyote Logistics has big implications for the trucking industry. In the lastest episode of The Trucker's Lounge podcast, host Eugene and DePriest dig into these developments and what they could mean for company drivers and owner-operators.
UPS Cost Cutting Measures
Last year, UPS renewed a lucrative 5-year contract with the union, likely to avoid labor disputes. However, with declining freight volumes, UPS is now laying off 12,000 non-union management and contracted workers to cut costs. This surprising move from the top down shows UPS is focused on protecting their bottom line, even after guaranteeing raises for union staff.
The potential sale of Coyote Logistics is another cost-saving measure. UPS paid $1.8 billion for Coyote 9 years ago to expand into the truckload brokerage business. But with spot rates falling, operating this division may no longer make sense financially compared to UPS' core LTL services.
What We Should Have Learned From Chasing Pandemic Rate
The host emphasize how greed and short-term thinking during the pandemic freight boom has now left many owner-operators and small fleet owners struggling. When rates were peaking, UPS and other big carriers lured drivers with pay bumps further exceeding their normal rates. The host believes larger carriers pay increase was due to many small fleet owners boasted of their drivers pay rates on social media.
But eugene and DePriest cautioned drivers to avoid chasing temporary peak pandemic rates. They valued consistent freight volume over inflated spot market prices. In hindsight, their long-term perspective proved wise.
Key Takeaways for Small Fleet Owners and Owner-Operators
This podcast episode is a sobering reminder of how quickly fortunes can change in the trucking industry. UPS is planning ahead to survive the downturn, at the expense of thousands of workers. Owner-operators should learn from past mistakes and focus on building sustainable, stable businesses ready for future ups and downs.
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