Sometimes it doesn't absolutely, positively have to be there overnight.
Budget-conscious shippers are deciding their packages and envelopes can take a slower path to their destinations, going by second-day air or, even slower, by truck. Some businesses are just plain sending less.
The shift, propelled by the declining economy and record fuel prices, was reflected in FedEx Corp.'s dismal earnings report Wednesday.
The changing outlook has altered the way the Big Three express delivery companies compete for air and ground shipments. It's also pushing DHL Express into the arms of a rival, probably bringing layoffs to DHL's 350-employee West Coast air hub in Riverside County.
"Customers are definitely trading down to cheaper services," said Norman Black, spokesman for Atlanta-based United Parcel Service Inc. "The stagnant economy is affecting almost all of our business customers, and when business slows down, they don't have as much to ship."
Company owners once considered the cost of overnight delivery part of the price of doing business.
Jonathan Rapaport curbed his quick-delivery habit when he realized that $1 out of every $15 he was projecting to bring in this year was being spent on overnight shipping. Rapaport's small Venice company, Great Work Perks, specializes in developing incentive programs that companies use to reward their employees.
"The cost was getting ridiculous. It was my biggest expense," said Rapaport, who now reserves overnight mail for big, new clients. For others, he uses virtual coupons that employees can print and trade for their desired reward.
UPS said the average number of daily domestic overnight air shipments it handled slipped 3.8% in the latest quarter compared with a year earlier, while less profitable ground deliveries edged 0.3% higher. Overall U.S. volume was flat.
FedEx saw domestic overnight shipments fall 7% for envelopes and 1% for boxes in the latest quarter, compared with last year. Overall average daily U.S. volume declined 3%.
On Wednesday, the Memphis, Tenn., company reported a loss of $241 million for its fiscal fourth quarter and blamed its only quarterly loss in 11 years largely on a write-down because it's changing the name of its Kinko's unit to FedEx Office.
FedEx said earnings for the next year wouldn't meet Wall Street's expectations because eye-popping fuel prices inflated the company's costs and a sputtering economy reduced demand. FedEx's financial results are widely considered to be a reliable indicator of how the overall economy is performing.
