Sent Items #187: Wednesday, May 7, 2025

I’m still reeling from the news over the weekend that Warren Buffett will be stepping aside as CEO of Berkshire Hathaway. A true end of an era.

A lot of news out this morning so figured I’d write one this morning. 

1. Some get excited about the papal nomination, I get excited about the Postmaster General nomination.

   At Trump’s urging, United States Postal Service board to name FedEx official as next Postmaster General (link). David Steiner is a member of FedEx’s board and was previously the CEO of Waste Management.

   The union representing 295,000 active and retired letter carriers, the National Association of Letter Carriers (NALC) strongly condemned this selection (link), stating it presents a clear conflict of interest. Steiner didn’t just stroll in from the private sector—he comes straight from one of the Postal Service’s top competitors. It’s an aggressive step toward handing America’s mail system over to corporate interests.

   Staying tuned to this one!

2. China announced this morning they would meet with Treasury Secretary Scott Bessent in Switzerland later this week.

I speculated the other day on LinkedIn that a trade agreement would happen before the end of May:

I thought it was increasingly likely when I saw this chart depicting how Temu is scaling Meta ads in the U.S. once again:

April 15: 4 ads live

May 2 (today): 35,000+ ads live

Some big headlines out of UPS as well:

1. UPS plans 20K job cuts this year as Amazon pullback advances (link). They will be closing 73 facilities by June’s end as part of “the largest network reconfiguration in our history,” CEO Carol Tomé said. This is to match its U.S. network capacity with a planned decline in volume from Amazon, its largest customer. The company announced in January that the amount of volume it delivers for Amazon would drop by more than 50% by June 2026. So far, Amazon volume delivered by UPS declined 16% year over year in Q1. UPS is expecting another 16% volume drop from Amazon in Q2, followed by 30% volume declines in both Q3 and Q4.

2. Somewhat relatedly, UPS Mail Innovations is hiking rates due to USPS changes. These will take take effect May 11 (giving shippers a mere 10 days notice). I’ve heard from shippers that these increases are upwards of 40% across the board. Mail Innovations is a deferred parcel offering from UPS that has historically handed off volume to the U.S. Postal Service for last-mile delivery. But changes at the Postal Service has forced companies using these deferred mail services (e.g. Parcel Select) to adjust their operating models.

Glad to see some positive M&A in the 3PL space. DHL Unit Acquires IDS Fulfillment, Eyeing Smaller E-Commerce Customers (link). The acquisition adds 1.3 million square feet of warehouse space in Indiana, Utah, and Georgia.

I enjoyed what my friend Kyle Bertin from Two Boxes had to say about the acquisition:

I believe this acquisition is another in a long line of acquisitions / announcements targeting the same trend - the largest contract logistics providers in the world are going where the growth and margin is, while also trying to fend off new competition that, over time, threatens the core of their contract businesses. I also think this trend is a major tailwind for new, agile technology solutions in the e-commerce logistics market. It's going to be a fun few years in e-com logistics land.

Enterprise 3PLs are spending billions to move down market to take share in the SMB and MM market.

Why?

1. It’s where the growth is. The fastest growing brands tend to be in the SMB and MM. The companies above are architected to serve Levi’s, Nike, et al once they’ve made it big. Acquiring the next Vuori or On Running early and growing with them is worth a lot of LTV to these companies.

2. It’s where the margin is, particularly from parcel. These companies make a lot more money selling parcel to SMB and MM companies than they can with ENT customers who have more significant buying power.

3. The “tech forward 3PLs” are moving up market and winning more deals than ever. Cart.com, ShipMonk, ShipBob, Stord, and many more have tech that enables agility and speed. They've been able to more quickly onboard growing SMB and MM brands, particularly in the chaotic time we're seeing now.

PSA: IDS Fulfillment (as well as Cart, Shipmonk, Shipbob and Stord!) are all great partners of Third Person!

Enjoy the rest of the week!

- Matt

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