I listened in on UPS' latest earnings report and came away with a few big impressions.

1 - Temu, Tiktok Shop and Shein Growth "Exploded"

Previously the euphemism of note was "our largest customer" which was UPS codeword for Amazon. "New eCommerce entrants" is the new UPS euphemism. And the growth is exceptional!

* UPS CEO used the words "growth has exploded" and noted that these new entrants are running an entirely different model than its traditional shippers, and greatly relying on SurePost.

* In response, UPS has invested a lot in redirecting SurePost volume back into its Gorund network -- to the tune of 40% success with redirect so far, and expect this number to rise.

2 - Businesses Trading Down, Not Just Consumers

One of the first mentions on a carrier call I have seen about shippers trading down in service level. For the same parcel that used to ship Air, those are now going Ground. Ground parcels are now trading down to SurePost.

UPS is claiming they are trying to maintain Ground network volume by matching loads, but all that does is reduce per parcel asset utilization of their Ground network -- somewhat a good news / bad news story. It does not fundamentally solve the trade-down problem.

Expect "TTS" - Temu, TikTok Shop, and Shein to continue to spread in the lexicon.

3 - Teamsters agreement good for robots, bad for humans

Combined with pressure on UPS average daily volume, the rise in costs of the Teamsters agreement is bad news for humans. UPS would have continued its RFID initiatives anyway, but the combination of UPS volume challenges has promoted UPS to eliminate 11,500 positions which has delivered $350M in savings. They expect to triple that savings number by end of year.

As I said, good for robots, bad for humans.

4 - Holiday Peak Will Be Condensed

If you haven't studied the holiday calendar this year, now may be time to do so. There are only 17 days between Thanksgiving and Christmas. UPS is calling this the most condensed peak since 2019. Dec 18th they expect to be the peak.

* Given the volume declines, I still don't expect many supply chain issues but those not prepared for the condensed peak may be caught flat-footed.

5 - Amazon Revenue Stable At 11.5% of Revenue

* The fact that this is flat to a year ago is somewhat surprising, but also indicative of the growth of Amazon relative to other shippers.

* When Amazon tells you for years that they are going to be reducing reliance on UPS but their share of your revenue stays consistently flat -- I take this as a clear indication that Amazon is still taking marketshare.