Breaking the oligarchy lock on parcel express

Over the years, we watched with growing concern as the consolidation of the domestic small package/express market turned in to what looked and acted like a two-company oligarchy. It was clear that two companies dominated the current and future parcel express market for U.S. shippers.

By ·

Over the years, we watched with growing concern as the consolidation of the domestic small package/express market turned in to what looked and acted like a two-company oligarchy. It was clear that two companies dominated the current and future parcel express market for U.S. shippers.

As a transportation buyer, you could pick UPS or FedEx—or explain to your boss why you were taking chances with a “no-name” local provider. In the meantime, these two public companies announced inflation-plus increases in tandem and did not lower fuel surcharges when fuel prices fell. The two big guys even muted the anticipated entry of the into the market, as they co-opted the postal service into being the last-mile solution instead of a full-blown competitor.

USPS can’t raise rates without permission from regulators, so they agreed to take a portion of the private company revenues—and parcel shippers appeared to be stuck.

However, the interesting thing about high margin transaction businesses in the 21st century is that they attract the eye of third parties. We’re seeing the development of technology to manage passengers by ride-sharing firms like Uber and Lyft now being applied to package and express transactions.

And as we’ve been reporting in the pages of Logistics Management, many less-than-truckload (LTL) carriers are dipping their toes in the water, and big-time parcel shipper Amazon has even entered the market.

So, how can a shipper become a common carrier? Large shippers have been doing it for years, especially when they have enough volume and density to keep a truck busy. But today’s new applications enable one-off transactions, so drivers can pick up loads from multiple sources and keep themselves busy all day.

In this case, the shipper isn’t committing to high fixed costs. This worked in truckload with “load boards” and broker 800 numbers, but the leap to LTL/parcel express seemed impossible until the new applications and smart phones turned that around. Now, add the volume and density of an Amazon or Alibaba.com and you have a new market with savvy operators.

Of course, the most difficult challenge is the last mile, but the good news is that USPS’s last-mile services are public, so any new entrants have a way to fill in the gaps in service areas.

With the two dominant players pushing prices higher at hyper-inflation percentages, there’s certainly room for experimentation by companies like Walmart to have employees make deliveries after work or provide incentives for customers to buy online and pick-up at the store.

I tried this recently at Lowes. Rather than go wandering up and down aisles at the big box store trying to find a particular door lock set, I found it online at my desk and simply went to the pick-up counter at the front of the store for simple collection. It was boxed and waiting for my arrival. Alternatively, they would have also delivered my purchase.

This omni-channel shopping is an enabler of “Uberized” delivery, and thus the small package/express market is booming. I include self-pickup in the mix as it saves time and money for the customer. In the meantime, higher volumes and good margins mean more technology-enabled competition will enter the market so creativity can thrive.

And keep in mind that applying this approach to B2B shipments also works when shippers cooperate in combining loads directly or through third-party providers. The good news for shippers is that we have some options today—with more to come tomorrow.  


About the Author

Peter Moore
Peter Moore is Adjunct Professor of Supply Chain at Georgia College EMBA Program, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at [ protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.


Latest Whitepaper
Is It Time For a New Network Strategy?
A successful supply chain network design gives companies a competitive advantage, pinpoints ways to significantly reduce costs, improves service levels, reduces overall cycle times, streamlines all processes and systems used, and more.
Download Today!
From the May 2019 Logistics Management Magazine
May is our Technology Issue, and we’ve devoted the majority of our pages this month to the evolution of the technology toolbox that’s now within our grasp.
The Digital Supply Chain Takes Shape
Top 30 U.S. Ports 2019: Trade tensions determine where cargo goes next
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly newsletter!
Latest Webcast
Technology Roundtable: Are you ready for what’s next?
In this webcast LM's group editorial director Michael Levans gathers four top supply chain management technology analysts to discuss how some of the hottest software and technologies is helping logistics and supply chain management professionals streamline their operations to meet the pressing demands of digital commerce and manage through the tightest labor market in a generation.
Register Today!
EDITORS' PICKS
35th Annual Salary Survey: Compensation matters more than ever
While job satisfaction remains the primary reason for today’s logistics managers to stay with one...
2019 Rate Outlook: Pressure Builds
In 2019, the world economy will enter a third straight year of broad-based growth, but many...

2019 Transportation Management Systems (TMS) Market Update: Keeping pace with the times
The transportation management systems market is growing right along with the number of challenges...
The Logistics News that Shaped 2018
Every year at this time, group news editor Jeff Berman combs through the mountain of news that was...
http://kinder-style.com.ua

www.citroen.niko.ua

start-sport.com.ua/mjachi/mjachi-dlja-fitnesa