The Wall Street Journal reports this morning how how small, super-regional ground shipping companies increasingly are making deliveries for online retailers this year, evolving into a threat to bigger companies such as FedEx and United Parcel Service (UPS), not to mention the financial challenged US Postal Service (USPS).
The story says that the regional shippers cooperate to cobble together what essentially is a national network. The Journal writes: "Regional shippers typically can get a package between two points in one region—from New York to Boston, for example—faster than their national counterparts, and they are able to price shipments 20% to 40% below the national shippers because of their lower costs … While the regional shippers’ total market share is only about 3%—total estimated revenues are expected to reach $1 billion in 2013, compared with a total ground package market of about $32 billion—their revenues have more than doubled since 2009, according to SJ Consulting Group, Inc. These companies separately now serve approximately 90% of all U.S. ZIP Codes, buoyed by the increase in parcel volumes from big customers like Amazon."
The story says that the regional shippers cooperate to cobble together what essentially is a national network. The Journal writes: "Regional shippers typically can get a package between two points in one region—from New York to Boston, for example—faster than their national counterparts, and they are able to price shipments 20% to 40% below the national shippers because of their lower costs … While the regional shippers’ total market share is only about 3%—total estimated revenues are expected to reach $1 billion in 2013, compared with a total ground package market of about $32 billion—their revenues have more than doubled since 2009, according to SJ Consulting Group, Inc. These companies separately now serve approximately 90% of all U.S. ZIP Codes, buoyed by the increase in parcel volumes from big customers like Amazon."
- KC's View:
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The development of these regional shipping companies means that behemoths like FedEx and UPS will have to develop new approaches that will make them less expensive and more nimble. Yet another case, I think, in which small and fast proves to be more effective than big and lumbering … and it is somewhat instructive that a company like FedEx, that revolutionized the shipping business, now can be considered to be an entrenched behemoth that could be endangered.
One of the things that companies can do, Mobile Marketer suggests, is to roll out "a new Kindle Fire application that integrates Facebook and the company’s My Choice program to let consumers track and ship packages."
Speaking as someone who has had a lot of stuff delivered this holiday season, I can tell you that it would be great to be able to know precisely when that truck might be showing up at the house. And I'm sure that if UPS is doing it, FedEx is working on the same sort of application.
And this doesn't even incorporate the whole drones discussion…
