Specialty carriers provide alternative solutions to the US domestic express parcel market

As integrators, UPS and FedEx, shift their strategic focus to outside the US market, an assortment of alternative small express parcel providers are standing by to gain market share in the US domestic express parcel industry. Transport Intelligence estimates this market at $54bn. Combined, UPS and FedEx make up the lion’s share of the market with an estimated 83.5% combined market share however, according to some industry estimates, these small regional providers currently comprise 2% of the market with expectations of 9%-10% growth for 2011.

These regional providers have indeed reported growth this year. For example, OnTrac reported record revenue and tonnage for their fiscal year that ended August 31. In the past month alone, the company has announced the opening of three new sort facilities in Menlo Park, Petaluma and Reno as well as expanded service into Colorado.

OnTrac serves a seven-\western states region that encompasses over 60 million consumers. With over 30 sorting facilities, its home-grown IT system is built to have the same look and feel of UPS and FedEx. OnTrac’s customers represent 49.5% residential and 50.5% business and includes among its customers Staples, Henry Schein and one of the largest internet retailers.

Other regional providers such as Speedy, Lonestar and Eastern Connection have also noted growth this year.

What makes these companies a viable express parcel delivery option? According to Mark Magill, Director of Business Development for OnTrac, advantages of regional providers include later pickups, reduced costs and time in transit. Also, rate increases and increasing accessorials by UPS and FedEx have also made these carriers a more viable option.

The US express parcel market remains an attractive market for potential providers. Earlier this year, LTL provider, Pitt-Ohio acquired regional small parcel provider, US Cargo, to further expand its small parcel service.

Officially launched this week, Equaship is promoting itself as the fourth parcel carrier and is targeting the small to medium-size shipper. Interesting, Equaship is basically a software solution provider and is partnering with the USPS and regional transport providers such as Blue Package to provide transportation services. With no physical infrastructure, the company offers shippers drop-off locations. Although the company has strong backing by an investment from DYMO Endicia parent Newell Rubbermaid as well as an impressive management team led by former Earth Class Mail CEO Ron Wiener and former Director of North American Transportation for Amazon.com and UPS logistics manager Shawn Childs, it remains to be seen if shippers are willing to take their parcels to a drop-off location.

Although regional providers and specialty carriers are experiencing growth and possibly market share gains, they still have a long way to go to be a competitive threat to UPS and FedEx and quite possibly may be potential acquisition targets for those providers interested in expanding into this market.

Quelle: eyefortransport
Portal: www.logistik-express.com