Thursday, December 19, 2013

There Is Always Marketplace Competition: Fed-Ex, UPS, USPS Losing Business To Faster, Cheaper, Smaller Connected Regional Shippers

From The Wall Street Journal, "A New Threat to UPS and FedEx: Networks of 'Super Regional' Shippers Handle More Packages for E-Retailers" by Laura Stevens:
They work like this: A company such as Eastern Connection, which operates in the Northeast, picks up a package in New York City. It hands it off in Harrisburg, Pa., to another shipper, partner Pitt Ohio LLC, which delivers it a total of two days later to a customer in Columbus, Ohio.

By cobbling together networks, the regional shippers are grabbing market share from UPS, FedEx and the U.S. Postal Service as e-retailers look for cheaper, faster delivery options for their online shoppers.

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. Most regional shippers have ground-only delivery networks that employ contracted drivers who own their own company-branded vans.

"They're going into the area that UPS and FedEx pretty much dominate—and they can go further faster," said Ivan Hofmann, a former executive at FedEx Ground who now consults with regionals as part of ETC & Associates LLC. [Emphasis added.]
Of course, the one proviso is that government does not restrict competition by creating legal barriers for new business to enter and compete with the established players, as it often does under the guise of protecting the consumer.

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