Small Package Delivery Companies Capitalize on Potential UPS Strike

Smaller parcel carriers made big gains during the pandemic handling packages that the larger players couldn’t deliver. Some want to get bigger.

Regional shipping companies across the U.S. are expanding their operations to pick up business from bigger rivals, seeking to capitalize on labor uncertainty at United Parcel Service and FedEx and growing reluctance among merchants to rely on a single carrier. 

The push comes as the e-commerce boom that fueled carriers’ growth has faded and inflation-weary shoppers begin to pull back on purchases. Some small carriers say that despite the slowdown, they see an opportunity to build on the gains they made during the height of the Covid-19 pandemic. 

LaserShip/OnTrac, the largest regional carrier, is expanding its delivery network into Texas this year. Lone Star Overnight, a Plano, Texas-based carrier with a network in Texas, Arkansas, Oklahoma, Kansas and Missouri, plans to open a major sorting facility in Chicago next year.

In the past, retailers typically gave all their packages to one carrier to maximize volume and reap bigger discounts.

“The new normal is to use a multi-carrier strategy for different types of packages for different locations,” said Krish Iyer, vice president of strategic partnerships at Auctane, a shipping and software solutions company.

Before the pandemic, regional that sometimes rely on the Postal Service for last-mile deliveries made up 6% to 7% of the parcel market, according to data from ShipMatrix Inc., a parcel analytics firm. Now it is around 8% to 9%, as carriers say they picked up substantial volumes from shippers who told them UPS and FedEx had insufficient capacity during the pandemic.

Many shippers say they don’t want to be beholden to an individual carrier, even as capacity constraints have eased. 

Source: WSJ.com