The shipping industry has gone through some changes in the past few months most notably, consolidators are consolidating. RR Donnelley Package Services Division was acquired by Heritage Partners, majority owner of American Package Express (APX). And Parcel/Direct was acquired by FedEx. These recent mergers/acquisitions of consolidators will no doubt have an impact on parcel shippers. But what type of impact? A positive impact, says Kevin Collins, vice president of Business Development, APX, because now there are larger players with more volume and more scale. This translates to greater operational efficiencies and better penetration to the DDU and, at the same time, more leverage with USPS to further improve the Parcel Select offering. In addition, the entrance of larger traditional carriers in this space also adds credibility to this delivery channel.
Collins adds, One thing that is interesting, as far as shippers go, FedEx and UPS are also participating in USPS Parcel Select in some areas, and I think that brings a lot of validity and credibility to this delivery channel. Both acquisitions will make it easier for the major players to take advantage of the U.S. Postal Services Parcel Select service as packages are sorted and consolidated and then transported to local post offices for last-mile delivery to residential customers by the more than 300,000 Postal Service mail carriers.
While a lot has changed in consolidation, certain things remain the same for now. To help you figure it all out, weve answered some of your most important questions by seeking out the advice of two of todays leading consolidators, APX and Parcel Corporation of America (PCA). Some of the answers you may already know, but some may surprise you.
1. How many packages per day do I have to ship to be at a level where I should consider using a consolidator?
APX A typical consolidator will consider your package volume with your physical location, creating an economic decision. Pickup and trailer procurement cost are balanced against revenue potential to determine a desirable customer. A consolidators or expeditors operating model will dictate its flexibility. Someone like APX will consider shippers with as little at 100 packages per day, says Collins.
PCA That depends on proximity to location, but typically were looking at a minimum of 500 a day. I would say about 500 to 1,000, depending on location, says Tom Sheppard, director of Marketing, PCA.
2. In what niches do consolidators help customers most? (For example, residential vs commercial, lightweight vs heavy packages)
APX Savings can be seen in both lightweight and heavy packages. Consolidators and expeditors take advantage of the U.S. Postal Services strength: daily residential delivery to every US address where the savings potential to shippers can be seen in all weights.
PCA We typically service the clients that have very high percentages of residential volume. We also have a number of clients that do ship commercial volume, but its more so the one- and two-piece type commercial shipments. One of our clients does a lot of shipping to the Hallmark stores and similar places where the carriers are dropping off a couple packages along with their regular mail routes. Those types of situations work fairly well. Where we dont work well at all is deliveries being made to Wal-marts, Kmarts, big box retailers.
3. What kind of savings could I expect by using a consolidator?
APX It depends on your profile as a shipper. Volume, distribution pattern, location, weight all are factors considered when a consolidator or expeditor develops your pricing. One thing is certain, there will be significant savings when compared to the larger national carriers.
PCA Right now with UPS rates being where theyre at, were easily in the 35% to 45% off range without even really trying.
4. How would I track packages shipped?
APX I cant speak for other consolidators, but for APX, our tracking and visibility is no different than that of the larger, traditional parcel carriers. Shippers or their customers can visit our Web site (www.shipapx.com) and the tracking functionality is there, including merged data from APX internal tracking events and all USPS tracking events. Shippers can track using internal order or reference numbers in addition to USPS delivery confirmation.
PCA Our package tracking is entirely Web-based (www.parcelcorp.com). We actually combine multiple databases so that we have a completely seamless door-to-door tracking interface for our clients. Weve got it set up where our clients have a number of options where they track by name, destination ZIP Code, Delivery Confirmation number or order reference number. Basically what weve done is allowed a lot of different options for the customer to track. We also have the ability to interface our Web tracking environment into our clients Web pages so that it has the look and feel of our clients site as opposed to just hyperlinking to our site. It just gives a lot more continuity to our customer.
5. How does utilizing a consolidator affect delivery times?
APX It really depends on who you use. The definition of consolidator tells you packages may be held to obtain a more economic transfer of your packages. This translates into delivery times somewhat slower than that of more traditional ground parcel carriers. APX is a Parcel Expeditor packages move everyday, meaning no consolidation takes place. This provides delivery times consistent with those of other traditional ground carriers. And lastly, the penetration of delivery to the DDU plays an important role in dictating consistent, reliable, and timely delivery.
PCA There is a difference in going through the consolidator network. The one thing that we like to advocate from a marketing perspective is to utilize our service for various shipping options, and then for each incremental level of faster service, charge the customer a little bit more. Thats become the industry standard especially with a lot of the catalogers. You dont want to go into utilization of a consolidator with the notion that its a one-to-one match with any of the guaranteed ground services because its not. The cost savings typically offsets the difference in the service level.