Parcel - June 2008 - (Page 14)

trends REGIONAL CARRIERS MOVE TO THE FOREFRONT Their markets are growing faster than ever Bob Ferri and Rob Shirley essenger services and regionalized carriers have been around for quite some time. In fact, they probably date back to before the medieval ages when some entrepreneurial lad conceived the idea of making deliveries for several companies rather than just working for one. Remarkably, the faceplate of the regional carrier industry has changed little in hundreds of years. Then railroads became the way to ship in the 1800s if you needed to ship outside a relatively small geographic region. In the 1950s, the newly developed US highway system ushered in nationwide trucking. But in 1946, an event took place which would change the face of transportation as we know it today. John Emery started Emery Air Freight, and the air freight forwarder was born. From Emery’s concept of transporting shipments by air, Federal Express evolved in the 1970s, creating the small package airline. That industry has proven to be the most robust segment of the entire transportation industry when compared to anything that came before it. In the late ’70s, the industry gained the nomenclature of “express carriers” and in the 1980s became “integrated carriers.” In the 1990s, FedEx, DHL and UPS became dominant as “global carriers.” Not only have these carriers grown in size based upon the geography they have chosen to serve, but they have grown by increasing the total weight of shipments they carry and the methods of transportation they utilize to carry those shipments. Outside the US, these carriers typically contracted with small ground-based agents for pickup and delivery and when the operation turned proﬁtable, they usually purchased the agent. In the US, they rapidly acquired trucking companies in the ﬁrst few years of the 21st century to continue to fuel their growth and expansion. 14 May 2008 Moving Forward M Heading towards the end of the ﬁrst decade of the 21st century, what will FedEx, DHL and UPS, as highly competitive companies, do next to fuel their growth? Their histories show that these companies prefer acquisitions rather than going it alone. While their strategies commenced with utilizing agents for speciﬁc geographic markets outside the US, their focus has transitioned back to the US market. Here they can become dominant players in new transportation segments (such as trucking) by literally acquiring established carriers overnight in established markets. It would appear that they have few business segment choices left, and it now appears that regional carriers specializing in same day deliveries may be their most viable target. Acquisition of the right carriers will not only give them entry into a new market segment, but any next day deliveries can be merged into their existing systems. It’s merely icing on the cake for them to increase the market share they already have in that crowded marketplace. You can probably expect UPS, FedEx and DHL to target regional carriers with the greatest geographic scope rather than those with the greatest market share. Assume geographic scope to be same day delivery within a general radius of 250 to 400 miles. It would be highly desirable for UPS, DHL and FedEx to acquire the assets of their targeted companies and then treat the employees as independent contractors (ICs). But with the current legal problems confronting FedEx on the independent contractor issue, coupled with Barack Obama’s introduction of Senate Bill 2044 (The Independent Contractor Proper Classiﬁcation Act of 2007), expect the process to move slower than you would anticipate. However, expect the Big Three to be doing their due diligence during this period in order to act quickly once the IC issue has been resolved. While the Obama bill has not yet even gotten to committee in the Senate, expect that he will put pressure on Congress to move the bill through quickly if he is elected President. That in itself may be good news to the regional carrier as it will provide a clearer deﬁnition of an independent contractor in a compressed timeframe. www.PARCELindustry.com http://www.PARCELindustry.com

Table of Contents Feed for the Digital Edition of Parcel - June 2008

Parcel - June 2008 Contents Editor's Note What Would Augello Say? Success Means Never Being Satisfied Moving from Manual to Automated Fulfillment Regional Carriers Move to the Forefront Understanding Warehouse Management Systems Negotiating Carrier Contracts It’s All About the Data! How Long Will The East-West Trade Imbalance Last? Educate the Shipper, or Fix the Software? Product Profile On the Mark New Products & Services Advertiser Index Wrap Up

Parcel - June 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.