Parcel - June 2008 - (Page 20)

operations IT’S ALL ABOUT THE DATA! Parcel carriers are emerging as broader logistics providers By Jonathan Shaver Are you ready for transportation’s seismic shift? Carriers traditionally pegged “parcel” are emerging as global full-service parcel and freight providers. If you think reviewing their contracts, data or reports is challenging now, within the next 18 months, the task becomes far more complex. Where Are We Now? Today, DHL and UPS are the largest Third Party Logistics Companies in North America with UPS’s 2006 gross revenue estimates just over eight billion dollars. DHL, including its subsidiary Excel Logistics, is the largest provider globally, with North American revenues similar to the UPS estimates of in excess of eight billion dollars. Although FedEx Supply Chain Services and FedEx Trade Networks do not fall into the same revenue category as UPS and DHL, FedEx’s transportation asset family branded FedEx Freight penetrates domestic markets more deeply than either UPS or DHL. While customers and third party providers chase UPS and FedEx late packages as a method of managing their parcel spend, the parcel carriers have been building infrastructure, integrating platforms and expanding markets to exponentially drive their revenue, while customers are left unprepared to take charge of that impact. They have positioned themselves to usurp traditional freight carriers. In disbelief? Recall what happened with postal consolidation: UPS and FedEx bought and built their way into the postal consolidation market quickly in the early 2000s. They were able to systematically coordinate inbound and outbound drop ship programs for a one-stop contract, running Donnelly Logistics/APX out of business. By 2006, high-volume parcel shippers ﬂed to UPS and FedEx for delivery to residential addresses — and a much higher rate. How Did We Get Here? Historically, shippers viewed parcel carriers for certain strengths, contracting with one primarily for ground and another for air. Shippers awarded remaining transportation to a bevy of other freight carriers who fought for business based on price more than characteristics like service and coverage. In the late 1990s, as parcel carriers began tapping into the freight segment, market dynamics started changing. FedEx implemented an aggressive acquisition strategy of complementary assets for domestic transportation. What is now called FedEx Freight was formerly East/West (originally American Freightways and Viking Express), FedEx National (originally Watkins) and FedEx Custom Critical (originally Roberts Express). UPS soon followed with their own asset acquisition strategy branded UPS Freight, formerly Overnight and Marten, as well as shoring up air freight programs with Fritz and acquiring port rights in other countries. 20 May 2008 What Does This Mean to the Shipper? Shippers used to be able to compare apples to apples. Now, determining which carrier to use for a particular mode and consequently managing those contracts has just become an order of magnitude far more difﬁcult. 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

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