In the past five years, e-commerce companies have seen a huge shift with how residential packages that weigh under five pounds are handled: Up to 50 percent of these packages are now going through the United States Postal Service.
FedEx SmartPost and UPS SurePost are last-mile residential delivery services that use USPS to handle the final leg. They sort packages to a consolidation area and then move them to a bulk mail center or sorting facility. USPS takes over to bring the shipment to everyone's doorsteps.
Regional carrier services are another way to accomplish this last step. A few of these options include:
- Lone Star Overnight in Texas
- Golden State in California
- Speedy Delivery in Minnesota
- Eastern Connections on the East Coast
- OnTrac in the Northwest
These companies attend to their own niche market, which can be defined through one or more of the following factors:
- Type of pickup customer
- Type of delivery customer
Where the Postal Services Fits
The U.S. Postal Service already delivers to virtually all homes, across the country. UPS and FedEx don't have to send their trucks down narrow streets or mile-long driveways to deliver lighter weight packages. It makes more sense for these carriers to leverage USPS at this stage.
For example, approximately 200,000 packages per day here at Creative Logistics Solutions go through the USPS, and they do a great job at getting them where they need to be. We've seen that the service has gotten way better over time.
You can tender packages to UPS or FedEx so they can hand it off to USPS, or you can have the Postal Service pick up from you directly. These ways of improving residential delivery can save your e-commerce company money and improve warehouse operations. You get discounted rates for packages under five pounds with USPS, so it makes economic sense to go with this choice over UPS or FedEx if you work with this size shipment.
It's very hard to be all things to all people. These niche carriers provide different options and savings that no one company could provide.
What You Should Consider
You need to know your package metrics so you can determine which carrier makes the most financial sense for a particular type of delivery. Track this information to get the details you need for better warehouse management:
- Package weight
- Customer location
- How far does the package travel
- Average revenue per package
You'll find greater carrier competition over heavier, longer haul boxes since they are more profitable than local, lightweight deliveries. Most regional carriers typically look for common categories, such as moving packages from medical companies to hospitals, or books from booksellers to schools. As you track your shipping metrics and learn more about your needs, you can establish whether a particular regional carrier or USPS offers a better service for your business.
Most people become complacent with their carriers as they get used to their account rep and the terms of service. Although you may sometimes have a great discount or a national contract, in most cases, your company simply hasn't explored other options.
Remember that it takes as little as $25 a day of savings to add up to thousands over the year. Incremental changes, whether from different carriers, system automation or process improvement, can become significant. Investigate your carrier options, from the regional and specialty services to the U.S. Postal Service.