20 DC VELOCITY MAY 2018 www.dcvelocity.com
newsworthy
With “Parcel Metro” service, DHL looks to become big fish in
small but growing delivery pond
In January 2009, German transport and logistics giant
DHL pulled the plug on its express unit’s domestic U.S.
operations, ending a financially disastrous six-year quest to
become the market’s third major express player and dent-
ing the parent’s reputation that had taken 40 years to build.
Now Big Yellow is back, in a much smaller and far dif-
ferent form than in the first go-around, reflecting the pro-
found changes that have reshaped the U.S. parcel market
since it left.
The service, dubbed “Parcel Metro,” launched in mid-March in Chicago, New York, and Los Angeles under the
auspices of DHL Supply Chain’s e-commerce unit. It will
be expanded to Dallas and Atlanta in the second quarter,
San Francisco in the third quarter, and Washington, D.C.,
in the fourth quarter. The service will provide last-mile (or,
in some cases, last-quarter-mile or maybe less) deliveries.
It will not use any DHL vans or drivers, but instead will
rely on regional and local firms as well as the “Delivery
Dunkirk” of crowdsourced drivers with private vehicles,
who will be vetted by the DHL unit before hitting the road.
What DHL brings to the table is its technology and, perhaps more important, its global brand. The U.S. last-mile
parcel market is both embryonic and something of a hodgepodge, with startups like New York-based Deliv vying for
share along with other eager pros and a DeMille-like cast of
citizen drivers looking for a piece of the e-commerce action.
By muscling into the nascent segment, DHL wants to build
credibility with the retailers that choose delivery methods as
well as attract a critical mass of qualified drivers to cover as
much geography as possible.
ANGLING FOR AMAZON’S BUSINESS
It also hopes to attract the ardor of a certain Seattle-based
e-tailer that nine years ago was just a seller of stuff and not
a transport and logistics force. The ties between Amazon.
com Inc. and DHL run deep. DHL’s U.S. hub operations—
it serves the U.S. only for international air services—use
the same airport in Cincinnati where Amazon is building
its air hub to support its “Prime” service, which promises
nearly unlimited two-day deliveries for an annual fee just
raised to $119. Amazon used nearby Wilmington, Ohio,
for some of its air services before choosing Cincinnati as its
permanent hub. DHL had its national air and ground hub
in Wilmington before ceasing domestic service. Amazon
and DHL are big customers of cargo airline ABX Air, a
Wilmington, Ohio-based unit of Air Transport Services
Group Inc., which is also based there.
But those bonds will only go so far in persuading Amazon
to use the Parcel Metro service, according to Satish Jindel,
founder and president of consultancy SJ Consulting Group
Inc. Amazon would use Parcel Metro if it can deliver reli-
able service at the lowest price. Should service falter or be
priced beyond what Amazon deems acceptable, the e-tailer
will go somewhere else, Jindel said.
The DHL service is also likely to take aim at the U.S.
Postal Service’s (USPS) “Parcel Select” operation, where
big retailers, parcel consolidators, and carriers induct large
volumes of packages deep into the postal system for delivery by letter carriers. Parcel Select grew by 14. 4 percent in
USPS’s fiscal first quarter, which included the peak holiday
shipping season. However, USPS has warned that the business could be negatively impacted if Amazon, UPS Inc., and
FedEx Corp., its three heaviest users, expand their networks
to offer similar services and siphon off business from USPS.
In April 2017, FedEx and UPS rolled out pricing initia-
tives geared to ultra-short-haul deliveries. The companies
planned to price the services cheaply because they wouldn’t
involve the use of over-the-road linehaul operations, which
add to their costs. Jindel, who is familiar with the initiative,
said the carriers have moved too slowly in building out the
programs, however.
This is a microcosm of the challenges that FedEx and UPS
face to compete in a new world of parcel delivery, according
to Jindel. FedEx and UPS either rely on USPS or on their
own networks to make local deliveries. They do not lever-
age the new ecosystems that have sprung up to respond to
changing retailer and consumer needs, Jindel said. In that
vein, DHL has the jump on them, he said.
—Mark Solomon
Peak-Ryzex Inc., a provider of end-to-end supply
chain, mobile work-force, and retail solutions, has
received a “Supply Chain Solutions Partner of the
Year” award from Ivanti Supply Chain, formerly
Wavelink. … Freight broker and logistics solutions provider Logistics Plus Inc. has recognized two of its less-than-truckload (LTL) carrier partners, Ward Transport
& Logistics and Dayton Freight, for their results and
performance in 2017. … Mitsubishi Caterpillar Forklift
America Inc. (MCFA), a manufacturer of forklifts,
has announced its 2018 Dealers of Excellence award
winners. The complete list can be found on the company’s website, www.mcfa.com. … The Economic
Development Authority of Western Nevada (EDAWN)
has recognized package delivery company On Trac for
its significant growth in Northern Nevada.
accolades
