The changing face
of parcel delivery
BY GARY FRANTZ, CONTRIBUTING EDITOR
PARCEL EXPRESS
Transportation
Once upon a time, a parcel delivery company meant either FedEx or UPS
(or maybe the U.S. Postal Service). Those days are gone.
THE PARCEL EXPRESS MARKET IS UNDERGOING
what may be its most dramatic evolution since Fred Smith,
then a Yale undergrad, wrote a 1965 term paper outlining
the original idea for Federal Express: a system for accommodating urgent, time-sensitive shipments. A paper for
which he received an average grade.
Fast forward to today’s world of e-commerce and its
explosive growth, where package volumes are projected
to double from 50 million to 100 million per day by 2026.
Then there is Amazon methodically building out its own
fulfillment and delivery network and taking millions of parcel deliveries in-house, UPS getting FAA (Federal Aviation
Administration) approval for drone operations, FedEx
testing autonomous urban delivery robots, well-funded
technology startups introducing new models seeking to disrupt the market, and finally, intense competition across the
board as existing and new players look to shave costs and
bring innovations large and small to the business.
What’s sparked this transformation is a seismic shift in
consumer shopping patterns and delivery expectations.
“E-commerce is really [package and parcel] growth driven
by free shipping. I challenge anyone to prove e-commerce
would have grown as it has without free shipping,” says
Satish Jindel, president of Pittsburgh, Pennsylvania-based
SJ Consulting Group. He emphasizes that online parcel
shipping is not technically “free” since retailers are essen-
tially paying the freight. As e-commerce volumes continue
to grow, “that creates additional pressure on [retailers] to
find companies that can handle it at a lower cost because
they have to absorb it. So, carriers have to come up with
cheaper and cheaper ways to handle [e-commerce ship-
ments] and make money at it,” he adds.
AMAZON REDRAWS PARCEL LANDSCAPE
Jindel says that the industry can thank Amazon, and particularly its introduction and promotion of its Amazon
Prime subscription service, for hooking consumers on the
free-shipping concept. Amazon says it has over 100 million
paid Prime members globally. Estimates by research firm
Consumer Intelligence Research Partners suggest that with
that market penetration, some 82 percent of U.S. households have a Prime account.
Jindel adds that in addition to the millions of consumers on Prime, over the past 10 years Amazon also has
built a foundation of some 3 million-plus e-commerce
retailers participating in its “Fulfillment by Amazon” ful-
The changing face
of parcel delivery
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