Could the end of the pack duopoly be near?

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Chase Flashman | Co-founder and CEO at ShipSigma

Today, parcel shipping is controlled by two goliaths: UPS and FedEx. According to the Pitney Bowes Parcel Shipping Index, they check: about 70% from market share to turnover. After more than 10 years at UPS, and now as the co-founder and CEO of a logistics technology company, I’ve seen first-hand how the market works.

A duopoly can have disadvantages, such as: restrict free trade† When two companies have such a hold on most of the market, it often means that the offerings of goods and services are not diverse – there are limited options for consumers. In addition, contracts and fees can become complicated and make it difficult for customers to understand what they are looking at and what is being charged. There is usually no way to effectively validate proposed savings or manually track compliance. Customers can also become familiar with annual rate increases.

However, recent trends show that the shipping industry and its key players could change.

More room for competitors

When a duopoly has such control over market share, it is usually very difficult for competitors to enter the industry successfully. This has been the case for decades, but with the rise of Amazon and other last-mile delivery services, I think the duopoly is slowly coming to an end.

While FedEx and UPS are both still strong in terms of revenue, Amazon surpassed FedEx in market share by package volume in 2020. Amazon continued to shrink FedEx’s volume-based market share in 2021, increasing their share from 21% to 22%.

Crowdsourced Delivery

Outside of Amazon (the biggest threat to the duopoly), crowdsourced delivery takes over the last mile. This has become a staple of food and grocery delivery and even Amazon delivery, but it’s starting to trickle down to retail.

Crowdsourced delivery allows merchants to increase their delivery speed and offer scheduled delivery options. It is also a small investment for the courier companies. Drivers use their own vehicles and often pick up directly from the store location. As a result, there is no need for additional warehouse space or personnel benefits. This setup also benefits customers as they can select text messages, push notifications or, in some cases, GPS tracking to track their packages from start to finish. It sounds great, so why isn’t everyone using it?

Unfortunately, the cost per delivery is usually high, with no massive discounts available. These prices and fees can be transferred to the customer to some extent, but often the retailer eats the fees as a customer’s willingness to cover high delivery costs is almost non-existent.

Regional carriers

The final threat to the carrier duopoly lies with the regional carriers. In October 2020, regional carriers were responsible for: 30% of shipments and deliveries, compared to the only 4% representation they had in January of that year. Regional carriers only offer services within specific areas. While that means you probably won’t be able to ship every package through that carrier, it also means that delivery speed and accuracy will likely increase. Usually these rates and surcharges are lower and there is a higher proportion of packages with next day delivery.

What this means for business leaders

If you run a company that ships a lot, start with your research. Compare prices outside of UPS and FedEx, negotiate your existing contracts, and start diversifying your portfolio. I expect these trends will lead to more fair and competitive pricing as there will likely be no more grip on the market. Don’t be afraid to use more than one or two companies to access the best total cost for your business. Check your service levels to make sure you don’t get a price for air shipping when ground services will deliver your package there in the same time for half the price.

If you are just entering the market or looking to scale up, know that the prices are the highest they have ever been. As alternative delivery options continue to increase, expect the prices of the major carriers to drop to become more competitive. If you’re a small or startup business looking to streamline your parcel shipping with just one carrier, make sure you research and pay close attention when it comes to contract negotiations to access the best rates available.

Diversifying your carrier portfolio will almost certainly give you access to lower overall rates for your business, but it’s not without its challenges. Using more carriers means you need more compliance and supply chain management. This means either an increase in human capital or greater access to better technology and services. (Disclosure: My company provides this technology.) You may want to consider looking for solutions that give your people time to focus on other things.

I think the duopoly is disappearing. Now is the time to do something about it.


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