Ten months after joining forces, regional carriers LaserShip and OnTrac have launched a transcontinental home delivery network linking east and west coasts, with plans to expand to Texas in early 2023 and other markets thereafter, offering shippers an alternative to FedEx and UPS.
LaserShip, which primarily services east of the Mississippi plus Arkansas but minus Alabama, Vermont and Maine, acquired west coast coverage along with OnTrac in October 2021 for $1.3 billion.
The companies say the new transcontinental network can reach 74% of the U.S. population across 30 states and Washington, D.C., with coast-to-coast delivery in 3-5 days. Hubs will be added in Q1 2023 in Dallas, San Antonio, Austin and Houston, with leases for sort centers and other capabilities being finalized.
Josh Dineen, chief commercial officer for the combined companies, said the service launched with a number of major retailers he couldn’t name, with more being added all the time. The companies worked to consolidate shipment volumes on both coasts, with combined assets moving it back and forth via truckload.
“Primarily, any (shipment) over 800 miles is dominated by the duopoly (of FedEx and UPS), and to a lesser extent the U.S. Postal Service,” Dineen said. “For retailers needing an alternative, they were literally asking, ‘when are you doing this?’ They want to show pictures of their product on our trucks, they want to be first.”
Dineen said when service was launched in Tennessee last year, the company was getting requests from retailers to add places like Chicago, St. Louis, Kansas City and Louisiana.
With UPS and FedEx focusing heavily on profit per piece and “better not bigger” to keep investors happy, while fees and charges rise and fuel spikes flow to the bottom line, Dineen said LaserShip and OnTrac see a natural opening to take some market share. Most estimates have all regional carriers combined at well under 10% of the domestic delivery market.
“By their own admission, (UPS and FedEx) are focusing on yield and revenue quality, and it’s profits over partners,” Dineen said. “We’re a private company and of course have to make a profit, but we’re not prioritizing that over our (shipper) partners. We believe developing and deepening relationships with retailers is the ultimate prize.”
However, there have been concerns about service levels with the combined company. On July 22, Moody’s downgraded LaserShip’s credit rating from stable to negative. The ratings service expressed concerns about “significant execution risk” heading into peak season 2022, after LaserShip experienced network struggles with excess volume last peak.
“This led to a temporary loss of customers and volumes for several months,” Moody’s wrote. “It is not yet certain whether LaserShip’s actions to add significant capacity in its network with new and expanded sorting centers will prove effective. Further, these actions have required substantial capital investments, which have weakened the company’s liquidity.”
Dineen said peak 2022 “is our number 1 priority,” adding the combined companies have been making heavy capital investments in infrastructure, including securing linehaul capacity with carriers and trailers, as well as automation and new sortation centers in New Jersey, Ohio, Tennessee and North Carolina. “That will all launch prior to the holidays,” he said.
The post LaserShip, OnTrac Plan to Expand Transcontinental Network appeared first on Multichannel Merchant.
0 Commentaires