A light at the end of the tunnel. A glimmer of hope. A life raft at sea.
Ok, so maybe these are a little dramatic or prone to hyperbole, however there is no mistaking that the Lasership acquisition of OnTrac is going to provide a strong option for many ecommerce shippers. And the related impacts of the merger may even start to tip the scale away from upward pricing pressure the integrated carriers have been exerting the past year.
Ecommerce shippers largely stayed with UPS and FedEx over the past decade, even as Amazon utilized regional and local delivery companies extensively. They did this to diversify their supplier base, maintain control, keep costs down and shorten delivery times. And while many shippers were concerned with competing against Amazon and the Amazon-effect, there was still an under-utilization of the regional carriers.
As the pandemic hit and the ongoing impacts have continued, a myriad of factors have come together, causing substantial amounts of volume to shift to the regionals.
Ecommerce volume boomed. Carriers struggled with the increase in volumes. Performance suffered. The integrated carriers implemented peak season volume limits for shippers – both minimums and maximums. Rates surged upwards. Demand for faster delivery increased.
With the scramble for both package capacity from UPS & FedEx and relief from significant upward pressure on parcel rates, interest in the regional carriers has surged.
The regionals have offered a good value on pricing and, in frequent cases, delivery and transit time advantages. However, the ability of shippers to get goods across the country on their own dime, to insert into a local regional network, has been a barrier to switching for some. A lack of familiarity and IT concerns also added into the equation.
With the acquisition of OnTrac by Lasership, the regional play just got a lot more exciting. In fact, it looks as if the next national integrated carrier may be coming to life. With Lasership currently serving 22 states in the East and Midwest and OnTrac serving all of California and the major metro areas of 7 others, there is a strong potential for equity investor American Securities to invest in other regionals to build out the national footprint.
And in the interim, its possible we will see 90% coverage of the U.S. population by the end of 2022. Is that an aggressive schedule? Both yes and no. There are growing pains with every acquisition and there is a shortage of both workers and equipment that could impact linehaul between the existing two regions, as well as the linehaul lanes that could bring about a large delivery footprint. However just the addition of the Chicago metro and Texas areas could get Lasership very close. With some hard work, effort and investment, major U.S. coverage is well within sight.
Regardless of the longer-term benefits, the short-term upside of bringing the two coasts together via company controlled linehaul will be a boon to shippers within the existing footprint. Lower costs, carrier controlled linehaul, more capacity and the potential for better transit are just a few of the major benefits available to ecommerce shippers as we pass the peak 2021 holiday season.
Given the tough pricing market this year, its refreshing to see that select shippers will be able to find some relief in the new year. At some point, the shift to the new Lasership might be just enough to start to turn the corner on parcel pricing with the current integrators.
And long-term, the door is open for more growth opportunity through this new acquisition and for regional players overall. A light at the end of the tunnel indeed.