Regional Package Carriers Join the E-Commerce Rush

Brahm Buck

Regional parcel carriers are expanding their reach as surging e-commerce demand fills up capacity at the national carriers and retailers seek fast, cheaper ways to ship packages to customers’ homes. Operators including Austin, Tex.-based Lone Star Overnight LLC and LaserShip Inc., which delivers in the Eastern U.S. and the Midwest, […]

Regional parcel carriers are expanding their reach as surging e-commerce demand fills up capacity at the national carriers and retailers seek fast, cheaper ways to ship packages to customers’ homes.

Operators including Austin, Tex.-based Lone Star Overnight LLC and LaserShip Inc., which delivers in the Eastern U.S. and the Midwest, are pushing into new coverage areas and investing in automation to help speed the flow of packages.

Shipping consultants say the regional growth is a boon to shippers scrambling to cope with accelerated digital demand since the Covid-19 pandemic, as delivery giants

United Parcel Service Inc.

and

FedEx Corp.

impose surcharges and limit some shipments to ease stresses in overloaded networks.

LSO, which serves Texas and Oklahoma, is planning a five-state expansion in early September to provide e-commerce and ground parcel delivery in Louisiana, Arkansas, Missouri, Illinois and Kansas. The company forecasts its e-commerce business will grow by 180% to 190% this year, and expects to be profitable in those five states within a few months, said Chief Executive Richard Metzler.

LSO says shippers have been urging the company to extend its geographic coverage since e-commerce volumes surged during pandemic lockdowns.

“What’s helped that is how FedEx and UPS have treated these customers,” Mr. Metzler said. “They capped volume last year with very short notice.”

A FedEx spokeswoman said it wasn’t unusual for the industry “to take action to manage capacity during times of high volume.”

While UPS is “definitely experiencing continued elevated package volume,” a spokesman said, the company has had “industry-leading on-time delivery performance.”

Vienna, Va.-based LaserShip has expanded into several markets this year, and began delivering in Tennessee last month. The company now serves 21 states and the District of Columbia, and plans to push west of the Mississippi, Chief Commercial Officer Josh Dinneen said.

He said that holiday-season capacity is already locked up and LaserShip won’t add new clients until January.

“We are adding north of 400% more customers this year than we did last year,” Mr. Dinneen said. “These retailers are looking for alternatives to FedEx and UPS, and faster speed to their customers.”

The market for parcel and last-mile delivery is shifting as shippers that once relied on the two biggest carriers shop around for other, more-cost-effective options, said Hannah Testani, chief executive of Intelligent Audit, a freight audit and analytics company.

“Now supply is starting to increase because more carriers are coming into the market,” she said. “A new carrier can enter the market and be profitable.”

Despite the recent growth, regional package carriers still account for less than 10% of the total parcel-delivery market, said

Satish Jindel,

president of ShipMatrix Inc., which analyzes parcel shipping data.

“The market is so big and it’s grown so much, their growth doesn’t take away market share from UPS, FedEx and the Postal Service,” Mr. Jindel said. “The demand for e-commerce has not gone down, and it isn’t going to let up. There is a lot of business there for everybody.”

Write to Jennifer Smith at [email protected]

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