Delivery Services

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Delivery Services

The U.S. Postal Service was established by the Continental Congress in America on July 26, 1775—thus before the U.S. had had its official start. The first Postmaster General was Benjamin Franklin. The USPS has had a colorful history since, delivering mail and packages by steamboat, railroad, pony express, and air. In 2005 the service carried 98.1 billion pieces of mail and 1.2 billion packages. Throughout our history, it has been and remains the largest delivery service. Private delivery services of limited geographical coverage have always existed side by side with postal service from early times as well. Today's largest private carrier, United Parcel Service (UPS) began in Seattle as American Messenger Service, founded by 19-year old James E. Casey on a borrowed $100. Casey had worked for other delivery services before. The company underwent several name changes before it became UPS. In 2005, the company delivered 3.75 billion packages, more than three times the volume carried by the U.S. Post Office.

More recent major entrants into the delivery business were Federal Express and DHL, both originating in the late 1960s and early 1970s. DHL was founded in 1969 by Adrian D alsey, Larry H illblom, and Robert L ynn. DHL began in international carriage of bills of lading. FedEx began with a term paper written by Frederick W. Smith in 1965. Smith became the founder of FedEx, incorporating the company in 1971 and launching operations in 1973. Smith's critique of airfreight shippers was that they were piggybacking on passenger routes; he saw a better solution: company-operated major air hubs based on traffic volume. Both DHL and FedEx expanded both by providing competitive services and by acquiring smaller organizations.

WEIGHING DELIVERY OPTIONS

When selecting a delivery service today, the small business owner has many choices but must consider a wide range of factors to reach a cost-effective solution. Small businesses that do a lot of shipping but have not analyzed all of their options may be able to cut costs by a little attention to the multiplicity of services and incentives available. Some issues to consider are:

Speed vs. Cost Private delivery services have created their place in the market by providing rapid services but at a premium cost. In the mid-2000s the Postal Service has, largely in response to this competitive pressure, established express mail and package services as well. The USPS is rarely as convenient as private carriers, but the price will be more attractive. Overnight deliver is immensely popular because it produces certainty. But if the business ships many items overnight, a look at this policy may uncover savings.

Incentives Parcel carriers have optimized their operations around parcel sizes that represent the bulk of their carriage. Two weight ranges that are incentivized are small packages at or below five pounds and packages of 20 to 30 pounds. Carriers will provide the best service and lowest prices in these ranges. If a business can redesign its shipping system to move more packages into these ranges, cost savings may be realized.

Destination Some carriers specialize in cross-country or overseas delivery and offer "single-zone" pricing structures. Others offer attractive rates for shipments within smaller regions. The small business might gain advantages by analyzing the destination of its shipments and selecting carriers based on the most attractive destination zone pricing.

Drop Off or Pickup Many small businesses have trucks or vans on the road which, with a little administrative effort, may be used to drop off packages to private delivery services rather than using pickup at the business site. Investigation of savings possible by doing its own drop off may provide slightly lower costs to the business and optimize the use of its own fleet of vehicles.

Tracking What degree of parcel/document tracking capability does the company require? Companies that deliver materials to rural/remote locales typically look to major carriers offering tracking services. In addition, businesses that ship time- or content-sensitive materials also typically enlist the services of companies like UPS or Federal Express, which can provide clients with detailed information on shipment data.

Integration If a business is well-satisfied with the services of a carrier, it might find it useful to explore additional services offered by the service company, such as inventory management directly tied to in-bound and out-bound shipments. Major carriers offer such services designed, of course, to lock the customer into their system. If such "intimacy" is not a problem, the service may add to efficiency and reduce costs.