Regional parcel delivery carrier OnTrac, which serves eight western states including every zip code in California, will not take on any new fourth-quarter business after Sept. 1, a company executive confirmed Wednesday.
Businesses will need to be fully onboarded with the Phoenix-based carrier as of that date for their parcels to be moved during the peak holiday shipping season, Mark Magill, OnTrac’s vice president of business development, told FreightWaves in e-mailed comments.
OnTrac effectively reached peak fourth-quarter capacity earlier this month, Magill said. As a result, the carrier will have its hands full even accommodating those customers who get in under the deadline, he added. OnTrac is also capping volumes of existing customers largely due to an ongoing driver shortage that has severely constrained its capacity, Magill said.
Magill said that all regional carriers are about to close their doors on new fourth-quarter business, and that any customers onboarded after the carriers’ respective deadlines will have to wait until the first quarter of 2022 to be serviced. On Tuesday, Richard M. Metzler, CEO of Austin, Texas-based regional delivery carrier LSO, which serves every zip code in Texas and operates in nine other states, said his carrier is just about maxed out on fourth-quarter volumes from existing customers.
A similar scenario arose during last peak season when the regional carriers, inundated with new delivery requests during a frenetic year, had to turn away new customers well before the peak season actually began.
The upcoming peak cycle may be the most meaningful in the history of the regional parcel segment. FedEx Corp. (NYSE:FDX) and UPS Inc. (NYSE:UPS) have struggled all year to provide consistently reliable delivery services, according to Mike Erickson, founder and president of AFMS LLC, a parcel consultancy. At the same time, the big carriers have been making it more costly for their large enterprise customers to ship with them.
The one-two punch of inconsistent service levels and high prices from the mega-carriers has led big shippers to make beelines for regional carriers throughout 2021. The regionals have also built a well-deserved reputation for quality service at reasonable prices, which has boosted big shipper interest even more, Erickson said. The executive said that he’s never seen so much interest in the regionals from big shippers in his 30 years running AFMS.
Adding to the high stakes is the recently emerging consensus that daily peak demand will exceed available capacity by approximately 5 million parcels. The capacity shortfall underscores big shippers’ concerns that FedEx and UPS will be unwilling or unable to handle the expected volume spikes, even though both have enhanced their respective networks to improve throughput.
Mark Magill
I would like to clarify some of the points I made in the article in order to provide a more granular response. Firstly, OnTrac has not maxed out its’ current delivery capacity. What did happen was that OnTrac reached the volume levels of Peak Season last November in early August 2021. I have been with OnTrac for 28 years and this is very gratifying. OnTrac’s goal going into last Peak was to increase our delivery capacity by 20% which we succeeded in doing and we had a very successful Peak. There are still three months until Black Friday/Cyber Week and OnTrac will continue to add capacity to prepare for yet another Pandemic Ecommerce Peak. OnTrac is employing a multi-faceted strategy to add to our capacity. These include adding three new delivery facilities, bringing on vehicles with greater delivery capacity, implementing route optimization software for greater efficiency, rolling out smartphone delivery scanner apps, installing million dollar small sorts in our Southern California hubs and yes bringing on many additional drivers and package sorters. The labor shortage is not news but OnTrac’s recruiting department is working non stop to onboard the necessary delivery resources. Secondly, yes, September 1 will be the last date for new customers to begin shipping with OnTrac. The large online retailers who make up the bulk of our customer base typically take months to onboard and September 1 is one of the several milestones OnTrac uses to set expectations and forecast demand for Peak Season. We recognize new opportunities while prioritizing existing customers. We are looking forward to a great Peak Season helping the largest online retailers serve the 66 million consumers in OnTrac’s delivery footprint. We look forward to helping the shippers who couldn’t make the September 1 date to begin using OnTrac in January. This ecommerce boom will not end anytime soon.
OffTrac
OnTrac’s multi-faceted strategy should include figuring out how to deliver on time and hire drivers that don’t throw or steal packages. Search #ontrac on Twitter if you’re curious for real-world experiences versus the circular back-patting at HQ.
Mark Magill
And the largest retailers on Planet Earth continue to flock to OnTrac for the cost reduction, faster time in transit, flexibility and service OnTrac provides for them. And yes, Sunday delivery is coming soon!
Dustin
“The regionals have also built a well-deserved reputation for quality service at reasonable prices”
User reviews speak quite the opposite to this, On Trac has a horrible reputation with the public, and companies continuing to use them and other badly run cost and process cutting shipping companies like laser ship risk alienating and losing their core customers to lost, delayed, miss delivered, and stolen packages.