The parcel delivery business is so hot that even consultancies following the segment are in demand.
Parcel consultancy Spend Management Experts (SME) has been acquired by Transportation Insight LLC, a consultancy and lead logistics provider that itself has a sizable presence in the parcel category. Terms of the transaction were not disclosed.
The deal beefs up Hickory, North Carolina-based Transportation Insight’s parcel consulting business amid surging growth in parcel delivery demand, especially over the past year. Parcel consultancies have been busier than ever before as more traffic gravitated toward e-commerce and, by extension, parcel delivery in the wake of the COVID-19 pandemic. Top-tier consultants have large, diversified and lucrative customer lists that would be attractive to a prospective buyer.
John Haber, SME’s founder and CEO, will head Transportation Insight’s small-parcel division and will remain at his company’s Atlanta headquarters. Haber, who spent 10 years at UPS Inc. (NYSE:UPS) as a pricing executive, founded SME in 2011.
Parcel consultants, who like Haber have come from the carrier industry, have been around for more than 20 years. Their objective is to level the playing field between shippers and carriers by deciphering complex carrier contracts, identifying carrier service failures that generate refunds, helping shippers understand the impact of the growing number of add-on fees known as accessorials and designing load-planning strategies that help shippers maximize their parcel delivery spending.
Parcel consultants bring a wealth of carrier information that most of their customers are not privy to, and they have track records of saving shippers hundreds of thousands, if not millions of dollars. Consultants typically take half of a customer’s cost savings as their fees.
Consultants spend most of their time working with shippers of UPS and arch-rival FedEx Corp., (NYSE:FDX) the two largest delivery companies. Early on, UPS and FedEx tolerated the consultants’ presence, though it was always a source of irritation that shippers had at their side former executives that had unique insights into their operations.
In those days, most FedEx and UPS traffic came from U.S. business-to-business deliveries, a lucrative segment in which, except for the 2003-2009 period when DHL was in the market, they had an ironclad duopoly. Consultants have long said they played a pivotal role in balancing the scales for shippers when the carriers held most of the cards.
The low simmer boiled over at an October 2009 industry event when UPS and FedEx executives announced they would no longer negotiate shipper contracts with consultants present at the bargaining table. The following year, consultancy AFMS LLC sued FedEx and UPS on grounds that the carriers’ actions violated federal antitrust laws. The case dragged on for years before it was dismissed in favor of the carriers.