According to Reuters, UPS is in talks with one U.S. trucking firm to launch an in-home delivery service for furniture, appliances, mattresses, and other bulky products.
Bulky products have seen a considerable rise in eCommerce sales, prompting startups such as Dolly to sign deals with major omnichannel retailers such as Lowes to offer bulky products and white-glove delivery services.
It now appears UPS believes the eCommerce market for bulky and white-glove deliveries has grown large enough that it wants to offer a solution to its parcel customers.
Parcel delivery services such as UPS have size and weight restrictions that make it difficult to offer these services within their parcel logistics networks. The local terminals and trucks are just not designed to manage such deliveries.
Both companies also offer cross-country trucking services (Truckload and LTL Freight), but that is another logistics network specific to that business.
While many of their trucks have lift gates to allow for street-level deliveries, these deliveries are typically done with full-size trucks or one-man straight (large two-axle dock height) delivery trucks and makes it not ideal for home delivery.
For bulk deliveries to homes, delivery trucks with low decks or lift-gates are far better and most importantly, with those type of shipments, the company can offer white-glove services such in-home delivery or even assembly and installation which requires at least a second person for each delivery.
Several trucking firms, Werner Enterprises, Schneider, and JB Hunt have expanded their standard truckload and LTL services with final mile options that also offer white-glove services.
Reuters claims UPS is in talks with Werner Enterprises to offer this kind of service to its customers with Werner’s Final Mile Delivery program. But neither company would confirm such talks.
“Outsourcing to a trucking firm would allow UPS to enter into the final-mile business without committing its own capital up front to expand its fleet or acquire end-of-line, final-mile infrastructure such as terminals”
R.W. Baird analyst Ben Hartford said to Reuters
Even when considering the argument that working with another trucking firm spares the company from making capital expenditures to offer final-mile delivery services, it does make one wonder if there is more to these rumored talks.
Before 2005, UPS offered “UPS Freight” LTL services to its parcel customers, but it outsourced most of the freight to the Overnite Transportation Company (Overnight).
But that changed in 2005 when UPS acquired Overnite and rebranded the company to UPS Freight.
FedEx also used acquisitions to build out its FedEx Freight division. So both parcel companies are now well represented in the LTL business by buying out existing trucking companies.
Of the three main LTL companies that already offer white-glove services, Werner Enterprises is the smallest one with a market cap of around $2.5 billion. Schneider National’s market cap is $4.7 billion, and JB Hunt’s market cap is $12.6 billion.
Consolidation in the trucking business has recently been picking up speed again with national companies purchasing smaller and regional trucking firms to expand its delivery networks.
While the main reasons for this consolidation are a bit different from the needs of UPS, it does make one wonder if there is more to this rumored discussion between UPS and Werner Enterprises than just last minute delivery services.
Of the three trucking companies mentioned, Werner may be the best and more affordable option for UPS to expand its LTL trucking services while also adding white-glove last mile delivery services.
Regardless, if UPS expands its brand to offer last mile services, this will be a significant benefit to small business online retailers that offer large bulky products.
eCommerce retailers that already use UPS for deliveries will have a more straightforward path to offer bulky product deliveries with an existing vendor and may be able to expand products or product lines to include bulky items.
And national retailers with eCommerce divisions, many which use UPS already, will find it much easier to expand bulky and white-glove delivery services with an existing logistics vendor.
This is an interesting development for eCommerce in the U.S. One worth watching!
Could your business benefit from bulky or white-glove last delivery mile services? Head over to our Facebook Discussion Group or use the comments section below.