Parcel shipping: EquaShip takes a low rate approach to competing with FedEx and UPS

While it has only been a few months since Seattle-based EquaShip made its entrance into the parcel sector marketplace, the company appears to be highly committed to making itself a cost-efficient alternative for shippers that traditionally turn to the parcel duopoly of FedEx and UPS.

As LM has reported, EquaShip is primarily geared towards e-commerce sellers and small shippers. What makes it stand out in a parcel duopoly along with the United States Postal Service, according to CEO Ron Wiener, is the ability to offer small shippers price breaks that have historically only been available to large enterprise shippers.

Shippers using EquaShip can go to the company’s Web site to access an interactive pricing map that allows them to make what EquaShip describes as “apples-to-apples” price comparisons to FedEx, UPS, and the USPS as well as calculate potential savings under various scenarios and not have to crawl through the often complicated pricing tables that FedEx and UPS have.

EquaShip has formed a partnership with Blue Package Delivery, a non-asset based parcel consolidator and carrier who contracts its deliveries through contracts with various regional carriers and delivers shipments and packages of all weights up to 70 pounds.

As is the case with most any shipper, price is often the key differentiator, and this is where EquaShip figures to dig into the market share of its large competitors, Weiner told LM in October. He said EquaShip can save its customers between 40-to-79 percent compared to FedEx and UPS Residential Ground retail rates along with savings of 70-to-88 percent compared to international offerings from FedEx, UPS, and DHL. 

Wiener said that these savings are due to the fact that EquaShip does not serve large enterprise customers, whom typically require steep discounts that FedEx and UPS provide.

And with previously announced 2012 rate increases kicking in for FedEx, UPS, and the USPS this month, EquaShip is entering 2012 with a clearly defined goal: to provide shippers with prices that are significantly lower and without the myriad accessorial fees tacked on by the larger players.

“We are a new company, and as we reach our break even point we had always planned to become profitable and stable as quickly as possible,” said Weiner. “We have fairly low overhead and don’t buy assets and don’t own any trucks, airplanes, or buildings. So we are able to lower our prices as our scale of economics improves and cover our overhead, with more margins we can share with customers.”

He added that for at least in the company’s first year EquaShip has planned to offer a price decrease in respond to price increases from FedEx and UPS. Depending on how things go, he said they do it again next year and possibly the year after, too.

What’s more, Weiner said that EquaShip has priced so aggressively at this point that it is targeting FedEx SmartPost and UPS SurePost customers, those company’s e-commerce-focused services, noting that EquaShip can provide small and mid-sized shippers with savings ranging up to 50 percent in this area.  

Jerry Hempstead, principal of Orlando-based Hempstead Consulting, said that the value proposition of EquaShip is that it will pick up, transport and deliver for a significant savings over the big integrators.

“In order for there to be any pricing restraint going forward in the industry, Equaship must be successful,” he said. “Shippers have learned the hard way when they let DHL fail at domestic transport in early 2009. Equaship is not a solution for every parcel shipper but where the price of transport is a major concern then Equaship is worth at the very least a try to see if it can fit into one’s distribution program.”