Report says that possible UPS-Werner last mile partnership could be in the works
Everywhere you look, the last-mile delivery market seems to be heating up. And a report published by Reuters yesterday could be labeled as the latest example of that. The report indicated that UPS is currently in talks with Omaha, Nebraska-based truckload and logistics services provider Werner Enterprises to “launch launch an in-home delivery service for large, heavy goods such as couches and treadmills, as the world’s largest package deliverer looks to cash in on one the fastest growing segments of online retail.”
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Everywhere you look, the last-mile delivery market seems to be heating up. And a report published by Reuters yesterday could be labeled as the latest example of that.
The report indicated that UPS is currently in talks with Omaha, Nebraska-based truckload and logistics services provider Werner Enterprises to “launch an in-home delivery service for large, heavy goods such as couches and treadmills, as the world’s largest package deliverer looks to cash in on one the fastest growing segments of online retail.”
On the surface, a marriage between these two industry heavyweights for a last-mile collaboration makes sense, and while this report is heavy on speculation to a point, it outlines the many market players that are pretty well-established in the heavy-haul last mile segment.
The names are familiar, and, chances are, you already know them, including: XPO Logistics, Schneider, Ryder, SEKO Logistics, and J.B. Hunt.
In terms of the big takeaways as to what UPS hiring Werner would bring to the last-mile party, the report, citing a source, explained that UPS has an eye on the furniture delivery business, which Reuters noted is one of the fastest-growing segments in the e-commerce space and filled with serious competition in the form of Amazon, of course, as well as Wayfair Inc., Crate and Barrel, and big box retailers, too.
Reuters also cited a familiar last mile stat from Noel Perry, Transport Futures economist, saying the last mile market could grow from $3.7 billion today to around $12 billion over the next decade. A figure that Reuters noted stems from a propensity for younger consumers more inclined to make purchases, of all kinds, online.
While the report did not feature any comments confirming any type of imminent partnership between UPS and Werner, it cited UPS COO Jim Barber saying that UPS cannot ignore the rising demand for in-home deliveries of furniture, mattresses, and treadmills, while also evaluating ways to handle larger goods, too.
And he added that with bigger products moving through global networks, UPS is tasked with figuring out the right way to get these products in the right network. What’s more, the UPS executive did not mention any potential partner company by name, explaining there is a need to balance things out with the UPS Express network, the company’s labor constraints, and future strategy.
A UPS spokesman essentially told LM the same thing, saying the company acknowledges there is a “customer need, but we have not made any decisions about whether to enter this business.”
Should UPS go forward with Werner as its last-mile partner going forward, it could certainly do worse, considering that Werner Final Mile, which it launched in May 2017, serves all 42,000 five-digit zip codes in the continental U.S., resulting in cargo landing closer to the customer for reduced transit times and more same-day and next-day deliveries, which has become the norm for consumer expectations for e-commerce deliveries.
Werner Vice President of Global Logistics Craig Stoffel told LM at the time of this news that there were a few big drivers behind Werner’s decision to enter this market.
“It’s a changing marketplace when it comes to the buying habits in the U.S. and the global population,” said Stoffel. “Nearly half of our revenue is touching retail and affecting a large amount of our customer base and volume. And, for us to continue to add value to our customers, it was a natural step for Werner to expand into this part of the supply chain.”
Stoffel added that entering the market later provided Werner a sense of what technology is necessary in the market, which led Werner to focus on the customer experience from a visibility and technology perspective, adding that with large items being delivered in a white glove service environment, there is a lot of opportunity to improve the efficiency of delivery for Werner’s customers and its customers’ customers, too.
When looking at the last-mile market, one can overlook the costs of delivery. But according to a report in our sister publication, Supply Chain Management Review, some estimates indicate that nearly 30% of the total cost of all goods delivery is in last-mile. That is a hefty number to be sure.
Putting costs aside, the Reuters report’s indication of UPS and Werner working together reinforces the rapid rise of last mile logistics, and that is something that does not figure to change anytime soon. Should this deal between two large, established, and well-capitalized players come to fruition, whose to say more would not soon follow? That is how competitive markets work more often than not. Either way, it’s something all last-mile stakeholders need to be closely following.
About the AuthorJeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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