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Package delivery or parcel delivery is the delivery of shipping containers, parcels, or high value mail as single shipments. The service is provided by most postal systems, express mail, private package delivery services, and less than truckload shipping carriers.
Package delivery in the United States
In the United States, private parcel services arose in part over discontent with the United States Post Office whose rates were frequently inflated due to the monopoly it held over regular mail and the appointment of postmasters as political patronage jobs. In 1852 Wells Fargo, then just one of many such services, was formed to provide both banking and express services. These went hand-in-hand, as the handling of California gold and other financial matters required a secure method for transporting them across the country. This put Wells Fargo securely in the stagecoach business and prompted them to participate in the Pony Express venture. They were preceded, among others, by the Butterfield Overland Stage, but the failure of the latter put the business in Wells Fargo's hands and led to a monopoly on overland traffic that lasted until 1869, when the transcontinental rail line was completed. During this period they carried regular mail in addition to the package business, defying the post office monopoly; eventually a compromise was worked out wherein Wells Fargo charged its own fee on top of federal postage, in recognition of the limitations of the post office reaching all areas easily.
From 1869 on, package services rapidly moved to rail, which was faster and cheaper. The express office was a universal feature of the staffed railroad station. Packages traveled as "head end" traffic in passenger trains. In 1918 the formation of the United States Railroad Administration resulted in a consolidation of all such services into a single agency, which after the war continued as the Railway Express Agency (REA).
On January 1, 1913, parcel post service began, providing rural postal customers with package service along with their regular mail and obviating a trip to a town substantial enough to support an express office. This, along with Rural Free Delivery, fueled a huge rise in catalog sales. By this time the post office monopoly on mail was effectively enforced, and Wells Fargo had exited the business in favor of its banking enterprises.
Motor freight services arose quickly with the advent of gasoline and diesel powered trucks. United Parcel Service had its origins in this era, initially as a private courier service. The general improvement of the highway system following World War II prompted its expansion into a nationwide service, and other similar services arose. At the same time the contraction of rail passenger service hurt rail-based package shipping; these contractions led to the cancellation of the mail contracts with the railroads, which in turn caused further passenger cuts. Eventually REA was dissolved in bankruptcy in 1975.
Air mail was conceived of early, and scheduled service began in 1918. Scheduled airlines carried high valued and perishable goods from early on. The most important advance, however, came with the "hub and spoke" system pioneered by Federal Express (now known as FedEx) in 1973. With deregulation in 1977, they were able to establish an air-based system capable of delivering small packages—including mail—overnight throughout most of the country. In response the postal service initiated a comparable Express Mail service. Ironically, in the same period they also began contracting with Amtrak to carry mail by rail. Thus at the beginning of the 21st century, the US consumer can choose from a variety of public and private services offering deliveries at various combinations of speed and cost.
Role of parcel shipping consolidators
|This section does not cite any references or sources. (March 2012)|
Continued growth of business-to-consumer (b2c) e-commerce has increased demand for low-cost package shipping services. Demand for inexpensive parcel shipping is especially intense for online and catalog retailers. These merchants, many of whom primarily ship low-cost goods, face consumers resistant to paying exorbitant shipping costs (often driven up by fuel surcharges, residential delivery fees, etc.) for package delivery to their homes. As a result, package shipping consolidators step in to combine low-cost "last-mile delivery" strengths of the US Postal Service with the technological and operational capabilities generally associated with private carriers.
Large parcel carriers, such as United Parcel Service (UPS) and FedEx, often include an array of accessorial charges (like fuel and residential delivery surcharges) in addition to their standard fees. The US Postal Service (USPS) offers low-cost options for small package delivery to the home, such as Parcel Select and Parcel Post. However, many merchants prefer low-cost shipping options without sacrificing visibility of their parcels while in transit ("track and trace"). The US Postal Service does offer a limited "Delivery Confirmation" for even their lowest-cost package delivery services, but more robust tracking is currently only available for Express Mail service and some international services.
Instead, the USPS has established "worksharing agreements" with parcel consolidators, who pick up a shipper's parcels, sort and route them, then enter them into the Postal system for final delivery. The Postal Services claims parcel shipping consolidators provide "up-front estimates on expected delivery time" and can offer "value-added services," like "customized rates, manifesting, delivery confirmation, billing, insurance, electronic data interchange (EDI), and pickup service." Indeed, most USPS "workshare partners"--from major carriers like FedEx SmartPost and DHL Global Mail to specialty carriers like Argix Direct and Newgistics--provide full tracking and tracing for their customers' parcels.
Regional parcel carriers
In addition, a number of regional parcel delivery companies have sprung up over the last twenty years including OnTrac in the Western United States, Eastern Connection on the Eastern Seaboard, Lone Star Overnight in Texas and Spee Dee Delivery Service in the Mid West. They combine the track and trace capability of the national carriers with the ability to guarantee next day delivery at ground rates over a larger delivery footprint. Because they are regionally based, they are able to improve shipment time in transit and increase shippers productivity with later pick up times. The regional parcel carriers can be a cost effective enhancement to UPS and FedEx because they do not charge the full array of accessorial charges mentioned in the section above.
The individual sorting and handling systems of small parcel carriers can put severe stress on the packages and contents. Packaging needs to be designed for the potential hazards which may be encountered in parcel delivery systems. The major carriers have a packaging engineering staff which provides packaging guidelines and sometimes package design and package testing services.
References and sources
- "Parcel Post: Delivery of Dreams: Introduction". Smithsonian Institution Libraries. 2004. Retrieved 13 November 2013.
- A Brief History of the Package Delivery Industry from the United States Treasury website
- FedEx Corporate History
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