June 6, 2021—Despite the might of Tennessee’s logistics sector, customers of delivery company LaserShip have described the state as a difficult one for quickly shipping goods into.
“Obviously, there’s a lot of distribution centers in Tennessee,” said Josh Dinneen, LaserShip chief commercial officer. “Memphis is a big area for some ones like Nike and others, but there’s a lot of retailers that have fulfilment centers in Ohio, Pennsylvania, the Carolinas, etc. that just weren’t getting to Tennessee as fast as they’d like.”
Naturally, LaserShip decided to expand its business into Tennessee, opening three new branches in Memphis, Nashville and Knoxville and launching delivery services in the state in May. The company says this expansion will help alleviate the slower delivery speeds and limited shipping capacity its customers have encountered in the state with other carriers.
LaserShip’s entry into Tennessee is part of a larger expansion the company has executed this year, adding 979 new ZIP codes to its coverage area. The growing regional carrier now provides same-day and next-day delivery services in 20 states and Washington, D.C.
Regional carriers battle FedEx, UPS
LaserShip’s growth comes as customers of major carriers FedEx and UPS are grappling with various delivery surcharges and less available room on delivery vans amid the pandemic-fueled e-commerce boom.
Nate Skiver, founder of the shipping consultancy LPF Spend Management, said negotiating down delivery surcharges with FedEx and UPS “is an uphill climb,” so companies diversifying what carriers they use is important to manage costs. He said there’s been more interest in regional carriers during the pandemic.
“Regional carriers and smaller, more niche final-mile carriers are garnering a lot of interest not just because of the rising parcel rates from FedEx and UPS, but the capacity constraints,” Skiver said. “The combination of those two factors has many companies evaluating alternative carriers far more in-depth and considering those far more strongly than they have in the past.”
LaserShip has experienced a volume surge during the pandemic. The company paused taking in new customers last July to make sure service remained reliable for existing ones before the peak holiday shipping season, Dinneen said. Despite that pause, the number of new customers LaserShip onboarded last year was “well north of 300%” from the year prior, he said.
“We’ll probably have to do that again this year to protect the service for everybody,” Dinneen said. “There’s nothing but opportunity for us ahead.”
Regional shippers like LaserShip still have a long way to go to collectively tackle the might of FedEx and UPS. According to a 2019 shipper survey from supply chain media company PARCEL, nearly half of respondents said 1% to 5% of their parcels are shipped with regional carriers, while fewer than 11% relied on regionals for more than half of their packages. Still, that number doubled from survey results two years prior.
Exec: TN launch takes FedEx volume
LaserShip is “continuing to make inroads with retailers” by offering a cost-competitive, faster delivery service with more flexibility than the major last-mile carriers, Dinneen said. For PARCEL survey respondents using regional carriers, more than half cited cost as the primary reason for doing so.
LaserShip’s business is focused on fulfilling home consumer deliveries for large- and medium-sized retailers. The company now has more than 1,500 employees and uses more than 5,000 independent contractors to fulfill its last-mile deliveries, per its website.
“When we expand into Tennessee, we’re already working with the largest retailers in the world, and they’re just turning on this new service area and making it active for us in their system, and then the volume diverts away from those two national carriers,” Dinneen said, referring to FedEx and UPS.
Dinneen said the company “looked hard at” expanding into Tennessee in 2020, but the various unknowns brought on by the COVID-19 pandemic had it hold off until this year. The expansion introduces LaserShip to many new consumers: the Nashville launch alone widens the company’s reach to 1.9 million more consumers, LaserShip said in a news release.
“The company’s investment in our region will increase last-mile delivery services available to e-commerce businesses, product-supply businesses, and consumers, creating more opportunities for our growing, vibrant community,” Stephanie Coleman, chief growth officer of the Nashville Area Chamber of Commerce, said of LaserShip in a statement.
Read the original article by Max Garland in the Memphis Commercial Appeal.