Can EquaShip Compete With FedEx, UPS?

Oct 19, 2011 1:37 AM  By

There’s a new shipper in town and its name is EquaShip.

Billed as America’s fourth parcel carrier, EquaShip targets small- to medium-sized ecommerce shippers and claims potential savings of 26%-77% compared to FedEx and UPS Residential Ground retail rates. The Seattle-based company launched its new service today.

EquaShip’s estimated savings for international air express deliveries range from 70%-88% compared to FedEx, UPS and DHL. The aim is to allow smaller shippers to compete with large retailers offering free shipping on the majority of their orders.

EquaShip.com features an interactive pricing map that allows customers to make instant comparisons against FedEx, UPS and USPS. It also gives users easy slide controls to automatically calculate potential savings under various scenarios.

Customers can find detailed pricing in the new EquaShip Pricing Handbook at EquaShip.com. Drop-off locations are being added nationwide to serve smaller customers — such as the millions of small eBay and Amazon third-party merchants that do not use pickup services.

Gerard Hempstead, president of Hempstead Consulting, says the marketplace “has been screaming for a competitor to UPS and to FedEx.” When DHL bought Airborne Express and then failed with integration, he adds, “shippers were then left with the consequences of a duopoly, or rapidly escalating costs for sending products to consumers.”
More and more parcel transactions are being transported directly to the consumer and, in particular, to residences, Hempstead says. “This interestingly is where the greatest price increases have been from all the parcel carriers, although the USPS does not currently have a surcharge.”

Hempstead says EquaShip, headed by Ron Wiener, also of Venture Mechanics, sees an opportunity. “They (EquaShip) don’t own any trucks, terminals, hubs, planes and so on. Their value proposition is a price less than the big guys. They are a software solution provider. They provide transport usually through a third-party parcel consolidator and the USPS takes the package the final leg using Parcel Select for entry.”

EquaShip resembles FedEx SmartPost, UPS Surepost, DHL Globalmail, Streamlite, and Newgistics, Hempstead says, “but without any network infrastructure of its own. I guess the best way to describe them is as a reseller for Blue Package, the firm doing the pickup, processing and tender to the USPS.”

EquaShip’s entrance into the parcel shipping arena is welcome. “There is plenty of room for and a great need of more players in the parcel arena to keep prices in check,” Hempstead says. “Equaship wants to be the low price provider. There are, however, many pieces to the puzzle and lots of details in the buying relationship beyond price.”

Rob Martinez, president of shipping consultancy Shipware, is excited about EquaShip’s announcement.

“There has long been a great chasm between the kind of shipping options that larger enterprise shippers have – like parcel consolidators, regional carriers, steeply discounted UPS and FedEx pricing, and USPS commercial rates – and the three limited and costlier options available to smaller shippers (UPS, FedEx and retail USPS.) EquaShip is coming in at the perfect time with new options that ideally suit the cost and transit time trade-offs that are so critical to smaller shippers, especially those engaged in online commerce.”

Martinez adds: “As a former Airborne Express guy, I knew that DHL’s pulling out of the market in 2008 would allow FedEx and UPS to dramatically raise prices – indeed they raised rates 20% over the past three years – so I’m glad to see some real competition in the marketplace again.”

So what are the chances of EquaShip making a splash in the parcel shipping arena?

“I am not going to invest any of my money in this adventure,” Hempstead says. Why?

“It’s aimed at the Amazon and eBay power sellers,” he adds. “They are banking on the shippers being willing to bring the packages to a drop off point. Pick up service is limited and fragmented. My tummy tells me they have less than a year, unless Wiener has real deep pockets and he is willing to gamble it. I think they underestimate the adoption rate and the customer tolerance of delay in transit. They will be faced with tremendous customer churn in my humble opinion.”

Hempstead says there’s little margin in this business and much has been invested. “I hate to be cynical when the country needs another player but I don’t feel this is quite it. I could be wrong and hope I’m wrong.”