Lesson learned from APX bankruptcy

Apr 01, 2006 10:30 PM  By

Chuck Frenette, the chief financial officer of Chippewa Falls, WI-based B.A. Mason Shoe, spent most of March 15 scrambling to reroute some 7,000 packages that had been on a trailer of third-party logistics provider APX Logistics.

Frenette had received a call at 11 a.m. that day telling him that Santa Fe Springs, CA-based APX — the parcel consolidator for about 95% of B.A. Mason’s packages — was filing for Chapter 11 bankruptcy protection. Worse yet, the company would no longer be serving the small parcel/small package business for the U.S. Postal Service after midnight of March 15.

Rick MacDonald, the facility manager for Huntingburg IN-based home decor cataloger Touch of Class, was in a similar situation: He took about 600 packages, weighing 1 lb.-15 lbs., that had been slated for an APX truck and transferred them to FedEx to get them delivered. MacDonald had heard the news from his APX sales representatives, who had heard it from the headquarters as they were en route to the Touch of Class facility.

The APX calamity should serve as a cautionary tale for merchants not to put all their eggs — or outgoing parcels — in one basket, says Rob Shirley, president/CEO of Austin, TX-based consultancy ExpresShip. He advocates contracting with multiple carriers and using a multicarrier shipping solution to determine which carrier to use when.

With the multicarrier software, mailers can can evaluate side by side the best rates from major carriers such as FedEx, DHL, and United Parcel Service as well as from regional carriers and consolidators. If one carrier suddenly shuts down, you have many options with which to choose because you’ve contracted with them.

The cataloger can set protocols (such as “all packages going to the Northeast”) based on speed, weight, origin, destination, price, and customer preference to determine which carrier to use for which delivery. “It gives the mailer a lot of flexibility,” Shirley says.

Shirley estimates that only 20% of marketers use multicarrier solutions. Maybe the APX Logistics scenario will inspire more merchants to consider them.