PARCEL DELIVERY: Donnelley Logistics buys CTC

Mar 01, 2000 10:30 PM  By

Deal creates a more formidable competitor to United Parcel Service

With its Feb. 2 acquisition of CTC Direct Distribution, catalog printer R.R. Donnelley & Sons adds parcel consolidation to the services offered by its Donnelley Logistics division.

Chicago-based Donnelley Logistics already drop-ships catalogs and other publications into postal bulk mail centers (BMCs) to help catalog shippers achieve postage savings. The $400 million-plus CTC ships more than 130 million parcels a year for several hundred catalogers into BMCs, sectional center facilities (SCFs), and destination delivery units (DDUs), the last of which are the local post offices nearest the package recipients.

CTC will continue to be run autonomously from its Minneapolis headquarters. But the consolidator’s president/CEO, John Clark, says that by combining its DDU drop-offs with the DDU catalog deliveries of the nearly $400 million Donnelley Logistics, CTC will be able to achieve economies of scale necessary to increase the number of packages delivered into DDUs – and lower rates.

“If you have enough scale, you can get to DDUs reliably with precision and at low cost,” says Matt Bernstein, vice president of marketing for Donnelley Logistics. “Combined, we have the scale that makes delivering to local post offices work. A majority of parcels – more than 50% for sure – will go to DDUs eventually, but we don’t want to give a targeted percentage right now.” CTC has already increased the number of packages it drop-ships into DDUs from 20% a year ago to approximately 45% as of early February, according to executive vice president of business development Mike Talbott.

Postal discounts for drop-shipping parcels into DDUs are 63% greater than those for drop-shipping into BMCs, and 31.3% greater than discounts for drop-shipping into SCFs. Moreover, most packages drop-shipped into DDUs are delivered within a day, according to the U.S. Postal Service, compared to two to five days for parcels shipped into BMCs or SCFs.

CTC says it can deliver packages into DDUs within three to eight days of picking them up from the catalogers’ warehouses. Although the delivery time for packages drop-shipped into DDUs varies based on where in the country the package is heading, CTC says that overall delivery time is close to that of UPS. What’s more, CTC claims its rates combined with USPS rates for the final delivery run $1-$3 less per package than UPS’s ground rates.