Dive Brief:
- Parcel carrier OnTrac is piloting a program for customers that opens the door for lower shipping rates when the company's network has available capacity, per an announcement Monday.
- The “Dynamic Savings” program, which taps technology from parcel pricing platform Onrout, operates as an additional pricing option when a shipper compares existing contracted carrier rates through their rate shopping process.
- Based on the lowest available rates through the rate shop, shippers can send the target price and package details through the OnTrac Dynamic Savings system, which evaluates the carrier's current network conditions along with the package's characteristics, origin and destination. The system either returns a label quoted at the shipper's target price or tells the shipper the price couldn't be met.
Dive Insight:
For years, major parcel carriers like FedEx and UPS have used surcharges to dynamically adjust prices during high-demand periods. However, "in those programs, the price only ever goes up," Vijay Ramachandran, OnTrac's VP of marketing, product strategy and marketplaces, said in an interview with Supply Chain Dive. OnTrac’s new program aims to provide shippers with incremental savings instead.
"We're rebuilding our entire pricing and billing stack right now, and that unlocks our ability to be a lot more agile in the way we price for our customers and where we can meet them where they are," Ramachandran said.
Pricing is at the top of many parcel shippers' minds as delivery costs have ramped up this year, aided by escalating fuel surcharges from FedEx and UPS. Meanwhile, alternative carriers continue to grow their market share by volume and strengthen their capabilities to woo shippers.
"I think people are really finally frustrated enough with UPS and FedEx," OnTrac CEO Mike Brown said in an interview. "They're absolutely looking where they might not have ever looked before."
OnTrac's dynamic savings program is currently being piloted with select customers. Testing with additional shippers is slated to start in Q1 2027. Participants must have existing pickup services and minimum weekly volume levels through OnTrac, and the program is intended for incremental volume above minimum commitments.
Brown said the dynamic savings program is part of OnTrac's efforts to become "much more customer centric," a priority of his since he was promoted from CFO in January. The company has developed a "perfect delivery rate" which factors in different data points throughout the shipping process, including a scan upon arrival at the origin facility to visual proof of delivery. Brown said the company plans to make that information visible in near real-time to shippers on OnTrac's customer portal.
OnTrac will also add 25% to 30% more capacity in its network in 2026, Brown said, with much of that additional space going to the carrier's Northeast operations. The company announced the opening of three facilities in Pennsylvania, Massachusetts and Texas earlier this year. Further expansion is planned for next year, Brown added.
"I fully expect we will have a plan for 2027 expansion in terms of capacity, really focused around service and quality, that we will have ready to go [in] January, February next year," Brown said.
