Dive Brief:
- OnTrac is eyeing the Chicago area as its next market launch after the parcel carrier's recent debut in Texas, Chief Commercial Officer Josh Dinneen said in an interview with Supply Chain Dive.
- Added delivery coverage is expected to reach beyond the city itself and into the wider Midwest region. "From Illinois up through Wisconsin and Minnesota, we'll consider that kind of like one region," Dinneen said. "So that absolutely, 100% will be next."
- The company is currently in the real estate review process to secure a facility for launching coverage in the region. "What we need is not insignificant in terms of the floor space, and we actually don't have something big enough that we can utilize right now," Dinneen said.
Dive Insight:
OnTrac is growing quickly even in a softer demand environment for parcel carriers overall. After launching in the Chicago area, OnTrac will explore adding coverage in other metro areas the carrier hasn't yet reached, such as St. Louis, Kansas City and New Orleans, Dinneen said.
Thirty-one states and Washington, D.C. are currently covered by OnTrac's delivery network, allowing it to pick up a package in one city and deliver it to a community several states away. Dinneen used an Allentown, Pennsylvania, to Dallas, Texas, delivery as an example of this capability. The carrier has also continued to bolster the speed and accessibility of its transcontinental service by adding more points where deliveries using that service can originate in its network.
OnTrac's network is larger than the typical regional carrier, but it still has a long way to go to match up with UPS and FedEx's national networks in terms of scale, Dinneen said.
While OnTrac and other smaller delivery providers are growing fast, they held 2% of U.S. market share by parcel volume last year, according to the Pitney Bowes Parcel Shipping Index. UPS and FedEx held 24% and 19% of market share, respectively.
"It's a very interesting spot to be sitting in," Dinneen said. "We've got tons of runway."
OnTrac was one of several parcel carriers that stood to gain from a UPS strike, which has for now been averted by a tentative agreement reached between the company and the International Brotherhood of Teamsters union last week. Dinneen said although a UPS strike "would have been interesting" for OnTrac's business, it also would have strained delivery capacity for carriers across the board.
"Quite frankly, we're growing so fast that we didn't need it," the CCO said, adding that the carrier's volume has increased year-over-year.
Going forward, OnTrac will maintain focus on its core strengths, Dinneen said. That means continuing to deliver small packages for retail and e-commerce shippers, but not expanding into additional services like big and bulky shipping or white glove delivery.
"We're not going outside our competency zone," he said. "We're going to continue to expand our geography and partner with the right retailers to provide the best service."
