The last-mile delivery is where the rubber meets the road, and regional players are revving up their engines to challenge the giants. Among these challengers is OnTrac, a company that underwent a transformation in 2021, when it acquired the west coast delivery service provider OnTrac Logistics, Inc. for a colossal $1.3 billion.
This strategic move set OnTrac on a path of expansion and transformation, reshaping the landscape of last-mile delivery in the United States . This article delves into OnTrac’s remarkable journey, exploring its roots as LaserShip, the impact of the acquisition, and its role in shaping the ever-evolving world of e-commerce delivery and lasership tracking services.
A Journey from LaserShip to OnTrac
OnTrac, formerly known as LaserShip, is not a newcomer to the world of parcel delivery. Founded in 1986, it originally began as a document delivery service, catering to a very different market compared to its current operations. However, the winds of change blew in during the 1990s when the dot-com boom transformed the business landscape, including the delivery sector. In 1999, LaserShip took a significant leap by partnering with the renowned bookseller Barnes & Noble, providing same-day shipping services in the bustling metropolis of New York City.
But it was in 2021 that OnTrac made a pivotal move that would redefine its future. This transformation was marked by the acquisition of OnTrac Logistics, Inc., a west coast delivery service. The $1.3 billion deal not only added significant financial muscle to the company but also expanded OnTrac’s footprint, extending its reach and capabilities across the country.
The Impact of the Acquisition
OnTrac’s acquisition of OnTrac Logistics, Inc. was a game-changer in the last-mile delivery industry. This strategic move enabled the two entities to merge their delivery networks, creating a transcontinental delivery powerhouse. This expansion brought the capacity for OnTrac to provide service to a broader range of customers and cover a wider geographical area, offering solutions to even more businesses and consumers across the United States.
The merger wasn’t just about numbers; it was about elevating the quality and efficiency of last-mile delivery services. The combination of OnTrac’s regional expertise and OnTrac Logistics’ reach along the west coast created a formidable force in the industry.
Reshaping the E-commerce Delivery Landscape
OnTrac’s journey and transformation have significant implications for the e-commerce industry. The boom that fueled the growth of parcel carriers is evolving. E-commerce has shifted from being a convenience to becoming an integral part of our lives. Customers now expect not only convenience but also speed and reliability.
In this context, regional shipping companies across the U.S. are expanding their operations to pick up business from larger rivals. They are capitalizing on labor uncertainty at United Parcel Service Inc. (UPS), higher rates charged by UPS and FedEx Corp., and the growing reluctance among merchants to rely on a single carrier. These regional players, including OnTrac, are seeking to cater to a changing market.
OnTrac’s acquisition allowed it to extend its coverage and capabilities, reaching even more customers with fast and reliable last-mile delivery. This shift in the delivery landscape comes at a time when shoppers are increasingly wary of inflation, leading to a more cost-conscious approach to online shopping.
The Last-Mile Delivery Race
OnTrac’s expansion journey contributes to the ongoing “last-mile delivery race.” The last mile, which is the final leg of a package’s journey to the customer’s doorstep, is often the most complex and costly part of the delivery process. It’s where the battle for speed, efficiency, and customer satisfaction is fought.
LaserShip, the precursor to OnTrac, was no stranger to this race. In 2014, it expanded its service area by adding four states, increasing its footprint by 44% and reaching an additional 8.5 million consumers. Additionally, LaserShip acquired Cleveland-based last-mile delivery company Prestige Delivery Systems in the same year, further expanding its service coverage.
As of 2016, LaserShip boasted 63 distribution centers and four sorting centers, servicing 22 states and Washington, D.C. The company was entrusted with handling deliveries for Amazon’s Same Day Service, demonstrating its capacity to serve major e-commerce players.
The Industry’s Response to Last-Mile Challenges
The expansion of regional carriers like OnTrac highlights a changing approach in the industry. Before the pandemic, regional and other carriers made up around 6% to 7% of the parcel market. This figure has increased to approximately 8% to 9% as carriers stepped in to pick up substantial volumes from shippers who faced capacity constraints with larger carriers during the pandemic.
The shift from a single-carrier strategy to a multi-carrier approach is becoming the new norm. To mitigate the burden of higher shipping rates and surcharges from FedEx and UPS, retailers have set up distribution centers in multiple cities. This strategic move shortens the distances parcels have to travel, while also providing access to local carriers.
Challenges and Controversies
While the expansion of OnTrac and other regional carriers is promising, it has not been without challenges and controversies. Reports have emerged of drivers roughly handling packages, including throwing and driving over them. These practices have raised concerns and garnered public attention regarding the company’s practices. Furthermore, OnTrac has been penalized by multiple governments for misclassifying drivers as independent contractors, a topic of growing concern within the gig economy, and for delivering untaxed cigarettes, leading to prosecution under the Racketeer Influenced and Corrupt Organizations Act.
Conclusion: Shaping the Future of E-commerce Delivery
OnTrac’s journey from LaserShip to its transformative acquisition of OnTrac Logistics, Inc. reflects a dynamic and evolving last-mile delivery industry. The company has become a key player in reshaping the e-commerce delivery landscape, expanding its reach, and adapting to the ever-changing demands of online shoppers.
As the last-mile delivery race continues to evolve, and with regional carriers like OnTrac striving to provide more efficient and reliable services, it is clear that this transformation has far-reaching implications for the e-commerce industry and the way we receive our packages. It is a journey that has not only elevated OnTrac but has also transformed the way we think about last-mile delivery in the digital age.
