Online Holiday Season Shopping Benefits Some LTLs, Execs Say

Less-than-truckload companies may not be getting a large slice of the online holiday shopping delivery pie, but for some of them, they bring in the extra business they can find at just the right time, fleet executives have said.

This time of year, “commercial [business] drops off. . . . November, December and January are the worst months for commercial shipping,” said William Hupp, chief operating officer of Estes Express Lines, Richmond, Va. But making holiday season home deliveries “levels out for us. We’re not seeing a big surge, but we are growing at a pretty good pace.”

That extra bit of residential holiday shipping “feels like a great opportunity for us to be an add-on service to a stable company,” Hupp said.

About 30% of the carrier’s business is residential, he said of the company, which ranks No. 17 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

Online shopping has boosted holiday spending in 2011, according to comScore Inc. The digital business analytics company re-ported that in the first 28 days of this holiday season, $15 billion was spent online — a 15% increase compared with the corresponding period last year.

For Pittsburgh-based Pitt Ohio, which ranks No. 65 on the for-hire TT 100, residential shipping makes up only about 5% of the business. But Executive Vice President Geoff Muessig said the company is seeing “a modest increase” in LTL and small-package business over the holiday season — “an increase which is good, and an increase that can be handled.”

Muessig added, “Business-to-business shipments tend to wind down near the end of the year, and so the increase in e-commerce shipments balances out our volume very nicely.”

He also said, in late November, “We had nice activity at the end of last week and yesterday as well. When I came to work, I was pleasantly surprised.”

Mark Magill, director of business development for OnTrac, told Transport Topics: “We are seeing very nice single-digit growth” as a result of online holiday shopping.

“Last night [Nov. 28], we had a record-high package volume and shipping revenue number for our company: Cyber Monday, of course!” Magill said.

OnTrac, based in Phoenix, is a regional overnight package-delivery carrier that covers Arizona, California, Colorado, Nevada, Oregon, Utah and Washington.

But spokesmen for two carriers, Con-way Freight and Central Freight Lines Inc., said their companies have not experienced an increase in residential deliveries.

“These shipments are not within our strategic ‘target profile’ for business growth,” said Mark Stein, director of operations services for Central Freight, which is based in Waco, Texas. But he added, “We are experiencing a very significant increase in the number of shipments to several big-name retail distribution warehouses that we currently service.”

Con-way Freight, San Mateo, Calif., “is not affected to a great degree by online retailers and the types of products these sites sell, which are then delivered to homes,” said Gary Frantz, director of communications. “Our average shipment size is about 1,200 pounds. Residential deliveries comprise less than 5% of our daily total.”

Con-way Freight is a unit of Ann Arbor, Mich.-based Con-way Inc., which ranks No. 3 on the for-hire TT 100.

Handling residential deliveries takes “more coordination, more preparation,” Estes’ Hupp said. “Shipments are usually smaller and fairly time-consuming, so being efficient is critical. Sometimes [employees] are going into the home to unpack items, [and] if you don’t have the right kind of equipment” to make deliveries in residential neighborhoods there’s the risk of “running over mail boxes, running over shrubs.”

Estes Express Lines now has a division — E-Street Direct — that specializes in first-mile to final-mile business-to-customer and business-to-business service. E-Street Direct uses smaller trucks and has a separate group of drivers who are trained to handle in-home deliveries and frequently work evenings and Saturdays, Hupp said.

“On days when we don’t have a lot of residential deliveries, [E-Street Direct employees] can do

other things,” he said. “They can make commercial deliveries on their smaller trucks. We try to keep them as busy as we can” by being flexible and efficient.

Although Estes Express has offered this type of service for only about two years, “We see a trend toward that type of opportunity,” Hupp said.

Pitt Ohio is “well-positioned to handle residential deliveries through our small-package and LTL services,” Muessig said, adding that “35% of our equipment is straight trucks with lift gates.”

The company has not added any full- or part-time employees, Muessig said, because the company has a flexible workforce, willing to work overtime.

Pitt Ohio tries to hire drivers “based on customer-service attitude,” he said, and trains them “to do what it takes to please the customer. Our drivers are more than willing to perform inside deliveries, to accommodate the customer rather than debate. If there is an extra expense, we will discuss it after the fact” with the online retailer.

Russ Aikman, director of marketing and public relations for ABF Freight System Inc., a subsidiary of Arkansas Best Corp., Fort Smith, Ark., said the company profits from its ABF TurnKey Service, a “white-glove” service that makes direct deliveries to homes from online retailers. The entire process has to be consumer-friendly, he said.

“When people receive products into their home,” Aikman said, “they appreciate good communication and follow-through” — which includes a call ahead of time to explain the service and to confirm the delivery conditions.

Information is fed electronically to local operators, who ensure that the delivery is made according to the agreed-upon requirements, he said.

For some products, “drivers view training modules that are shipment-specific, which gives them the knowledge needed to make a successful delivery,” Aikman explained.

“We welcome residential deliveries,” OnTrac’s Magill said. OnTrac has grown to a regional company with more than $200 million in annual revenue. It was founded in 1991 as a division of Express Messenger Systems Inc. to deliver documents to law firms, title companies, engineers and architects in California.

Magill boasted that by leasing linehaul 53-foot tractor-trailers and straight trucks from Penske, “We have the latest equipment on the road. Our drivers are almost spoiled by what they get to drive.”

OnTrac is well-prepared for the year-end increase in business, he said. The company added Colorado to its network in September, expanding expedited service to 60 million consumers in the seven largest western states — “20% of the U.S. population.”

In October, OnTrac opened new 165,000-square-foot facilities in Reno/Sparks, Nev. The company also opened a new sorting facility in Menlo Park, Calif.