EquaShip, a Seattle-based company that opened its doors last October, touting itself as the nation's fourth small parcel carrier behind FedEx Corp., UPS Inc., and the U.S. Postal Service, has closed its doors until further notice.
EquaShip announced earlier this month that it is "temporarily suspending" all operations while it retools its pickup and delivery network and works out the service glitches that plagued it virtually from the start. Ron Wiener, EquaShip's president and CEO, said it is possible, but unlikely, that the company could resume operations as early as the third quarter.
Wiener also ruled out a re-launch during the fourth quarter, which coincides with the busy holiday shipping season for the e-commerce merchants the company is targeting. He said EquaShip's service problems last year were exacerbated by the timing of its launch, and that performance suffered during the holiday "crunch time" for e-tailers and their service providers.
According to Wiener, EquaShip's customers had tendered only a small portion of their shipments to the company, and they had viewed the service as a type of pilot initiative. With EquaShip out of the picture, those shippers will redirect their parcels to the providers that had been handling them prior to his company's launch, Wiener said.
EquaShip's sales proposition was that it could significantly underprice FedEx and UPS on business from small to mid-size e-merchants that lacked the daily volumes to qualify for the deeply discounted package-consolidation services offered by the parcel giants and the U.S. Postal Service (USPS). A large percentage of e-commerce shipments are tendered to FedEx and UPS as well as to a cluster of parcel consolidators, who in turn induct them into the USPS' low-cost network for so-called last-mile delivery to the final destination. UPS estimates that 35 percent of its deliveries are from businesses to consumers, with many of those packages consisting of items ordered online.
EquaShip, which operated no vehicles or warehouses, used the St. Paul, Minn.-based consolidator Blue Package Delivery LLC to handle parcel pickup and the subsequent line-haul to the postal system. However, Wiener said Blue was unable to meet the transit-time needs of EquaShip's customers. He also said that Blue's I.T. integration with the "first mile" carriers that pick up at origin was too limited and thus restricted shipment visibility.
According to Wiener, Blue's routing capabilities, which are well-suited for hauling parcels to USPS for shippers that operate multiple warehouses, did not align well with the need for fast and predictable transit times demanded by EquaShip's customers, which were shipping from a single point of origin.
Wiener estimated that even in the best-case scenario, Blue was hitting Equaship's delivery commitments only 65 percent of the time, generally an unacceptable performance ratio in the parcel delivery world.
"We assumed this was working right," Wiener admitted. "We're not going to take a carrier's word for it ever again."
Executives at Blue declined to comment.
At this point, EquaShip is evaluating other carriers. It plans to rely on a regional carrier network augmented by a national parcel consolidator for long-haul deliveries, Wiener said. He added that customer response to the company's strategy was overwhelmingly positive.
"Demand generation was not the problem," he said.