Streamlite Inc., an Atlanta-based company that aggregated small parcels for businesses and pushed them through the U.S. Postal Service (USPS) network for low-cost deliveries to consumers, abruptly shut its doors last night after it lost what it called a "critical customer."

Streamlite would not identify the customer, but a parcel industry source said it was CVS Caremark, the Woonsocket, R.I.-based pharmacy benefit management titan that mails thousands of prescription drug shipments per day. The source said Streamlite lost the CVS Caremark business to UPS SurePost, the unit of Atlanta-based UPS Inc. that performs what are known as "parcel consolidation" services.

Like other parcel consolidation providers, Streamlite picked up clients' shipments, calculated postage, sorted the packages for the proper postal facility, and pushed them into the postal network for final delivery. High-volume mail order companies and e-commerce merchants like the model because they are able to obtain low USPS rates for their bulk shipments.

However, parcel consolidation services don't command high margins, and market penetration by the three big parcel players—UPS, FedEx Corp., and DHL—has put further pressure on the smaller providers that once made up the lion's share of the provider universe.

All three of the big parcel players are experiencing rapid revenue growth in the category, driven by the equally rapid growth of business-to-consumer e-commerce services. For example, FedEx SmartPost, the consolidation business of FedEx, said average daily volume in its fiscal third quarter rose 13 percent over the year-earlier period. Revenue per package increased 5 percent year-over-year, primarily due to increased fuel surcharges, FedEx said.

Streamline delivered between 200,000 and 250,000 packages a day and had annual revenue of about $200 million, according to data from investment firm Stifel, Nicolaus & Co. Shipments already in the postal pipeline will be delivered to consumers. But the fate of shipments still in Streamlite's possession is unclear.

David G. Ross, transport analyst for Stifel, Nicolaus, estimated that FedEx SmartPost, which offers an inexpensive parcel consolidation product, could end up receiving between 20 percent and 50 percent of Streamlite's business.

Streamlite was in business for seven years. The announcement of its closure appeared as a terse paragraph on the home page of its website. The rest of the site was not functioning.