OnTrac, USPS launch last-mile delivery service

Western regional parcel carrier OnTrac today launched a delivery service in conjunction with the U.S. Postal Service (USPS) that offers large-volume retailers a fourth major business-to-consumer option in a region covering 70 million consumers.

The service, called "DirectPost," allows OnTrac to collect parcels from retailers and inject them deep into the postal network, which consists of more than 2,000 facilities in OnTrac's service area. USPS will then deliver the parcels the so-called last mile to their final destinations.

Newegg Inc., an Internet retailer of computer hardware and software, is the launch customer, Chandler, Ariz.-based OnTrac said today. Newegg, based in City of Industry, Calif., is expected to begin shipping through the service during the upcoming holiday season.

The USPS' service, known as "Parcel Select," has been used for years by FedEx Corp., UPS Inc., and, to a lesser degree, DHL Express. The service is appealing to parcel carriers because of its low costs and because USPS is required by law to serve every U.S. address, a feature that enables parcel companies to make deliveries to residential customers without incurring the cost of dispatching a driver and van to serve what are normally low-density areas.

For the past five years, OnTrac has partnered with USPS on a last-mile offering. However, OnTrac has only made the service available to parcel consolidators, firms that aggregate shipments from retailers and have used the carrier's intraregional distribution network to bring packages to USPS. Parcel consolidators do not control physical distribution networks.

The launch of the "Direct Post" service is significant because OnTrac can now directly pursue large retailers for their traffic, effectively bypassing the consolidators.

OnTrac's delivery footprint covers eight states, including every ZIP code in California, and extends from Washington State to the Mexican border, and east to Colorado. As a regional carrier, it utilizes its defined geography to offer next-day ground deliveries of up to 500 miles, a service neither FedEx nor UPS provides. The large carriers generally use more expensive airfreight services to deliver next-day shipments over that distance. OnTrac maintains that its model undercuts the big carriers in price and time-in-transit.

The seeds of the service were planted in October 2012 when OnTrac opened a 400,000-square-foot distribution center in Commerce, Calif., east of Los Angeles. The DC was designed to offer retailers shipping across the West and integrated pickup, distribution, and delivery service in concert with USPS.

The launch was awhile in coming, however. DC Velocity first reported on OnTrac's plans in February 2013. At the time, the company said the service would be operational by late summer or early fall of that year. However, the project was delayed due to delays in OnTrac's development of systems and equipment required to operate with USPS in such a manner.