Entry of technology firms into courier logistics and its impact on the industry

The courier, express and parcel (CEP) logistics market is buzzing with new entrants from unexpected quarters. The robust e-commerce industry is helping B2C delivery segment to grow at a faster rate than B2B. The changing consumer demands are presenting new opportunities and also throwing challenges for express companies forcing them to adopt new operating models.

Technology companies such as Uber and Deliv have entered the express delivery market dominated by major players such as UPS and FedEx. These firms facilitate express delivery services through their website or smartphone application that connects the customers with the private transportation service providers, subcontractors and casual employees who use their own modes of transport.

Uber entered the courier logistics market in October 2015 with UberRUSH, an intra-city express delivery service in San Francisco, New York and Chicago. Uber already has a presence in the logistics industry with UberCARGO, a road transportation service provider. Uber’s strength of about 327,000 drivers is almost equal to the number of UPS employees. The UberRUSH app transfers customer requests to the nearest available drivers who pick up the parcel and deliver it to the desired destinations.

The technology firms collect a service fee ranging between 10% and 20% of the service cost from the driver/courier. Consumers either pay by cash to the delivery personnel or use the payment gateway available in the app.