Package delivery

Package delivery

Package delivery is the "shipping" of packages and parcels (and in some instances high value mail) as single shipments. While the service is provided by most postal systems, private package delivery services have also existed in competition with and in place of public postal services.

Package delivery in the United States

Private parcel services arose in the United States in part over discontent with the United States Post Office, whose rates were seriously inflated due to the monopoly it held over regular mail and the appointment of postmasters as political patronage jobs. In 1852 Wells Fargo, then just one of many such services, was formed to provide both banking and express services. These went hand-in-hand, as the handling of California gold and other financial matters required a secure method for transporting them across the country. This put Wells Fargo securely in the stagecoach business and prompted them to participate in the Pony Express venture. They were preceded, among others, by the Butterfield Overland Stage, but the failure of the latter put the business in Wells Fargo's hands and led to a monopoly on overland traffic that lasted until 1869, when the transcontinental rail line was completed. During this period they carried regular mail in addition to the package business, defying the post office monopoly; eventually a compromise was worked out wherein Wells Fargo charged its own fee on top of federal postage, in recognition of the limitations of the post office reaching all areas easily.

From 1869 on package services rapidly moved to rail, which was faster and cheaper. The express office was a universal feature of the staffed railroad station. Packages travelled as "head end" traffic in passenger trains. In 1918 the formation of the United States Railroad Administration resulted in a consolidation of all such services into a single agency, which after the war continued as the Railway Express Agency (REA).

On January 1, 1913, parcel post service began, providing rural postal customers with package service along with their regular mail and obviating a trip to a town substantial enough to support an express office. This, along with Rural Free Delivery, fueled a huge rise in catalog sales. By this time the post office monopoly on mail was effectively enforced, and Wells Fargo had exited the business in favor of its banking enterprises.

Motor freight services arose quickly with the advent of gasoline and diesel powered trucks. United Parcel Service had its origins in this era, initially as a private courier service. The general improvement of the highway system following World War II prompted its expansion into a nationwide service, and other similar services arose. At the same time the contraction of rail passenger service hurt rail-based package shipping; these contractions led to the cancellation of the mail contracts with the railroads, which in turn caused further passenger cuts. Eventually REA was dissolved in bankruptcy in 1975.

Air mail was conceived of early, and scheduled service began in 1918. Scheduled airlines carried high valued and perishable goods from early on. The most important advance, however, came with the "hub and spoke" system pioneered by Federal Express in 1973. With deregulation in 1977, they were able to establish an air-based system capable of delivering small packages-- including mail-- overnight throughout most of the country. In response the postal service initiated a comparable Express Mail service. Ironically, in the same period they also began contracting with Amtrak to carry mail by rail. Thus at the beginning of the 21st century, the US consumer can choose from a variety of public and private services offering deliveries at various combinations of speed and cost.

The Role of Parcel Shipping Consolidators

Continued growth of business to consumer (b2c) e-commerce has increased demand for low-cost package shipping services. Demand for inexpensive parcel shipping is especially intense for online and catalog retailers. These merchants, many of whom primarily ship low-cost goods, face consumers resistant to paying exorbitant shipping costs (often driven up by fuel surcharges, residential delivery fees, etc.) for package delivery to their homes. As a result, [ package shipping consolidators] step in to combine low-cost "last-mile delivery" strengths of the US Postal Service with the technological and operational capabilities generally associated with private carriers.

Large parcel carriers, such as United Parcel Service (UPS) and FedEX, often include an array of accessorial charges (like fuel and residential delivery surcharges) in addition to their standard fees. The US Postal Service (USPS) offers low-cost options for small package delivery to the home, such as Parcel Select and Parcel Post. However, many merchants prefer low-cost shipping options without sacrificing visibility of their parcels while in transit ("track and trace"). The US Postal Service does offer a limited "Delivery Confirmation" for even their lowest-cost package delivery services, but more robust tracking is currently not available through the federal agency.

Instead, the USPS has established "worksharing agreements" with parcel consolidators, who pick up a shipper's parcels, sort and route them, then enter them into the Postal system for final delivery. The Postal Services claims parcel shipping consolidators provide "up-front estimates on expected delivery time" and can offer "value-added services," like "customized rates, manifesting, delivery confirmation, billing, insurance, electronic data interchange (EDI), and pickup service." Indeed, most USPS "workshare partners"--from major carriers like [ FedEx SmartPost] and [ DHL Global Mail] to specialty carriers like [] and [ Puerto Rico DDU Plus] --provide full tracking and tracing for their customers' parcels.

Package Handling

The individual sorting and handling systems of small parcel carriers can put severe stress on the packages and contents. Packaging needs to be designed for the potential hazards which may be encountered in parcel delivery systems. The major carriers have a packaging engineering staff which provides packaging guidelines and sometimes package design and testing services.


* [ A Brief History of the Package Delivery Industry] from the United States Treasury website
* [ FedEx Corporate History]

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