OnTrac to stop accepting new peak business on Sept. 1

Regional parcel delivery carrier OnTrac, which serves eight western states including every zip code in California, will not take on any new fourth-quarter business after Sept. 1, a company executive confirmed Wednesday.

Businesses will need to be fully onboarded with the Phoenix-based carrier as of that date for their parcels to be moved during the peak holiday shipping season, Mark Magill, OnTrac’s vice president of business development, told FreightWaves in e-mailed comments. 

OnTrac effectively reached peak fourth-quarter capacity earlier this month, Magill said. As a result, the carrier will have its hands full even accommodating those customers who get in under the deadline, he added. OnTrac is also capping volumes of existing customers largely due to an ongoing driver shortage that has severely constrained its capacity, Magill said.

Magill said that all regional carriers are about to close their doors on new fourth-quarter business, and that any customers onboarded after the carriers’ respective deadlines will have to wait until the first quarter of 2022 to be serviced. On Tuesday, Richard M. Metzler, CEO of Austin, Texas-based regional delivery carrier LSO, which serves every zip code in Texas and operates in nine other states, said his carrier is just about maxed out on fourth-quarter volumes from existing customers. 

A similar scenario arose during last peak season when the regional carriers, inundated with new delivery requests during a frenetic year, had to turn away new customers well before the peak season actually began.

The upcoming peak cycle may be the most meaningful in the history of the regional parcel segment. FedEx Corp. (NYSE:FDX) and UPS Inc. (NYSE:UPS) have struggled all year to provide consistently reliable delivery services, according to Mike Erickson, founder and president of AFMS LLC, a parcel consultancy. At the same time, the big carriers have been making it more costly for their large enterprise customers to ship with them. 

The one-two punch of inconsistent service levels and high prices from the mega-carriers has led big shippers to make beelines for regional carriers throughout 2021. The regionals have also built a well-deserved reputation for quality service at reasonable prices, which has boosted big shipper interest even more, Erickson said. The executive said that he’s never seen so much interest in the regionals from big shippers in his 30 years running AFMS.

Adding to the high stakes is the recently emerging consensus that daily peak demand will exceed available capacity by approximately 5 million parcels. The capacity shortfall underscores big shippers’ concerns that FedEx and UPS will be unwilling or unable to handle the expected volume spikes, even though both have enhanced their respective networks to improve throughput.