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The Rise and Fall of Branded Logistics

By Dr. Robert L. Gordon | 09/08/2015 | 7:42 AM | Categories: Current Affairs

ThinkstockPhotos-506360955Logistics was originally dominated by local businesses that understood certain transportation lanes, but did not have the national reach to move products nationally, or internationally. This was the case when United Parcel Service (UPS) became an early branded logistics company. Since then, there has been a steady rise in branded logistics companies. But, have these companies gotten so large that they might start to feel other providers are starting to take a bite out of their market share?

History of Branded Logistics

UPS was considered an alternative to national mail service, which at that time was the dominant player for logistics. National postal services have long been known for inefficiencies and taking far too long to deliver shipments. It is this common perception--more than anything else--that has led to the rise of branded logistics.

FedEx has become one of the most successful brands in logistics by offering innovative services while building a reputation for being fast, efficient, and reliable. Other companies that have built similar reputations are DHL, TNT, and UPS, who have been pushing the envelope with regard to deliveries. Businesses can no longer operate without these companies that offer scalable, seamless logistics.

Problems on the Horizon?

Advances in technology may soon lead to more competition. Local operators might be able to serve certain shipping routes and national mail carriers could re-tool and make these logistics giants take notice.

Not too long ago, these branded logistics giants were taking on the national mail carriers in a David versus Goliath showdown. Today, these companies have grown to a size that makes them less nimble and perhaps vulnerable.

Branded logistics companies have also failed to maintain innovation, which was at the heart of their initial success and what made FedEx the brand it is today. While these companies are continuing to implement incremental improvements and automation, few of these giants appear poised to make the next great leap in technology.

Competition from Amazon and Wal-Mart

Amazon, a global retailer, is looking to use drones for making deliveries, and has even purchased a drone manufacturing company so that they can customize their delivery system. This will make it a new breed of branded logistics company.

What Amazon has done would be like FedEx purchasing Boeing or UPS purchasing General Motors so they can better customize vehicles to meet their exact specifications. Controlling the manufacturing of delivery vehicles means that Amazon will be a clear branded logistics company.

Many companies already use Amazon for their distribution. If it can master logistics, it could conceivably supply every household item directly to consumers without consumers having to interface with any other companies. Amazon seems to be moving to become a one-stop-shop.

One should expect Wal-Mart, a retailer known for having the industry’s most efficient supply chain, to also move in this direction. It is already custom-designing trucks for its supply chain and could plausibly design drone delivery vehicles like Amazon.

These changes will not happen overnight. There are still many obstacles, including acceptance by the FAA and public as well as changes in technology. The question is not if this shift will take place, but when.



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The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Dr. Robert Lee Gordon

Dr. Robert Lee Gordon

Dr. Robert Lee Gordon is program director of the Reverse Logistics department at American Public University. Dr. Gordon has over twenty-five years of professional experience in supply chain management and human resources. He holds a Doctorate of Management and Organizational Leadership and a Masters of Business Administration from the University of Phoenix, as well earning a Bachelor of Arts degree in History from UCLA. Dr. Gordon has spent more than 14 years teaching reverse logistics, transportation, project management, and human resources. He has published articles on reverse logistics; supply chain management; project management; human resources; education, and complexity. He has also published four books on Reverse Logistics Management; Complexity and Project Management; Virtual Project Management Organizations, and Successful Program Management..

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