APX Packages Get Into USPS System

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Updated March 24, 2006


All packages from APX Logistics Inc. have entered the U.S. Postal Service's processing system and are on their way to customers. That news from the USPS comes just a week after the Santa Fe Springs, CA, parcel consolidator filed for Chapter 11 bankruptcy protection.


To handle the influx of packages, the postal service had to increase drop-ship appointments at its bulk mail centers to ensure the packages are delivered as quickly as possible. The USPS would not say how many packages it is handling.


One APX client, Blair Corp., Warren, PA, has been using APX for more than three years to consolidate outbound parcels. APX handled 9 million packages a year for Blair. Randall A. Scalise, vice president of fulfillment at Blair, said he had heard rumors about APX's problems but didn't believe them. He found out they were true a day before APX filed for Chapter 11.


That gave Blair executives time to get 95 percent of its systems, transportation and fulfillment operations realigned by the next business day.


Scalise said Blair is drop-shipping its parcels at USPS BMCs while it negotiates with other carrier options.


Scalise said Blair experienced an initial delay but "that lag was quickly overcome. We seem to be on track now and are monitoring carefully to ensure that all our parcels are delivered properly and in a timely manner."


With annual sales exceeding $700 million, APX specialized in business-to-consumer shipping using the USPS for final delivery. It is the largest of the dozen or so Parcel Select mailers that partnered with the postal service. Companies save money by mailing sorted parcels closer to their ultimate destination via three levels of entry: bulk mail centers, sectional center facilities or destination delivery units.


USPS spokesman Bob Anderson said the postal service is "working with customers on an individual basis, asking them how they want their packages handled. Some have chosen Priority Mail. Others, such as those that still have packages in the system, are working with other consolidators. The bottom line is that we want to do our best so there is no delay once the packages hit our system."


In a statement, APX parent firm Heritage Partners Inc., Boston, blamed APX's problems on a challenging industry and "significant difficulty ... resulting from the integration of a large acquisition in late 2004. Heritage went to great lengths and invested substantial capital in an effort to restructure and turn around the business. Unfortunately, those efforts proved unsuccessful."


Competitors quickly moved in after APX's exit. FedEx said last week that it will pick up clients its FedEx Home Delivery service, which is a similar service to APX. DHL Global Mail, WTI Postal Logistics Inc. and Total Logistic Services also said they have added clients in the past two weeks.


Repeated calls to APX were not returned.


Alexsandra Morales, owner of Edwin's Corporation of Florida, which has a fleet of four trucks that APX contracted to help get its customer packages to the last mile, said she was informed of the bankruptcy March 17.


"There was no sense that something was going wrong," she said. "It never crossed my mind that they were filing for bankruptcy [protection]. Please let me know where to turn to for a job because nobody has given me information, and I am stranded with a fleet of four trucks. The few people I have contacted down here in South Florida are reluctant to give me a chance, advising me that ... their fleet owners' operators have the first choice."


Among the largest creditors listed in the court documents are Werner Enterprises Inc., Omaha, NE, $3,527,182.63; NYK/GST Corp., Memphis, TN, $1,381,585.05; DHL Express (USA) Inc./DHL@Home, Houston, $1,289,922.74; and Smith Transport Inc., Chicago, $1,150,685.42. In the filing, APX said that it has 5,001-10,000 creditors, that its estimated assets exceed $100 million and that estimated debts exceed $100 million.


APX CEO Brad Garberich told the York (PA) Daily Record that the company and its senior creditor expects to pay all earned, accrued salaries and vacation pay to employees.


"It's a very challenging time for our company, and we're trying to deal with everything professionally and meet our legal obligations as set forth in the Chapter 11 administrative proceedings," he was quoted as saying.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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