Distribution Fulfillment Services Inc., the logistics arm of the Spiegel Group, switched its small package surface shipping last month from United Parcel Service to the U.S. Postal Service.
DFS handles fulfillment and distribution for Eddie Bauer, Spiegel and all other Spiegel Group ventures except for Newport News. Bill Terry, senior manager, domestic logistics at DFS, would not discuss how much DFS spends on small package shipping or how much it expects to save by the switch, saying only that the number of packages involved “is a very large volume.” Newport News is the only Spiegel marketer that will not switch.
As a result, DFS will use USPS Parcel Select and consolidators. Parcel Select is used by residential shippers sending parcels weighing 3 to 25 pounds and requires shippers to transport items to consolidators around the country. When the consolidators have enough volume, they deliver the parcels directly to hundreds of local post offices.
DFS will deliver packages in its own trucks to nine hubs nationwide run by five consolidators — R.R. Donnelley, Parcel/Direct, Global Logistics, APX and PFI.
“All of these hubs have a very high [Destination Delivery Unit] operation, which means quicker in-home delivery,” Terry said.
DFS had tested Parcel Select for the past year, he said, “and the delivery service was meeting our expectations and actually improving throughout the year, which made the idea of moving very attractive to us.”
But price was the main reason for the switch. “The rates we received from the consolidators were very attractive,” he said.
In the most recent rate case implemented June 30, the USPS gave large presort discounts to parcels drop-shipped closer to the “last mile” or final destination.
“The rate increases were very favorable to the consolidators,” Terry said.
DFS decided to switch now, he said, “so that all of our programming would be ready before the Christmas season. If we didn't do it now, we'd have to wait until the first of the year.”
DFS will continue to use UPS for bigger packages such as small furniture and larger toys. In addition, DFS will continue to use USPS Priority Mail two- to three-day delivery service for packages sent to Alaska and Hawaii and UPS for its next-day and second-day services.