A delivery truck pulls up in front of your house. The driver gets out, makes his way up the driveway, and hands you a package as you are standing at the door. How much do you know about that driver? Do you know if he actually works for the company whose name is on his truck?
Before you assume, you should know that it is not uncommon for shipping companies to facilitate local deliveries through authorized partners. In simple English, they sometimes contract with local companies to handle deliveries for them. Those local companies might still utilize the original shipper’s name, logo, and so forth, but they are still independent entities offering contract services.
Local Contract Deliveries
For the purposes of this post, we can break shipping down into three categories: local, domestic, and international. Local deliveries can be made directly by shippers or through contractors. The second option is gradually becoming the industry standard thanks to the proliferation of e-commerce.
Amazon is the perfect example. Some of their drivers work directly for them. They are standard Amazon employees who get paid by the hour to run local deliveries. But others are self-employed contractors. You might not be able to tell the difference because Amazon is gradually getting its contractors into branded vehicles and wearing branded uniforms.
Although there is some overlap between local and domestic deliveries, this particular category involves shipments that leave the local area. In other words, a company in Chicago might ship product to a customer in Philadelphia. A London company might ship product to Liverpool.
Domestic shippers are more likely to maintain their own local operations in major cities. So the chances of the driver being a company employee are pretty high. That is not necessarily the case for smaller towns and rural areas. In such cases, major domestic shippers are known to utilize contractors.
The U.S. Postal Service does that. Rural carriers are independent contractors even though some of them drive branded trucks. The one way you can tell is that contract workers are not required to wear the USPS uniform.
The international scene is where you are most likely to see contract deliveries. DHL is a good example of this. As one of the world’s largest and most prolific logistics providers, DHL prefers to use a network of authorized resellers and delivery contractors to ship packages around the world.
As a shipper, you might purchase shipping services from an authorized reseller like Preferred Shipping out of Sugar Land, TX. Likewise, any packages delivered to you by DHL are probably going to arrive in a truck owned by an authorized contractor. The truck and driver’s uniform will both be branded.
Efficiency and Cost-Effectiveness
Contracting is fairly common in the shipping business. All the major players and do it to one degree or another. If you are curious as to why, it boils down to efficiency and cost-effectiveness.
The larger a shipping company is, the more complicated its logistics. With more complex logistics comes a higher price tag. Shipping companies reduce complexity, increase efficiency, and better control costs by offloading some of their work to contractors.
DHL works with contractors in the U.S. because it is cheaper and more efficient than trying to run operations from Germany. Amazon works with contractors because the sheer volume of their sales makes contracting the most efficient way to get deliveries done.
Next time a delivery truck shows up in front of your house, consider the possibility that the driver doesn’t work for the company whose name is on the truck. You could be interacting with a contractor.