Commentary: Why RPS is the most successful transportation startup ever

By Satish Jindel

On Monday, FedEx Corp. spun-off its Freight division. What is near is the combined web of FedEx Express and FedEx Ground. 

It’s an opportune clip to retrieve that FedEx (NYSE: FDX) would beryllium a distant third-place parcel bearer successful the U.S. marketplace without the acquisition of RPS arsenic portion of the $2.4 cardinal woody for Caliber System successful 1998. And, were it not for RPS, FedEx apt wouldn’t person acquired Caliber and its determination less-than-truckload subsidiary, Viking Freight. FedEx wasn’t looking to get into the LTL space, but had to bargain Viking to get RPS. 

FedEx laminitis Fred Smith liked the Viking acquisition truthful overmuch that successful 2001, helium acquired American Freightways to beryllium capable to connection afloat sum crossed the little 48 states. And now, FedEx shareholders volition person 1 stock of FedEx Freight (NYSE: FDXF) for each 2 shares they clasp successful the parcel transportation company.

At the clip of the woody successful 1998, RPS handled 1.3 cardinal parcels per time portion FedEx Express was delivering 3 million. Since then, the parcel manufacture has undergone tremendous change.

Carriers began to connection guaranteed on-time show for the crushed work and e-commerce exploded to the constituent that segmentation successful the parcel marketplace has wholly reversed from 80% B2B to 75% lightweight B2C shipments. As retailers connection much escaped shipping, FedEx customers request the crushed work and not the costly explicit delivery.

Today, FedEx explicit measurement is conscionable 1.8 cardinal packages per day, portion FedEx Ground (formerly RPS) measurement has accrued to 13 cardinal pieces per day.

RPS pioneered the low-cost crushed transportation operating exemplary based connected usage of autarkic contractors with their ain vans and aboriginal usage of maestro contractors, which has been copied by Amazon (NASDAQ: AMZN) and smaller startups similar Better Trucks, Jitsu, and OnTrac.

RPS, which opened for concern successful 1985, was precise palmy earlier its acquisition by FedEx. Founded by Daniel J. Sullivan, RPS rapidly grew from a Northeast determination bearer to a nationwide bearer serving each large markets wrong 7 years. Beside insisting connected large connected clip service, Dan intensely focused his squad connected perpetually improving productivity that allowed RPS to vie with UPS. As a result, RPS was the low-cost shaper successful the tiny bundle transportation space.”

By 1996, allowed RPS to rapidly grow work to 100% of the U.S. colonisation and seizure much than 15% of the marketplace share. Other determination carriers astatine the clip — Spee Dee Delivery, GPS and OnTrac — collectively controlled little than 5% of the parcel market. Thirty years later, they inactive stay astatine the aforesaid level.