E-commerce delivery startup ShipX took a big step forward in its evolution last month, building out an end-to-end transportation solution through acquisition. The deal added the first and middle mile to its mostly final-mile offering.
New York-based ShipX was launched at the beginning of 2021, but the seed had been planted years prior when founder and CEO Solomon Zakinov was consulting for a small, regional delivery company.
“Back then I was literally only aware of UPS and FedEx. I wasn’t aware of how big the market was,” Zakinov told FreightWaves. “The idea was, how do you piece all these guys together to make one larger network and essentially start competing with the nationals?”
ShipX provides end-to-end e-commerce package delivery through a network of highly vetted regional and local delivery providers. The company also operates a fleet of vehicles. The bulk of the parcels it handles are sorted at one of its warehouses.
The ShipX platform has native integrations with many TMS providers, and anyone with application programming interface capabilities can connect for service. The software is carrier agnostic, meaning a package could be delivered on a ShipX vehicle or through a local third-party delivery or courier company in the area.
The difference is, it’s a real-time, door-to-door, trackable service offering in which every shipment gets scanned at each touch point of the first, middle and last mile. The experience is seamless to the shipper as the package has a ShipX label and customer service is handled internally.
“The unique difference between us and some of the other players in the space is that those players are heavily reliant on the post office and we’re not,” Zakinov said. He believes a private network of delivery providers allows for a better service offering than that of its competitors, most of which hand off packages to the U.S. Postal Service to deliver. He said the carriers ShipX contracts are easily held accountable to service standards.
The platform is very scalable too. For now, the bulk of the packages ShipX moves are considered “standard e-commerce,” 1 to 15 pounds, but the next phase will likely usher in oversize loads. “Our technology allows us to really distribute all this volume all across our network in a manner that if you’re working with one lone carrier you just can’t do,” Zakinov added.
Last month, ShipX acquired Princeton Logistics and its subsidiary, TriStar Carriers. Princeton offers truckload brokerage services, including power-only and box trucks, along the East Coast. TriStar has a fleet of sprinter vans, box trucks and drop trailers, primarily serving retail’s middle mile.
The deal closed the loop, giving ShipX full control over the life of a shipment.
“It gives us efficiency that we didn’t have otherwise. It’s an internal operation. We get to control our own destiny,” Zakinov said. “In final mile, one of the biggest challenges is that first mile; it’s that pickup. That pickup point from the retailer to your sortation [facility]. [The acquisition] gives us a certain amount of efficiency that really only the big carriers have.”
He believes no other delivery service provider has the trucking capabilities that ShipX has currently. Plus, it now has “three different ways to interact with the customer.”
“We touch the customer a lot more, it allows us to provide a more complete solution across the customer’s supply chain,” Zakinov said.
Currently, ShipX’s offering includes 41 states and 11,000 ZIP codes, with a heavy presence in Los Angeles, Chicago and the New York tristate area. The company is looking to open new warehouses throughout the South, specifically in Texas and Atlanta. It also wants to grow its customer book, which primarily includes e-commerce and 3PL shippers, in addition to the fleets it provides peak capacity to.
The growth is expected to be accomplished organically and with the support of a group of investors that it hasn’t identified publicly yet.
ShipX is also focused on building out visibility across the first- and middle-mile offering it just acquired. It’s brining on talent from within the industry, including strategic hires in sales and operations. In conjunction with the acquisition, Jim Neebling, the former president at Princeton Logistics, was named chief logistics officer at ShipX.
Asked if he has concerns around recent warning signals from big-box retailers like Walmart (NYSE: WMT) and Target (NYSE: TGT), Zakinov acknowledged some easing in demand.
“We’ve seen volumes go down a bit but nothing significant that would give us worry right now.” He expects volumes to pick up as peak season approaches, although he acknowledged that this year may not be as big as last year across the broader industry.
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