Spend Matters welcomes another guest post from NPI, a spend management consultancy focused on eliminating overspending on IT, telecom and shipping.
As UPS and FedEx implement another round of annual rate and surcharge increases, along with dimensional weight pricing for all packages, shippers are seeking alternatives. Increasingly, many are turning to regional parcel carriers. Competitive (often, lower) rates, fewer surcharges and better service are quickly debunking preconceived notions of inferiority.
Even concerns about regional carriers’ limited delivery area are fading. Today, many have partnered with their competition to expand their footprints to compete with UPS and FedEx. The top 9 regional parcel carriers now cover more than 85% of the US population.
The advantages of using a regional parcel carrier over UPS and FedEx are specific to each shipper’s unique shipping patterns and parcel characteristics. However, for the majority of large volume shippers, they include:
- Lower Freight Rates – Rates for regional parcel carrier services can be 15-40%+ lower than UPS and FedEx, depending on the carrier, service selection and shipping patterns. Many offer discounted pricing with a simple contract and often without volume commitments.
- Fewer Surcharges – Across the board, regional parcel carriers have fewer surcharges and accessorials. Those that are in place are typically lower compared to FedEx and UPS, and there is often greater flexibility to negotiate these costs downward.
- Faster Delivery – Regional parcel carriers can provide faster delivery times. For example, OnTrac can ground deliver a package from Reno, Nevada, to Colorado in 2 days, whereas FedEx takes 3.
- Better Customer Service – Shippers typically experience better, more personalized customer service from regional parcel carriers – including a higher percentage of on-time deliveries and easy access to their account manager. State-of-the-art processing, tracking and signature technologies provide high visibility as packages move through the delivery system.
- Increased Flexibility – Regional parcel carriers tend to be more flexible in their operating plans. For example, some offer Sunday or weekend pickups. Others can move a parcel from Canada to Mexico between Sunday and Monday. This level of flexibility isn’t always available to UPS and FedEx customers.
In summary, regional carriers can have a positive and significant cost impact. Many high-volume shippers can achieve cost reductions in the 15-40% range. If you’re thinking about moving volume to a regional carrier, quantify how your unique shipping characteristics and patterns will benefit, and what (if any) transition barriers are present. More often than not, these challenges can be overcome – all while creating a carrier mix that is highly motivated to outperform on service and cost.