Regional Parcel Carriers – Why It’s Wise to Expand Your Basket Beyond the Big 2
In selecting a parcel carrier for your shipping needs, companies can go a couple of ways. Remember the old saying from the corporate CTO – “Nobody ever got fired for choosing IBM”? The safe route would be to go with one of the global giants – UPS or FedEx. Now more than ever, many logistics leaders are considering what they call the “smart” route, selecting regional parcel carriers as a complement to their overall shipping strategy.
Benefits of Selecting Regional Parcel Carriers
When you take a close, strategic look at it, it makes a lot of sense – dollars and cents, that is. You may be asking yourself – what’s a regional parcel carrier? Simply put, they are package delivery companies that are usually more personal, flexible, and responsive than national carriers and offer shipping advantages within a targeted geographic area. Focusing on certain geographic regions can translate into a winning formula for shippers who leverage the soundness of a regional carrier’s network. Besides improving your bottom-line, regional parcel carriers can provide a variety of other benefits. These usually break into four core areas – service, speed, flexibility and cost reduction.
Regional carriers may be in a better position to move certain products that require special attention – like “over-the-threshold” service – or be in a better position to be nimbler in responding to service requests. Additional service benefits you receive from regional parcel carriers are:
- High on-time delivery rates – averaging 99%
- More responsive customer service
- Many regional parcel carriers utilize live customer service teams vs. automated
- Customer service teams are usually more operationally involvedCan have greater front line authority to directly resolve customer issues
- Can have greater front line authority to directly resolve customer issues
- Lower Damage Claim Rates – can be as low as 1/30th the industry average
- Simplified networks means less hands on your packages
- Less hub intensive model reduces handling
- Smart use of mechanized sort equipment
- Fewer billing errors due to simplified invoicing – compared to the national carriers
Many regional carriers have the ability to offer faster times in transit, often at a lower cost than the national carriers. If businesses have large clusters of customers within a certain geographic area, this can be a tremendous advantage for that shipper. It offers a competitive advantage to businesses by reducing shipping costs and improving revenues – creating the ability to attract new customers through faster fulfillment.
- Expanded next-day delivery footprint – provides:
- Cost savings through a lower need for Express options
- Ideal for shippers with regional distribution centers
- Provides competitive advantage
- Same-day delivery capability – with the “Amazon effect” in full bloom, customers expect everything faster. This trend will only get bigger.
Regional carriers build their entire business model around a geographic region enabling them to provide more flexible custom shipping solutions through more direct routes to meet customers’ exact needs. For instance, regional carriers can do things like extend pickup windows for customers later into the early evening – up to 10p.m. in some cases – and still have overnight delivery capabilities, because they don’t have to worry about getting packages back to the hub for international shipments. These later pickup times enable shippers to have a later order window, creating a competitive advantage for this business as well as improved customer satisfaction. Additionally, they provide:
- Networks that are less complex
- Ideally suited for eCommerce or even same day delivery
- Higher service continuity in inclement weather since all packages aren’t going through a central hub in one stateEarlier availability for deliveries
- Earlier availability for deliveries
- Ability to develop customized solutions – because they’re not required, as global carriers are, to standardize their offerings to accommodate a more rigid, broader network.
- A unique service offering – ability to provide a full portfolio of day-definite guaranteed services, plus same-day, next day, on-demand, dedicated or scheduled services. Even LTL, Final Mile, postal insertion and over-the-threshold deliveries.
Because they have lower operating costs and are less asset intensive than the national carriers, regional providers can pass along that savings – sometimes as much as 10% to 40% lower base rates – over UPS and FedEx. Here’s some other cost benefits you may receive:
- Fewer and lower accessorial charges – the national carriers have over 80 fees for domestic package and freight services.
- Minimums can be lower – with their rate schedules, regional carriers typically provide lower minimums.
- Improved negotiating power – with the national carriers.
National carriers like FedEx and UPS play an absolutely critical role in helping companies manage their delivery networks and logistics needs. Remember – regional carriers need to be viewed as a complementary solution. But, in certain situations, already outlined, regional carriers can offer a more flexible, competitive offering which addresses specific customer needs that the national carriers might not be able to accommodate. If you haven’t already, don’t you need to ask yourself - isn’t it about time I consider a regional shipping strategy for my company?