The economy may be improving, but shippers are still looking for ways to cut costs without sacrificing quality. Today, more shippers are looking for alternatives to UPS and FedEx to fill the void after DHL, the perceived lower-price alternative among the industry giants, suspended domestic services. The departure of DHL presented an opportunity for regional carriers to become a “third choice” for parcel shipments. Accordingly, many regionals have made inroads in the marketplace as they continue to try to level the playing field long dominated by the goliaths.
In the process, many companies have been reminded about the built-in advantages of regional services (namely pricing and flexibility). But they have also discovered that the leading regional players have become much more sophisticated than had been presumed; in fact, the so-called new breed of “super-regionals” now rival and sometimes surpass the nationals in terms of efficiency.
Age-old Regional Advantages
As much as the industry changes, the following attributes have been the foundation of regional offerings from the onset:
Cost. With lower operating expenses and a reliance on ground versus air transport, the regionals have always offered better pricing than the giants. This includes not only lower base rates but also fewer accessorial charges and hidden fees, such as earlier deliveries and special handling charges. Many of these charges aren’t transparent to shippers, but they add up. Overall bottom line? Recent surveys indicate that regionals now are up to 40% more cost-effective than the nationals…and that can translate into millions of dollars of potential savings.
Flexibility. Time is money, and regionals have traditionally offered later pickups and earlier deliveries. Most regional services are open 24/7, operating often even when airports are closed. Around-the-clock services are particularly important to those companies that are open all night and those that require critical shipments first thing in the morning, before the standard 10:30 AM deliveries.
Personalization. It’s hard to quantify the value of personalized service, but shippers tend to prefer dealing with friendly, familiar customer service reps and not feeling like a number.
Recent Regional Milestones
More surprising than the above advantages are the recent strides taken by the regionals, many of them shattering ancient industry myths:
Ground service. In recent years, there has been a significant migration from air to ground services, especially when deferred shipping is not an issue. This migration has boosted revenue for both big and smaller services. But shippers should consider that regional ground prices now average 20% less than the nationals, and most regional leaders guarantee next-day delivery, whereas FedEx and UPS may deliver two or three days later.
Quality. The regionals, with fewer exchange points, have always had less margin for error. But the leading regionals are now challenging an old industry stereotype (i.e., nationals are the most reliable services) by providing technology that is at least on par with their much larger competitors. With web-based shipping, barcoding, mobile scanners and integrated shipping systems, technology is becoming more of an industry commodity. With this in mind, see how your carrier shapes up in terms of the following:
• On-time delivery: Ask to see quality index ratings (you should expect performance levels to exceed 96%).
• Intact packages: Ask for the dollar value of claims (note that the industry average is .50%).
• Safe driving: Check for the “mod factor” to determine accident ratings (the industry average is 1.0%).
Expanded scope. Today, the regionals cover almost 90% of the nation’s ZIP Codes — and that footprint is expanding. Stay tuned for major news about a “super-regional” network expected later this year.
Not All Regionals Are Alike
The more regional carriers educate the market, the more effectively they can make their case. But while there are few national giants, there are hundreds of smaller carriers, including same-day messenger services, mom and pop shops as well as other providers that have not made the necessary investments to qualify them as sophisticated players.
Certainly, in the multi-billion-dollar parcel industry, there is room for a multitude of services and products. However, for the purposes of this discussion, if we’re comparing carriers that offer full-service capabilities, shippers are advised to limit their search to FedEx, UPS, the US Postal Service and the leading regional players located throughout the country.
In any event, if you’re considering a relatively smaller service, you need to understand that not all regionals are alike. So make sure the regional you’re evaluating has “big-company qualities.”
The following checklist can help you find the best regional fit:
• Experience. What are the track record, reputation and financial stability of your prospective service? Ask for customer references.
• Advanced technology. Does your carrier provide online ordering and tracking and real-time scanning?
• Logistics. Does your carrier offer easy access to your inventory with services such as warehousing and trucking options? What about drop shipping, which allows national companies to transport parcels from one region to another and still reap the advantages of “one zone, one price?”
• Same-day. Do you want on-demand messenger delivery and Next Flight Out?
• Facilities management. What about personnel provided to help sort your mail on site?
• Professional, courteous drivers. Do couriers have visible identification?
• Specialized medical supply service. What about special procedures for delivering medical supplies and blood work, if appropriate?
Final Considerations
If you’re evaluating shipping options, make sure you perform your due diligence and have all the information you need to make an informed decision. A couple of final suggestions:
• Study the fine print of your service agreement, even if your contract isn’t up. If your contract is up, consider locking into a new agreement before prices increase.
• Conduct an analysis of your unique shipping history and characteristics. Various industry consultants can help you negotiate new terms. However, before you pay big fees to these services, consider that some carriers, particularly regionals, provide comprehensive audits at no cost. These may include a breakdown of cost comparisons between national and regional services.
Whatever the economic climate, shippers need to maximize opportunities to contain costs and minimize risks. A big part of this equation is partnering with the right parcel carriers.
Let’s be clear: No one is questioning the might of the giants, and no one is talking about replacing them. Rather, it’s a question of finding the right combination of complementary services that meet your particular needs.
Do your homework. Weigh your options. And put your carrier to the test. Because today, more than ever, it’s good to have options when it comes to delivering the goods.
Editor’s Note: Eastern Connection reports the following as industry benchmarks:
• Next-day ground delivery guaranteed by 5 p.m.
• Quality performance index of 98.6%.
• Damage claims of .0007%.
Jim Berluti is President and CEO of Eastern Connection. Based in Woburn, Mass., Eastern Connection is the largest regional transportation and logistics provider on the East Coast, covering all major zip codes in over 5,000 cities. Founded in 1983, the company is open 7 days a week and 365 days a year. Services include Priority Overnight, Ground, Medical Logistics, Same-Day Rapid Response, Logistics & Warehousing, Trucking, and Expedited Mail. For more information, visit www.easternconnection.com. Please visit Eastern Connection at The Parcel Forum, Oct. 4-6, 2010, Chicago, IL, Booth # 322.
In the process, many companies have been reminded about the built-in advantages of regional services (namely pricing and flexibility). But they have also discovered that the leading regional players have become much more sophisticated than had been presumed; in fact, the so-called new breed of “super-regionals” now rival and sometimes surpass the nationals in terms of efficiency.
Age-old Regional Advantages
As much as the industry changes, the following attributes have been the foundation of regional offerings from the onset:
Cost. With lower operating expenses and a reliance on ground versus air transport, the regionals have always offered better pricing than the giants. This includes not only lower base rates but also fewer accessorial charges and hidden fees, such as earlier deliveries and special handling charges. Many of these charges aren’t transparent to shippers, but they add up. Overall bottom line? Recent surveys indicate that regionals now are up to 40% more cost-effective than the nationals…and that can translate into millions of dollars of potential savings.
Flexibility. Time is money, and regionals have traditionally offered later pickups and earlier deliveries. Most regional services are open 24/7, operating often even when airports are closed. Around-the-clock services are particularly important to those companies that are open all night and those that require critical shipments first thing in the morning, before the standard 10:30 AM deliveries.
Personalization. It’s hard to quantify the value of personalized service, but shippers tend to prefer dealing with friendly, familiar customer service reps and not feeling like a number.
Recent Regional Milestones
More surprising than the above advantages are the recent strides taken by the regionals, many of them shattering ancient industry myths:
Ground service. In recent years, there has been a significant migration from air to ground services, especially when deferred shipping is not an issue. This migration has boosted revenue for both big and smaller services. But shippers should consider that regional ground prices now average 20% less than the nationals, and most regional leaders guarantee next-day delivery, whereas FedEx and UPS may deliver two or three days later.
Quality. The regionals, with fewer exchange points, have always had less margin for error. But the leading regionals are now challenging an old industry stereotype (i.e., nationals are the most reliable services) by providing technology that is at least on par with their much larger competitors. With web-based shipping, barcoding, mobile scanners and integrated shipping systems, technology is becoming more of an industry commodity. With this in mind, see how your carrier shapes up in terms of the following:
• On-time delivery: Ask to see quality index ratings (you should expect performance levels to exceed 96%).
• Intact packages: Ask for the dollar value of claims (note that the industry average is .50%).
• Safe driving: Check for the “mod factor” to determine accident ratings (the industry average is 1.0%).
Expanded scope. Today, the regionals cover almost 90% of the nation’s ZIP Codes — and that footprint is expanding. Stay tuned for major news about a “super-regional” network expected later this year.
Not All Regionals Are Alike
The more regional carriers educate the market, the more effectively they can make their case. But while there are few national giants, there are hundreds of smaller carriers, including same-day messenger services, mom and pop shops as well as other providers that have not made the necessary investments to qualify them as sophisticated players.
Certainly, in the multi-billion-dollar parcel industry, there is room for a multitude of services and products. However, for the purposes of this discussion, if we’re comparing carriers that offer full-service capabilities, shippers are advised to limit their search to FedEx, UPS, the US Postal Service and the leading regional players located throughout the country.
In any event, if you’re considering a relatively smaller service, you need to understand that not all regionals are alike. So make sure the regional you’re evaluating has “big-company qualities.”
The following checklist can help you find the best regional fit:
• Experience. What are the track record, reputation and financial stability of your prospective service? Ask for customer references.
• Advanced technology. Does your carrier provide online ordering and tracking and real-time scanning?
• Logistics. Does your carrier offer easy access to your inventory with services such as warehousing and trucking options? What about drop shipping, which allows national companies to transport parcels from one region to another and still reap the advantages of “one zone, one price?”
• Same-day. Do you want on-demand messenger delivery and Next Flight Out?
• Facilities management. What about personnel provided to help sort your mail on site?
• Professional, courteous drivers. Do couriers have visible identification?
• Specialized medical supply service. What about special procedures for delivering medical supplies and blood work, if appropriate?
Final Considerations
If you’re evaluating shipping options, make sure you perform your due diligence and have all the information you need to make an informed decision. A couple of final suggestions:
• Study the fine print of your service agreement, even if your contract isn’t up. If your contract is up, consider locking into a new agreement before prices increase.
• Conduct an analysis of your unique shipping history and characteristics. Various industry consultants can help you negotiate new terms. However, before you pay big fees to these services, consider that some carriers, particularly regionals, provide comprehensive audits at no cost. These may include a breakdown of cost comparisons between national and regional services.
Whatever the economic climate, shippers need to maximize opportunities to contain costs and minimize risks. A big part of this equation is partnering with the right parcel carriers.
Let’s be clear: No one is questioning the might of the giants, and no one is talking about replacing them. Rather, it’s a question of finding the right combination of complementary services that meet your particular needs.
Do your homework. Weigh your options. And put your carrier to the test. Because today, more than ever, it’s good to have options when it comes to delivering the goods.
Editor’s Note: Eastern Connection reports the following as industry benchmarks:
• Next-day ground delivery guaranteed by 5 p.m.
• Quality performance index of 98.6%.
• Damage claims of .0007%.
Jim Berluti is President and CEO of Eastern Connection. Based in Woburn, Mass., Eastern Connection is the largest regional transportation and logistics provider on the East Coast, covering all major zip codes in over 5,000 cities. Founded in 1983, the company is open 7 days a week and 365 days a year. Services include Priority Overnight, Ground, Medical Logistics, Same-Day Rapid Response, Logistics & Warehousing, Trucking, and Expedited Mail. For more information, visit www.easternconnection.com. Please visit Eastern Connection at The Parcel Forum, Oct. 4-6, 2010, Chicago, IL, Booth # 322.
