While the holidays have always been considered “peak season” for shipping, this year’s e-commerce growth has intensified this reality and required businesses to prepare for a capacity crunch and delivery setbacks. Because of their abilities to rejuvenate fulfillment, regional carriers are getting more attention. As experienced shippers will attest, regional carriers can be the key to faster, cheaper delivery, along with solving the last mile challenge.
•Lower freight rates: Most regional carriers transport packages via truck hubs, which can be operated at a lower cost than airfreight. As a result, regional carriers can save customers 10% to 40% vs. UPS and FedEx pricing.
•Fewer surcharges: Many regional carriers do not assess the same delivery surcharges and fees charged by national carriers. Regional carriers may not charge for rural deliveries, for example, while national carrier charges can vary based on rural ZIP codes. Also, regional carriers may not add a surcharge for weekend deliveries.
Holiday delivery surcharges also vary by carrier. In August 2020, UPS announced it will impose surcharges ranging from $1 to $3 per package on high-volume U.S. residential shippers during the eight-week peak cycle which begins November 15. Companies expecting their highest shipping peaks during this period should add regional carriers to handle some of the volume and control costs.
•Faster delivery for a lower cost: Regional carriers may also offer faster transit times at lower costs. This can be an advantage for shippers with customers in certain geographic regions. For example, an online retailer in California with a high density of customers in New York can save time and cut costs by using a less-than-truckload (LTL) carrier or airline to deliver its orders to a NY-based regional carrier – who then makes the last leg delivery.
•Responsive service: Regional carriers may be willing to provide additional services, because, unlike national carriers, they’re not required to standardize their services to accommodate a broader network. They may be in a better position to move certain kinds of products that require special handling or set up, for example.
•Improved negotiating power: Adding regional carriers places shippers in a better position to negotiate more competitive contracts with their national carriers. Regional carriers are likely to be flexible in order to compete with the volume of business national carriers draw. Whether the volume of packages shipped is low or high, rates can still be negotiated, as some carriers seek to fill capacity in specific lanes.
Similarly, fuel surcharges, general rate increase (GRI) caps, and accessorial charges can all be up for negotiation. In some cases, regional carriers can save large companies 30% on shipments. With e-commerce changing the way companies ship and how carriers approach negotiations, contracts should be reviewed regularly to ensure rates are competitive.
Control Transportation Spend in the New Shipping Landscape
The escalating delivery capacity shortage raises the stakes for businesses. Companies that invest in a multi-carrier shipping system to leverage regional carriers create flexibility in fulfillment and keep costs in check.
Ken Fleming is president of Logistyx Technologies, the leader in Transportation Management for parcels. Since the mid-1990s, Ken has led successful launches of many new technologies and services, including supply chain management, e-commerce, SaaS, and enterprise software and systems integration solutions. Ken can be reached at ken.fleming@logistyx.com.
