ADSI Blog – ROI Tip #8 – Reduce Your Freight Bill by Using Regional Carriers
If you’re looking for ways to directly reduce hard costs in your transportation budget, consider using regional carriers to handle some of your deliveries. This can be an extremely cost-effective option for companies with a concentration of customers in certain geographic areas.
Regional carriers can be categorized in a number of ways. Some focus on small parcel delivery, while others offer less-than-truckload (LTL) services for heavier shipping. Certain regional carriers provide multi-state solutions, while others are couriers or “micro-regionals” that cover smaller geographic regions such as cities or partial states.[i] There are hundreds of regional carriers operating in the U.S., making it much easier to identify those who offer the right rates, services and technology for your needs.
Regional carriers offer numerous benefits:
- Lower freight rates. As a result of lower operating costs, regionals can often pass along to customers savings of 10% to 40% over UPS and FedEx pricing. Most regional carriers transport packages via truck hubs instead of airlines. Trucking can be as little as 10% of airline costs.
- Fewer surcharges. Many regional carriers do not assess the same delivery surcharges that national carriers do, which can range from $1.85 to $3.00 per package based on “rural” zip codes.
- Faster delivery for a lower cost. For example, if you have a lot of customers in a specific major market such as New York, Chicago or Los Angeles, you can send these packages via an LTL carrier or an airline on a Thursday or Friday to the regional shipper, which will deliver them on Monday. “Savings can be as much as 40% with any loss of delivery time,” says Rob Shirley, president/founder of Austin, TX-based shipping solutions consultancy ExpresShip.[ii]
- Negotiating power. Adding regional carriers puts shippers in a better negotiating position with their national carriers. In fact, according to Ben Huffman, Vice President of Operations for online retailer Legendary Whitetails, this multi-carrier system approach has delivered immediate payback in carrier negotiations. “When you’re dealing with an arbitrage rate shopping system it’s fairly cut and dried as to who is going to deliver the package,” he said, “If you can compare similar service levels between carriers, you force them to compete on price and get creative, so they come to the table with their best rate.”
- Responsive service. Regional carriers may be willing to take on special shipping requirements and have more flexibility in terms of the kinds of services they can offer. In fact, as a recent Multichannel Merchant article noted, “Getting the nationals to be flexible can be a frustrating experience – even for multimillion dollar shippers. Merchants that make the switch to regionals often see a greater degree of customer service and accommodation. As one shipper noted, ‘After getting very little attention from the national carriers, I now feel like a big fish in a small pond with my regional carrier.’”[iii]
Comparing and Choosing Regional Carriers
As a first step, it is important to make sure that your multi-carrier shipping system will accommodate the addition of regional carriers. Some systems, such as ADSI’s Ship-IT multi-carrier shipping system already include a wide range of regional carriers in the carrier rating library.
As the next step, experts recommend that you perform a carrier cost/service analysis to determine if/where makes sense to add regionals to your delivery network. It’s important to assess the carrier’s financial stability, service territory, rate structure, etc.
In our next post, we’ll discuss the key factors that should be considered in this process.
Contact us if you’d like to discuss ways to add regional carriers to your delivery network. We can help you perform an analysis to determine your best carrier selection options.
[i] Kent Szalla, “Regional Parcel Carriers: A Historical Perspective,” Parcel Industry, May/June 2012.
[ii] William Atkinson, “Close to Home,” Multichannel Merchant, December 1, 2006.
[iii] Rob Martinez, “A Look at Regional Parcel Carriers,” Multichannel Merchant, April 1, 2011.