Thorough Analysis Yields the Best Results in Evaluating Regional Carriers
As discussed in our last blog, shippers can leverage a regional carrier’s delivery network to reduce freight costs by as much as 40% and cut time from their delivery schedule. Given these gains, it makes sense to consider adding regional carriers to your network. As you evaluate your regional carrier options and potential cost savings, keep the following in mind:
A Robust Multi-Carrier Shipping System Will Help You Uncover the Greatest Savings
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 solution, already include many regional carriers such as Eastern Connection, LaserShip, Lone Star, OnTrac, SpeeDee and many others in their carrier library. Your system should allow you to add small parcel and less-than-truckload (LTL) carriers to compare hundredweight or multiweight rates with LTL rates and services.
Before You Add Carriers, Run a Cost-Comparison Model
If your system accommodates regional carriers, you may be able to easily add a new carrier and perform a cost-comparison based on historical shipping orders. Douglas Kahl, director of sales and business development for AFMS Logistics Management Group, suggests pulling all the pricing information you gather into a database format or spreadsheet format. “Then pull out as much information as you can, down to the package level, from your shipping system and any electronic invoicing information that you have. This will provide you with the costs associated with your current carrier,” he explains. “Then you can compare this to the cost of a potential regional carrier.”¹ Another option is to consult with your multi-carrier shipping solution provider and leverage their experience in working with national and regional carrier rates. They should be able to help you load regional rates and model the results.
Analyze Your Customer Map
You may uncover significant cost savings by employing zone skipping and/or pool point programs. Which regional carriers are located in the areas of higher customer concentration? It may make more sense to use less-than-truckload carriers in conjunction with regional carriers to manage deliveries. For example, if your customers are concentrated in a major market such as Chicago, New York or Los Angeles, you can send these packages via an LTL carrier or an airline on a Thursday or a Friday to the regional shipper, which will deliver them on Monday. “Savings can be as much as 40% without any loss of delivery time,” says Rob Shirley, president/founder of Austin, TX-based shipping solutions consultancy ExpresShip.²
Consider Realigning Your Distribution Network
In addition to comparing actual shipping costs in your existing network, what savings could be gained by shifting distribution points in your network? It’s definitely worthwhile to compare your existing options with those added by a regional carrier.
Super Regional Networks May Be an Option
You may also consider the benefits of using a “super-regional network.” By forming strategic alliances with integrated software and package tracking, shippers can take advantage of coast-to-coast coverage in an arrangement that is transparent to customers. The carriers use a regional parcel alliance, modeled in a similar way as recent LTL regional alliances, using a standard technology platform to control package custody from one carrier to another and transmit online package status data to customers. One such regional alliance is being formed between Eastern Connection, OnTrac, SpeeDee, Lone Star, TransTek and U.S. Cargo. Any of these companies can provide additional information on such alliances and how they will work for you.³ If you’re considering using the services of super regional network, do a close check into the network’s technology, tracking systems etc., to ensure that you have full visibility of your shipments.
Be Proactive in Managing Volume Commitments
If your current contract includes a guaranteed volume of business with your existing carriers, you may or may not incur a price increase by diverting some of that volume to regional carriers. Build this consideration into your analysis and into your next contract negotiations.
Do Your Due Diligence
In addition to ensuring that a regional carrier can meet your service requirements, make sure you evaluate on the company as a whole. How long have it been in operation? Is the company financially solid? Does it offer the same kinds of value-added services and technology capabilities offered by your other carriers?
If you have questions or need guidance in evaluating regional carriers for your distribution network, ADSI can help. Please contact us today to speak with a logistics specialist.
¹William Atkinson, “Close to Home,” Multichannel Merchant, December 1, 2006.
²Rob Martinez, “A Look at Regional Parcel Carriers,” Multichannel Merchant, April 1, 2011