Many shippers think that they have to rely on one or both of the big two carriers, UPS or FedEx, but there are other regional carriers and courier options available.
Benefits of Contracting with Regional Carriers and Couriers
One of the benefits is time and transit.
A lot of the regionals and the couriers, especially the couriers, are ones close to the shipper.
Couriers, especially, are typically close to the end-user or the recipient of the shipment. And that’s an advantage. Time and transit, speed to market, and speed to customers are huge.
Another big one when you're comparing to UPS, FedEx, and even the post office, is fewer charges. There are a lot fewer, if any, surcharges from regional carriers. Regional carrier deliveries don't assess a lot of size and weight limits. Most residential surcharges don’t appear either. A lot of those surcharges don't apply when you're using a regional carrier.
So you've got time in transit advantages, and then the big one is the cost. There can be significant cost savings with regional carriers.
Also, to use an analogy, a lot of shippers put all of their eggs in one basket, but regional carriers and couriers can protect against that.
Looking Beyond the Big Two Carriers
If you’ve spent some time in the shipping industry, you know that FedEx and UPS make it tough to look at other options based on the way their contracts are set up and the commitments that they have in their contracts for discounts. You really are tied to them. If there's an opportunity for you to look at a regional or a courier, however, that might be an option worth testing in certain markets.
It doesn't necessarily impact the spend that contributes to your overall contract with either FedEx or UPS. And if it works, and you see the cost benefits, you can start using regional carriers. Down the line, if it starts to impact your contracts or your discounts and those commitments, then you can renegotiate your contract with UPS or FedEx and incorporate regional carriers into your supply chain.
Using a regional can really open up opportunities for different markets. You can consolidate some shipments into certain areas. Also, sometimes you'll find that regional carriers are better equipped to handle your business. Depending on the size and scope and characteristics of your packages, a regional carrier might be better equipped with the type of service that they provide.
Finding Regional Carriers Geographically
Let’s think about it geographically.
If you're looking at suburban or rural areas, depending on the types of deliveries in your customer base, geography is really how you want to look at your options. Because certain regionals are better equipped to handle residential deliveries, for example, than others in densely populated areas.
Further, the regional carriers that you look at and the strengths of a given carrier are better than others in different areas. Factors like that and your needs will determine whether a courier or local carrier is a good fit.
Effective Shipping Characteristics for Using Regional Carriers
There are some shipping characteristics that can help determine if a shipper should rely on a regional courier or carrier.
If you have small shipments, for example, that are short zone regional carriers, those probably have a good shot. Depending on the size limits of that particular regional carrier you might have an issue from a cost standpoint.
In reality, however, you should be looking at what that regional carrier can offer. And if your packages fit within the scope of their services, the short zone small packages are usually a good choice to at least test regional shipments this way.
Shifting Carriers in Times of COVID
This year has been different than years past, to say the least. And we've seen a huge shift in deliveries going to residences. That has affected the use of regional carriers or couriers this year.
We have several customers, for example, who have 99.9% of their shipments going to residences with a huge influx of volume. Basically, since late March or early April, both FedEx and UPS have seen a shift that looks like they've hit their peak season. Usually that’s right after Thanksgiving, their big peak with the holiday season. And they usually see the residential increase in shipments happening then.
This year, their residential shipments have been at that level since March and April. The shift has essentially blown out both carriers. Their buildings and networks have been blown out from a residential standpoint.
Even now, we're seeing a lot of customers utilize regional carriers for those shipments because UPS and FedEx can't handle them as well as they could before. Compared to pre-pandemic levels, the volume going through their residential networks now is mind-boggling.
So, in conclusion, one slight upside of this upheaval is that shippers have more options now than just the two big carriers.