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"If You're Not Looking at Regional Carriers, You're Leaving Money on the Table."

Type:  Blog  
By: Diane Rivera, Business Development Manager

This was the recurring theme at many educational sessions at the recent Parcel Forum.
 
At these well-attended educational  sessions, shippers and consultants echoed why regional carriers are gaining traction, especially in light of the recently announced rate increase from FedEx and the dimensional (DIM) changes that are being implemented by FedEx and UPS in January 2015. Some shippers are projecting that the change in DIM calculation could increase shipment weights on up to 30% of their parcels.
 
Along with the DIM debate and frustrations about the annual rate increases by the national carriers, shippers voiced their frustrations about increased accessorial charges.  A common refrain was that shippers want alternatives to the UPS and FedEx “duopoly.” 
 
In the past, many shippers may have been hesitant to consider regionals as a serious option.  But now, thanks in part to the spotlight at the Parcel Forum, more companies are poised to “open the door” and discover savings and related advantages, such as flexibility and personalization, are available to them. 
 
The following is a summary of the highlights and lessons learned at this valuable industry event:
 
Fear Factor
Speakers stressed that shippers shouldn’t be fearful that moving business away from the national carriers and prevent them from making a change. The prevailing comment was, “Why not include more shippers in your upcoming bids …what do you have to lose?”
 
Technology
Beware of allowing the national carriers to lock you into their services by giving you a "technology allowance.”  These are never "free" and always have hidden fees and payback time tied to them.
 
Speaking of technology, it’s also important to note that the sophisticated regionals are now at the same level of technology as the giants.
 
Negotiating
It’s important to study your contract and understand the “tier structures”… where you fall in the tiers, which of your parcels are included in your tiers, etc.   Don't negotiate with your carrier without understanding your shipping profile, and that starts with reviewing your data. 
 
Accessorials
Identify the accessorials that most impact you and how that translates to your shipping costs. DAS charges/extended DAS are applied to approximately 58% of US zips. While regionals also have accessorial charges, they typically aren’t nearly as numerous or onerous.
 
Cost Reduction
Analyze which pieces of your business you can move to reduce costs in your operation.  You don't have to move everything; rather, look at one region/sector at a time, and consider regionals as a complement to, not a replacement of, the nationals.  Most regionals will provide a free analysis of your data and identify where you can save.
 
Zone Skipping
If you are zone skipping, try to price the cost of the linehaul separate from the delivery charges. Usually, it is less expensive to outsource the linehaul carrier yourself rather than allowing the national carrier to provide it.
 
So what is the main takeaway from Parcel Forum?
 
As more shippers spread the word as to how they have successfully implemented regional carriers into their shipping operations, the deployment of regional carriers is becoming more widespread.   After all, most shippers use a regional LTL carrier when shipping LTL/truckload freight, so why not apply this same thinking for your small parcel ground shipments? 
 
In short, according to those in the know, if you continue to ignore regionals, you are most likely leaving money on the table!