Save Money Using the Regional Parcel Carriers Instead of UPS and FedEx Ground

Years ago, domestic shipping used to be simple. Weigh the package, look up the zone, look up the charges, and hand the parcel to the pick up driver. Thirty years ago, there was no shipping software and computers were in their infancy. Shippers either wrote their shipments in the UPS “book” or they used a UPS “meter” to process their parcels. If you are able to remember the UPS book and the UPS meter, then you have been in this business a long time.

Times have changed and so has the complexity of shipping a UPS parcel. There was a time when the only extra costs of shipping a parcel UPS were COD, Declared Value, and Hazardous Materials. Today, over 20 additional fees can come into play when shipping a parcel via UPS. Unless a parcel is shipped to a business in a large city, it is almost a guarantee additional charges will be added to the base cost. Residential delivery fees, delivery area surcharges, and extended area delivery surcharges can quickly drive up the price of a UPS shipment. With shipping costs increasing every year, how are businesses able to keep their transportation pricing as low as possible?

One way businesses can lower their transportation costs is to utilize the Regional Small Parcel Carriers for some of their Zone 2 and 3 shipping. Regional Carriers offer parcel pricing that can start at a point well below UPS and FedEx Ground. Many of the Regional Carriers don’t even charge a residential fee or an extended area surcharge fee. As an exercise in pricing, we will compare shipping costs between UPS Ground and Spee Dee Delivery Service, based in St Cloud, MN.

Let’s take a 20 lb parcel traveling from St Paul, MN to Random Lake, WI 53075 which is north of Milwaukee. In the UPS system, this is a Zone 3 shipment and base commercial costs are $8.88. Since it is a residential delivery, we need to add in the residential fee, the rural delivery area fee, and let’s not forget the fuel surcharge fee.

In the Spee Dee Delivery system, this is a Zone 3 shipment and the base cost is $6.48. Spee Dee Delivery does not charge a residential fee, or an extended area surcharge fee.

Base Fee: UPS              8.88          Basic Fee: Spee Dee Delivery         6.48

Residential Fee              2.20

Rural Extended Area       2.50

Fuel Surcharge               0.75          Fuel Surcharge                                .36  

Total Shipping Cost    $ 14.33*        Total Shipping Cost                       $ 6.84*             

*Calculated by using the Carrier’s website

In this example, Spee Dee starts at 27% less than UPS in their base rate. After adding on all of the UPS additional charges, the difference jumps to a whopping 52.26% less expensive than UPS. It is common knowledge UPS will discount their commercial rates based on the amount of parcels you ship with them. There are not too many shippers who get more than a 27% ground discount, and I don’t know of any shipper who is getting a 52% discount off their residential delivery rates.

Spee Dee is just one example of how the Regional Parcel Carriers can help shippers reduce their transportation costs. Besides Spee Dee, some of the other regional carriers who are competitive with UPS pricing are Eastern Connection, Prestige Delivery, Pitt Ohio, Dunham Express, and more. Here is a link to the Express Carrier Association web site where you can search for the regional parcel carriers’ serving your part of the country. http://www.expresscarriers.com/FindMember/index.cfm?memberType=CARM

If you are shipping from a single location, making the decision to use a regional carrier is easy. Most third party multi carrier shipping software systems have modules for the various regional carriers and are easy to integrate. It gets a little more complicated if your company is shipping from multiple facilities across the country. Then you need to utilize Enterprise Multi Carrier Shipping Software for processing your parcels. This type of software will automatically look at the correct Regional Carrier based on where your shipping site is located. Then the shipping software will rate shop each site against your UPS or FedEx Ground negotiated rates, and the Regional Carrier’s rates, to determine the least cost method to process your parcel shipments.

If you are not using the Regional Carriers as part of your shipping strategy, you should. Many of the Regional Carriers provide the same time in transit as UPS, and some are able to beat UPS’s time in transit when delivering to the Zone 3 and 4 delivery areas. In general, the Regional Carriers are easier to use and will offer better flexibility for handling your unique requirements for shipping. Each Regional Carrier has its own strengths when compared to one another. However, when compared to UPS, they all have one strength in common; they are competitive alternatives to UPS and FedEx Ground.

Michael Everson is President and CEO of Data Trak Technologies located in St Paul Minnesota. For over 18 years Data Trak has been helping businesses of all sizes automate and improve the efficiency of their outbound distribution and shipping operations. You can reach Data Trak at 651-639-0091 or email sales@dtsna.com. Data Trak’s web address is http://www.dtsna.com and www.digitalshipper.com.