Save money by using regional package carriers instead of UPS and FedEx Ground

Years ago, domestic shipping used to be simple. Weigh the package, search the area, find the charges, and hand the package over to the pickup driver. Thirty years ago, there was no shipping software and computers were in their infancy. Shippers wrote their shipments in the UPS “book” or used a UPS “meter” to process their packages. If you can remember the UPS book and the UPS meter, then you’ve been in this business a long time.

Times have changed and so has the complexity of shipping a UPS package. There was a time when the only additional shipping costs for a UPS package were cash on delivery, declared value, and hazardous materials. Today, more than 20 additional fees can come into play when shipping a package via UPS. Unless a package is being shipped to a company in a large city, it’s almost a guarantee that additional charges will be added to the base cost. Residential delivery fees, delivery area surcharges, and extended area delivery surcharges can quickly add to the price of a UPS shipment. With shipping costs rising every year, how can companies keep their shipping prices as low as possible?

One way businesses can reduce their transportation costs is to use regional small package carriers for some of their shipments in Zones 2 and 3. Regional carriers offer package prices 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 a Wide Area Surcharge fee. As a pricing exercise, we will be comparing shipping costs between UPS Ground and Spee Dee Delivery Service, based in St Cloud, MN.

Let’s take a 20 pound package 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 basic trade costs are $8.88. Since it is a residential delivery, we need to add the residential fee, rural delivery area fee, and let’s not forget the fuel surcharge fee.

Base Rate: UPS $8.88

Residential fee $2.20

Extended Rural Area $2.50

Fuel surcharge $0.75

Total shipping cost $14.33*

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, Wide Area Surcharge Fee or Fuel Surcharge Fee.

Express Delivery Dee $6.48

Fuel surcharge $0.36

Total $6.84*

*Calculated using the Carrier’s website

In this example, Spee Dee starts at 27% less than UPS in its base rate. After adding in all of UPS’s additional charges, the difference jumps to 52.26% less expensive than UPS. It is known that UPS will discount their commercial rates based on the number of packages you ship with them. Not too many shippers get more than 27% off ground, and I don’t know of any shipper that gets 52% off their residential delivery rates.

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

If you ship from only one location, it’s an easy decision to use a regional carrier. 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 ships from multiple facilities across the country. You then need to use the Enterprise Multi Carrier Shipping software to process your packages. This type of software will automatically search for the correct regional carrier based on the location of your shipping site. The shipping software will then qualify each site’s purchase against the UPS or FedEx Ground negotiated rates and regional carrier rates to determine the least cost method to process your package shipments.

If you’re not using regional carriers as part of your shipping strategy, you should. Many of the Regional Carriers provide the same transit time as UPS, and some may exceed UPS transit time when delivering to Zone 3 and 4 delivery areas. In general, regional carriers are easier to use and will offer greater flexibility to handle your unique shipping requirements. Each regional carrier has its own strengths when compared to each other. However, compared to UPS, they all have one strength in common; they are competitive alternatives to UPS and FedEx Ground.