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Smartspendtm Bulletin Regional Parcel Carriers to Deliver Big Savings, Better Service in 2015

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Smartspendtm Bulletin Regional Parcel Carriers to Deliver Big Savings, Better Service in 2015 SmartSpendTM Bulletin Regional Parcel Carriers to Deliver Big Savings, Better Service in 2015 As UPS and FedEx implement another round of annual rate and surcharge increases, as well as dimensional weight pricing for all shipments, shippers are seeking alternatives. Increasingly, many are turning to regional parcel carriers that offer more favorable rates, surcharges, delivery times and customer service. Shippers that aren’t fully leveraging regional carriers could miss out on big savings and better service in 2015. In 2014, shippers experienced a wakeup call. The industry’s largest small parcel carriers announced their decision to invoke dimensional weight pricing for all shipments, on top of annual rate and surcharge increases. Fed up with price hikes, many shippers have wondered if FedEx and UPS are really the best and only options for their business. For some, the answer is “no” – and that’s opened the door for a multitude of regional parcel carriers who are poised to leverage this window of opportunity. Once thought to be inferior to UPS and FedEx in terms of service and brand, many regional carriers have developed sophisticated pricing, service and branding strategies that allow them to deliver packages at a lower cost with comparable (or better) service levels. Worried about a random delivery person showing up in an unmarked car? Those days are over. Today’s regional parcel carriers provide the professionalism and technology capabilities that shippers have come to expect from the world’s largest carriers. npifinancial.com ©2014 NPI, LLC. ALL RIGHTS RESERVED. 2 SmartSpendTM Bulletin Historically, the term “regional” has implied a limited footprint. But, even this aspect of regional carrier delivery has evolved. Regional parcel carriers are increasingly partnering with their competition to expand their footprint to compete with UPS and FedEx. Just ask mega-shippers like Amazon.com, Walgreens and Avon, who now rely heavily on regional carriers to move volume across the U.S. Here is a list of several of the most widely used regional parcel carriers. Together, these parcel carriers cover more than 85 percent of the U.S. population and specialize in short-haul deliveries (typically up to 500 miles): Rates for regional CARRIER SERVICE AREA carrier services can be 15 to COURIER EXPRESS AL, FL, GA, NC, OH, SC, TN and VA 40+ percent EASTERN connection Northeast and Mid-Atlantic lower than UPS lasership Eastern seaboard from Maine to Florida and FedEx. LSO AR, CA, LA (Western), NM (Eastern), OK, TX, (FORMERLY lone star overnight) Texarkana and Mexico ONTrac AZ, CA, CO, ID, OR, NV, UT and WA (FORMERLY california overnight) pitt OHIO CT, DE, IL, IN, MA, MD, MN, NJ, OH, PA, RI, VA, WI and WV. Also serves parts of ME, NH and KY PRESTIGE DELIVERY IN, KY, MD, MI, NY, OH, PA, VA and WV SPEE DEE DELIVERY service IL and Upper Midwest US cargo DE, IN, KY, MD, NJ, NY, OH, PA, MI, VA, WV and a small area in Canada THE REGIONAL CARRIER ADVANTAGE For some shippers, the benefits of using a regional parcel carrier over UPS or FedEx are numerous. They include: • Lower Freight Rates – Rates for regional parcel carrier services can be 15 to 40+ percent lower than UPS and FedEx, depending on the carrier, service selection and shipping patterns. Many offer discounted pricing with a simple contract and often without volume commitments. • Fewer Surcharges – Across the board, regional parcel carriers have fewer surcharges and accessorials (example: three of the top six do not add on surcharges for residential deliveries). Those that are in place are typically lower compared to FedEx and UPS, and there is often greater flexibility to negotiate these costs downward. npifinancial.com ©2014 NPI, LLC. ALL RIGHTS RESERVED. 3 SmartSpendTM Bulletin • Faster Delivery – Regional parcel carriers can provide offer faster delivery times. For example, OnTrac can ground deliver a package from Reno, NV to Colorado in two days, whereas FedEx takes three. Unlike UPS and FedEx, Eastern Connection and LaserShip are able to provide next-day ground delivery from Harrisburg, PA to Boston. • Better Customer Service – Shippers typically experience better, more personalized customer service from regional parcel carriers – including a higher percentage of on-time deliveries and easy access to their account manager. Processing, tracking and signature technologies provide high visibility as packages move through the delivery system. • Increased Flexibility – Regional parcel carriers tend to be more flexible in their operating plans. For example, some offer Sunday or weekend pickups. Others can move a parcel from Canada to Mexico between Sunday and Monday. This level of flexibility isn’t always available to UPS and FedEx customers. Determining if a Regional Parcel Carrier is Good for You Where do you currently ship and how does that align with regional parcel carrier coverage? The top regional carriers cover 85 percent of the U.S. population. How much volume do you ship? Are your deliveries to major metropolitan areas or mostly rural? Regional parcel carriers work best for large shippers that deliver to large population centers. Small shippers and those that deliver to rural areas may not realize the same cost and service benefits. What are your customers’ expectations? Is expedited and free shipping a requirement? Do they demand more flexibility with delivery times? End-customers in most industries are demanding faster, cheaper (or free) delivery from their retailers and supply chain partners. They’re also demanding more flexible delivery times and advanced tracking capabilities. Regional parcel carriers are excelling in these areas, often providing faster and more flexible delivery compared to UPS and FedEx with the same package tracking visibility. How much can you save with a regional parcel carrier, given your unique shipping profile? Making a business case for bringing in a regional carrier requires a deep understanding of your unique shipping patterns and requirements and how they map to carriers’ capabilities and costing models. Conduct this scenario and modeling analysis first to understand the true cost advantages of a more diversified carrier strategy. Do you (or can you) have the right automation tools in place to easily select and manage a greater number of carriers? Automation is the key to taking advantage of a multi-carrier approach. It allows you to easily manage multiple carrier services – from adding regional carrier(s) to the roster to selecting the appropriate service level. Be sure to select the right system to handle the multi-carrier roster, including national parcel carriers and regional carriers. npifinancial.com ©2014 NPI, LLC. ALL RIGHTS RESERVED. 4 SmartSpendTM Bulletin HOW CAN NPI HELP? From technological advancements and software integration to simplified contracting and pricing, regional parcel carriers have made it easier for shippers to integrate them into their carrier mix. Regional carriers are a very viable addition for many shippers, but NPI realizes the task of considering a new carrier is not a small one. That’s why we offer specialized expertise including cost modeling, scenario modeling, carrier selection services (including RFI, RFQ, RFP) , contract negotiation, and ongoing cost and service level monitoring. Our services expedite the carrier assessment and selection process and help shippers maximize savings and service levels. ABOUT NPI NPI provides spend management consulting that helps our clients optimize IT, telecom and supply chain transportation costs so that savings can fund other projects or drop to the bottom line. Extensive market data is combined with deep category expertise to provide price analysis and benchmarking, contracting, RFP, vendor auditing and other cost optimization services. Our services are self-funding – fees are 100% results driven and we guarantee ROI. This combination of expertise, savings and value is why NPI is an advisor to IT, finance, NPI Headquarters procurement and supply chain executives for some of the world’s most recognized brands. 271 17th Street Suite 550 Atlanta, GA 30363 T 404-591-7500 F 404-591-7501 E [email protected] npifinancial.com ©2014 NPI, LLC. ALL RIGHTS RESERVED. v1114.
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