It's Time to Think Outside the Box

Posted on May 7, 2012 10:00:00 AM

For some companies, the idea of change is an intimidating one—a thought that invites hard work and dismisses old habits.

It’s a new way of thinking that suggests venturing outside the lines of the way things have always been done.

It’s hard.

But in an industry that continues to grow, standards are constantly evolving.

Not only do companies have to commit to faster transit times and uphold their superior service, but they must do it in a way that poses monetary benefits for them.

Last year, Shipware LLC, in conjunction with PARCEL, conducted a pricing survey centered on benchmarks, trends and strategies.

There were 440 respondents, whose companies ranged from less-than 25 million dollars to over a billion dollars.

What they found was quite interesting.

The results offered shippers an opportu­nity to compare market data, carrier pricing and contract terms, and cost reduction strategies with hundreds of other shippers.

It also suggested a bigger place for regional carriers in the market.

When asked if it’s harder or easier to negotiate with FedEx and UPS now than in the past, shippers by a margin of 4 to 1 feel it’s harder to negotiate today. Their reasons varied from a lack of competition (44%) to carriers being focused on revenue yield per package (43%); and the perception that pricing has been com­moditized (43%).

But with this shared sentiment, what are shippers doing to reduce their parcel costs?

What about the 12 percent of shippers who answered “nothing”?

Twelve percent of the shippers surveyed are upset about how expensive their shipping costs are, but are doing nothing about it?

The good news is, there are alternatives; companies that can be used to reduce cost and enhance, or even replace the national carriers in large sections of the United States delivery market.

Those alternatives are regional parcel carriers.

Through an interconnected hub and spoke model, regional carriers are able to deliver to large geographical areas in multiple states, and offer next-day ground delivery to destinations more than 600 miles from their origin.

Because they are very capital intensive enterprises, there are only a handful of them located across the U.S. Some of the largest ones are Eastern Connection, Lone Star Overnight, OnTrac, Pitt Ohio Ground and Spee Dee Delivery. Though small in number, these carriers deliver to 40 of the lower 48 states and serve well over 200 million consumers. 

Save transit time and boost your bottom line by investigating your alternatives.

To view the survey in its entirety, check out Part 1 and Part 2 in PARCEL Magazine.

Topics: package delivery options, Shipware, regional carriers, OnTrac Shipping