Years ago, domestic freight used to be easy. Weigh the package, look up the zone, check the fees and leave the package to the pickup driver. Thirty years ago, there were no shipping software and computers in their infants. Shippers either wrote their shipments in the UPS book or used a UPS meter to process their packages. If you remember the UPS book and the UPS meter, you have long been in this business.
Times have changed and the complexity of shipping has a UPS package. It was a time when the only additional costs for sending a UPS package were COD, Declared Value and Hazardous Materials. Today, over 20 additional fees can come into play when you ship a package via UPS. Unless a package is sent to a company in a large city, it is almost a guarantee. Additional fees will be added to the base cost. Housing fees, delivery charges and extended delivery charges on-site can quickly increase the price of a UPS shipment. With shipping costs increasing every year, how can companies keep their shipping prices as low as possible?
One way companies can reduce their shipping costs is to utilize the regional small-package vessels for some of their zones 2 and 3 freight. Regional Carriers offer package prices that can start at a point far below UPS and FedEx Ground. Many of the regional carriers do not even charge a housing fee or an additional fee. As an exercise in pricing, we compare shipping costs between UPS Ground and Spee Dee Delivery Service, based in St Cloud, MN.
Lets take a package of 20 pounds traveling from St Paul, MN to Random Lake, WI 53075 located north of Milwaukee. In the UPS system this is a zone 3-shipment and the base costs are $ 8.88. As it is a housing delivery, we have to add the housing fee, the fee for the rural fee and lets not forget the fuel fee.
Base fee: UPS $ 8.88
Residence fee $ 2.20
Rural Extended Area $ 2.50
Fuel fee $ 0.75
Total shipping cost $ 14.33 *
In the Spee Dee Delivery system this is a Zone 3 shipping and the base cost is $ 6.48. Spee Dee Delivery does not charge a housing fee, an extended fee or a fuel fee.
Spee Dee Delivery $ 6.48
Fuel fee $ 0.36
Total $ 6.84 *
In this example, Spee Dee begins 27 percent less than UPS at base speed. After adding on all UPS additional costs, the difference jumps to a giant 52.26 percent cheaper than UPS. It is generally known that UPS will discount its commercial prices based on the amount of packages you ship with them. There are not so many shippers who get more than 27% off due to, and I do not know if any sender who receives a 52% discount on his mortgage rates.
Spee Dee is just an example of how regional package companies can help shippers reduce their shipping costs. In addition to Spee Dee, some of the other regional carriers are competitive with UPS pricing Eastern Connection, Prestige Delivery, Pitt Ohio, Dunham Express and much more. Here is a link to the Express Carrier Association website where you can search for the regional package companies serving your part of the country.
If you ship from a single location, its easy to make decisions about using a regional operator. Most third party multi-carrier software systems have modules for the different regional operators and are easy to integrate. It becomes a bit more complicated if your company sends from several plants across the country. Then you must use Enterprise Multi Carrier Shipping Software to manage your packages. This type of software will automatically look at the right regional carrier based on where your shipping location is. Then, the shipping program will rate the store each page against your UPS or FedEx Ground negotiated prices, and Regional Carrier prices, to determine the minimum cost method to process your package deliveries.
If you do not use 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 can turn UPS time in transit when delivered to Zone 3 and 4 delivery areas. In general, the regional carriers are easier to use and will offer better flexibility to handle your unique shipping requirements. Each regional carrier has its own strengths compared to each other. But in comparison with the UPS, they all have a common strength. They are competitive alternatives to UPS and FedEx Ground.