BUILDING AN EFFICIENT, COST-EFFECTIVE LAST-MILE DELIVERY NETWORK

The pandemic has brought about an unprecedented surge in e-commerce sales and global parcel delivery volumes, which could surge to 316 billion packages per year by 2026[1]. At the same time, online shoppers expect faster deliveries than ever before. While the major national carriers still control the lion’s share of shipping and have benefitted greatly from the increased demand, many shippers found themselves scrambling for alternatives as capacity quickly reached its limit.

Enter regional parcel carriers. These carriers specialize in B2C parcel shipments within a specific geographical area. They represent only about 7% of the overall U.S. parcel market[2], yet they have proven to be both a reliable and cost-effective way for many shippers to navigate the pandemic.

If your business is in one of the following situations, you may well consider adding some regional carriers to your delivery network:

• Your company is looking to diversify its carrier network. The pandemic exposed one of the main benefits of regional carriers: the simple fact that they can often be there for you when the bigger carriers can’t.
• You have customers concentrated within a specific region. When it comes to shipping a package from, say, a warehouse in Albuquerque to a resident in Santa Fe, the regional carrier can almost always get it there faster and cheaper. These shipments can typically be done overnight and at a 10-40% discount relative to more traditional options! It’s no surprise that companies like Amazon have put their trust in regional parcel carriers to get their products from warehouse to customer.
• Your industry demands high service levels. Companies in the medical or pharmaceutical industries must absolutely have the ability to ship on time, every time. Regional carriers boast extremely high service levels that fulfill this promise.
• Your company needs to ship at odd hours. Regional carriers offer early and late pick-up times in some areas, which facilities faster, more flexible shipping.

Depending on the shippers’ needs, selecting regional carriers for parcel delivery can offer a variety of benefits. Compared to the big players, they often deliver at lower logistics costs, offer more flexibility and can get shipments delivered faster.

So, when should you choose to stick with the big carriers instead?

• Your company focuses on larger, high-volume, B2B shipments. The strength of regional carriers lies in their ability to handle lighter, one-off loads delivered directly to the end customer. B2B shippers are better off using one of the big players in order to benefit from their scale and volume-related discounts.
• Your customers are scattered throughout the country, or you frequently ship coast-to-coast.
• Your customers are concentrated in a remote area not well serviced by regional carriers. True, there is a small carrier for every region on the map, but that doesn’t mean their networks are truly airtight. Check with the carrier first to find out exactly where they routinely ship.
• Your staff does not have the bandwidth to manage multiple contracts with multiple carriers. If you choose to go the small-carrier route, you will likely work with several of these carriers in tandem. Unfortunately, building out your network will always add complexity to the equation in the form of more contracts and more relationships to maintain. While there are multi-carrier software solutions available to ease the growing pains, you may need to think carefully before taking on the additional workload.
• Your company requires best-in-class shipment tracking. The smaller players still lag a bit when it comes to technology solutions such as automation and shipment tracking, and this may be a deal-breaker for select shippers.

National carriers play a critical role in managing shippers’ logistics. For B2C shippers, adding regional carriers to the mix can be the key to faster, more flexible and cost-effective delivery services. As e-commerce businesses grow, shippers need to optimize their e-commerce and supply-chain strategies by choosing the right network of last mile delivery partners. This helps shippers to improve the bottom line and provide a positive last-mile delivery experience for today’s “I want it now” online-shoppers.

For more trends in last-mile delivery and logistics outsourcing, read our 2021 Third Party Logistics Study and our PoV “Gaining a Competitive Edge with Last Mile Logistics”.

[1] Pitney Bowes Parcel Shipping Index, Oct. 14, 2020, www.pitneybowes.com

[2] Shefali Kapadia, “Mapping and charting the growth of regional parcel carriers”, Nov. 2, 2020, www.supplychaindive.com