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Regional parcel carriers that are little noticed in a market controlled by UPS Inc. and FedEx Corp. can offer lower-cost and faster shipping options than their giant rivals, representatives of the smaller fleets said.
Participants on a January conference call organized by Stifel Nicolaus & Co. said savings for express shipments typically were at least 40% compared to UPS and FedEx and that ground shipment rates were more than 15% lower for packages moving 150 miles or less.
“Regional carriers offer cost savings and advantages that are very compelling,” said Rick Jones, chief operating officer of Lone Star Overnight, Austin, Texas, speaking on behalf of five regional carriers participating in the call.
“The concept is, why pay for Paris, France, when all you need to serve is Paris, Texas,” Jones said.
Also represented were Eastern Connection, Woburn, Mass.; Spee-Dee Delivery Service, St. Cloud, Minn.; OnTrac, Phoenix; and U.S. Cargo, Columbus, Ohio.
Rates are lower because the regional carriers have lower operating costs and charge fewer accessorial or additional charges, Jones said.
Besides lower costs, Jones said regional carriers make later pickups because their networks are tailored to shorter-haul business. Larger package carriers typically have earlier pickups because their schedules must be tailored to earlier sorting deadlines at hubs to serve longhaul customers, he said.
“Most shippers don’t know there are any other parcel carriers out there other than UPS and FedEx,” said David Ross, a Stifel Nicolaus analyst.
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