The pitch for using regional carriers to ship products is tough to ignore. They all promise lower rates, faster local delivery, and fewer surcharges compared to national carriers like FedEx and UPS.
In many cases, these pitches are accurate. If you ship a lot of packages to customers in the same part of the country, regional carriers can legitimately save you a lot of money on shipping costs.
That said, using a regional carrier doesn’t make sense for everyone. They’re a niche solution that works really well in specific scenarios. But other times, they can actually increase your costs and operational complexities.
Savings ultimately depend on where your customers live, where your warehouse is located, and how your current carrier contract is structured.
Examples of Regional Carriers in the US
I’m sure all of you are familiar with the big national players: UPS, FedEx, USPS, and I’d even include DHL in this list. All of these carriers operate nationwide across the US and internationally as well.
But regional carriers only have a presence in a defined geographic area. It could be a single state, cluster of states, or major metropolitan area.
They’re not trying to compete with FedEx or UPS across the country. Instead, their business model is built on having a deeper footprint in a smaller area instead of wide coverage across the entire map.
Examples of popular regional shipping carriers include:
- OnTrac – Historically served Western states, but expanded to East Coast following its acquisition of LaserShip
- Spee-Dee Delivery – Upper Midwest regional carrier
- Pitt Ohio – Mostly Mid-Atlantic and Midwest
- CDL Last Mile – North East and Mid-Atlantic coverage
- GLS – Mostly Western states
What Makes Regional Carriers Different From National Carriers
Aside from the localized presence and smaller geographic footprint, there are a few things that set regional carriers apart from the national players.
- They primarily handle short-haul ground deliveries.
- Most deliveries are under 500 miles.
- Rarely deliver beyond shipping Zone 4.
- Packages aren’t routed through national sorting hubs.
The logistics behind a regional carrier operation all translate to two things:
- Faster delivery.
- Lower costs.
These carriers have much less overhead. Since packages aren’t traveling through national hubs and getting handled at multiple checkpoints, they get from A to B faster, and those costs get passed to the customer.
This setup allows them to offer more competitive rates within their footprint. That’s where the savings live. But if you veer beyond their footprint, those savings can quickly disappear.
The Pros: What Regional Carriers Actually Do Better
Lower Rates on Shorter Hauls: Denser routes in a smaller area means rates almost always beat national giants for local (same state or region) deliveries. The 10% to 40% savings on ground deliveries you’ll see advertised are real, assuming your shipping profile fits the best-case scenario for what that carrier offers.
Faster Deliveries in Their Coverage Area: Regional carriers bypass national sorting hubs because all deliveries happen within their local network. Next-day or two-day ground delivery is often standard without extra fees to expedite items.
Fewer Surcharges: Local carriers don’t typically charge residential delivery surcharges, delivery area fees, and other add-ons because this is all part of their business model. These savings can add up during peak seasons, when national players often layer multiple surcharges on top of each other.
Better Customer Service: You can typically reach customer support directly and speak to a real person when you call a regional shipper. Since they’re dealing with a much smaller pool of customers, they can also be more flexible in terms of pickup times, address corrections, and special handling needs.
Drawbacks and Challenges of Using a Regional Carrier
Limited Coverage Area: It sounds obvious, but the implications of using a regional carrier are often bigger than they first appear. If your customers are spread across the country and a regional carrier only covers a fraction of your volume, you’ll still need a national carrier for everything outside of that zone. Adding a carrier to shipping logistics is complicated, and the extra work required to manage multiple relationships can wipe away any savings.
You Need Inventory Inside Their Footprint: Even if the majority of your customers are in a specific region, your warehouse also needs to be in that area. If your primary distribution center is in Arizona but you’re using a regional carrier in New England, you need to ship your items across the country to inject the packages into their network (which defeats the purpose).
Splitting Volume Can Hurt Your National Carrier Contract: This is a trade-off that is most often glossed over when a business adds a regional carrier. If you’ve negotiated volume-based discounts with UPS or FedEx and you shift a portion of your packages to a regional carrier, your rates can increase with the remaining volume. This price hike can offset or potentially exceed what you’ve saved regionally.
Inconsistent Quality: Regional carriers often outsource deliveries to independent contractors and local drivers. Performance can vary and affect tracking, on-time rates, and even package handling. So before you commit, it’s worth researching how a specific carrier operates in your actual delivery area instead of just relying on their overall reputation.
When it Makes Sense to Use Regional Shipping Carriers
The clearest signal to consider a regional carrier is geography. If the majority of your shipments are concentrated to a specific region, and a regional carrier has strong coverage there, the economics can work.
Beyond location, the right conditions generally look like this:
- You already have a fulfillment center or warehouse inside the carrier’s coverage area.
- Shipping volume in that region is high enough to justify the overhead of managing an additional carrier relationship.
- The math still makes sense after calculating potential discount tier changes with your national carrier.
- You ship mostly short-haul ground items.
- You’re shipping something unique that a regional carrier specializes in (perishables, healthcare, etc.).
It’s rare to have a regional carrier completely replace a national shipping company.
Typically, we see mid-to-large ecommerce businesses with dense, predictable shipping patterns save money with regional carriers. But only if their fulfillment infrastructure is already in place within those regions.
When it Probably Doesn’t Make Sense for Your Business
Even if a regional carrier checks a few of your boxes, it’s probably not worth pursuing if:
- Your customer base is spread nationally with no heavy or predictable regional concentration.
- You ship from a single centralized warehouse and don’t have inventory strategically positioned in regional zones.
- Your shipping volume is relatively low.
- Your national carrier volume discounts would erase any potential savings offered by a regional carrier.
- You don’t have the internal resources to manage a network of multiple carriers.
The complexity associated with using a regional carrier can’t be ignored. And for most smaller operations, the perceived savings just aren’t worth the headaches.
Per-label savings might be cheaper. But when you factor in your total costs, things may just be marginally better or potentially more expensive.
Does it Actually Save Money?
Yes, regional carriers can save your business money on shipping costs. But only if the stars align. This isn’t a guarantee.
You’ll need to actually run some numbers and scenarios based on your volume to see if this makes sense for your business.
And you’ll need a history of accurate data to weigh your options. Ecommerce startups that have only been in business for 6-12 months likely don’t have enough data to truly determine where their customers live.
If you need help assessing your current situation, you can get a free audit from our team here at the Cost Guards.
What to do Before Adding or Switching to a Regional Carrier
For most businesses, the idea of using a regional shipping carrier is all centered around cost. But there are other ways that you can cut shipping costs without adding a new relationship.
Most savings can be found by optimizing your current shipping costs:
- Run a parcel audit
- Audit your shipping invoices
- Re-negotiate your existing carrier contract
- Review your surcharge exposure
- Set up systems to claim refunds on service failures
Try this stuff first. These strategies can help you slash costs by upwards of 20-30%, and you don’t have to change carriers, add new ones, or make major adjustments to your current operations.
Final Thoughts
Regional carriers offer legitimate savings on shipping, but only for the right businesses.
When the perfect conditions exist, you can save real money. But when they don’t, the savings can be marginal or nonexistent.
And if your business is a good candidate for using a regional shipping carrier, you could potentially save just as much money or more by optimizing your costs with your current carrier. So it’s worth making sure you’ve maxed out what your existing relationship offers before you layer on additional complexities.