When it comes to parcel delivery, FedEx, United Parcel Service (UPS) and the U.S. Parcel Service (USPS) are clearly the dominant players. However, a growing number of shippers are using regional parcel carriers to complement the service of the national providers.

Like the name implies, regional carriers serve a specific region within the U.S. offering reliable package delivery services similar to FedEx and UPS. Regional carriers such as Eastern Connection, Lone Star Overnight, OnTrac, Spee-Dee Delivery and Pitt-Ohio cover more than 80% of the U.S. population and specialize in short-haul delivery (typically up to 500 miles). Refer to Table 1 for a partial listing of regional carriers, areas served and website information.

The regional carriers advertise many benefits over the national carriers including cost savings, greater service options including same day delivery, and custom/specialized solutions. Is your business a candidate for regional carrier services? Companies looking to achieve any of the following benefits should consider regional carriers.


Lower cost

Regional carriers maintain a low cost of operation through their regional focus, direct loading and transportation primarily via truck. Conversely, national parcel players operate costly airline fleet and multibillion dollar hubs. As a result, regional carriers have significantly lower operating costs than the nationals and generally pass along to their customers cost savings of 10% to 40% over UPS and FedEx.

As an example, Spee-Dee Delivery’s pricing starts at $3.79 for next-day delivery of a 1-pound package.

Compared with the UPS and FedEx minimum charge of $5.49, shippers would save 31%.

Moreover, many regional carriers offer pricing with no minimum charges, better dimensional divisors and far fewer surcharges – an important point of comparison when you consider that “accessorial” fees can make up to one third of all UPS/FedEx costs.

Many regional carriers do not assess charges common with UPS/FedEx like weekly service fees, Saturday delivery, additional handling service, large package surcharges, residential delivery fees and delivery area surcharges. Whatever the published surcharges, you are more likely to negotiate discounts and/or waivers with the smaller and hungrier regional carriers.

Same Day Service and Expanded Next-Day Delivery Footprint

Regional carriers are ideal for shippers with multiple distribution centers, especially if the DCs are aligned to the regionals’ delivery footprint.

Since regionals concentrate operations in a well-defined geographic market, service to that market is often better than what the national carriers provide. For example, Eastern Connection handles East Coast deliveries from Maine to Virginia, all included as “next day” delivery points. Using FedEx and UPS Ground service, the same coverage area extends to five zones for 1-4 day delivery.

Seattle-based health and beauty products retailer Super Supplements partners with OnTrac for faster West Coast deliveries. Kyle Faino, Director of Marketing & Ecommerce views OnTrac’s same day and next day delivery as a competitive advantage. “There are very few ways to differentiate ourselves between our competitors. Just keeping pace with ‘free shipping’ incentives is not enough.” Faino said, “We now have to offer faster shipping to be able to compete.”

Shippers with a high concentration of customers – and volume deliveries – in a particular market are also prime candidates for regional carrier services. As an example, a shipper in St. Louis could truck its West Coast-bound shipments via LTL to OnTrac’s hub in Reno, NV. Including the linehaul, delivery from Bellingham, WA, all the way down to Yuma, AZ is under 4 days. Comparable to UPS and FedEx Ground service, but often at a lower cost.

Flexibility, Customer-Centric, Customized Solutions

Getting the nationals to be flexible can be a frustrating experience—even for multimillion dollar shippers. Shippers that make the switch to regionals often see a greater degree of customer service and accommodation.

“When it comes to customer service, the national carriers simply cannot compete,” said Jacob Day of Natura-Like Dental Lab in Bedford, TX. The company uses Lone Star Overnight (LSO) for all shipments within the LSO delivery footprint.

Jeff Carpenter, Distribution Manager at restaurant supplier AceMart in San Antonio agrees. “We think that the regional carriers notice our business more day in and day out. The national carriers tend to forget about accounts that are working well.”

In addition, regional carriers can provide customized service solutions including later pickup times and earlier deliveries than the standard 10:30 a.m. service.

Less Damage, Fewer Claims

Many shippers experience lower damage rates with regionals, the result of reduced package handling. AceMart’s Carpenter agrees. “The advantage of using a regional carrier like Lone Star Overnight as opposed to a national carrier is the fact that the packages are handled less and more carefully. We ship products like glassware, china, appliances that could be damaged if the boxes are thrown from truck to conveyor or into a truck that is being loaded. We feel that a regional carrier will handle our shipments better.”

Moreover, by bypassing national and multiple regional hubs, service can be more reliable in inclement weather.

Despite the many advantages, shippers are largely unaware these carriers exist. According to a PARCEL survey of over 440 volume shippers, only 39% reported using regional carriers and two-thirds of that group ship less than 5% of their overall volume via regionals (Source: “Parcel Pricing Survey, Results Unveiled”, Oct 2011).

While many regional players are growing 9-10% annually, they still make up less than 5% of the overall parcel market.


Are there downsides to parcel regional carriers? Well certainly.

Risk of Partnering with Smaller Companies

Regional carriers collectively generate an estimated $500 million annually. Contrast that with the $96 billion in revenue between FedEx and UPS, and it’s easy to understand why many regional carriers struggle to compete with their deep-pocketed national competitors on brand recognition, driver/vehicle image, technology, manifesting automation, website integration, reporting, product sophistication and service consistency.

In addition, while many of the larger regional players have been in business for many years, the regional carrier and courier industry has a history of going out of business. As you evaluate regional carriers for your business, be sure to ask questions about their financial status, how long they’ve been in business, credit scores, etc.

Service Inconsistency

We asked regional carriers in a recent Shipware survey, “What are the most common objections you hear from prospective customers on why they WON’T use your service?” The number one response was “previous poor service experience”.

While all carriers – regional as well as national – incur shipment delivery delays, package damage, misdeliveries and lost packages, FedEx and UPS consistently deliver millions of packages every day with service reliability into the high nineties.

Prior to committing a high volume of packages, shippers should conduct a thorough trial of regional carriers by testing and carefully monitoring service performance.

Limited Delivery Area

While a regional delivery specialization can certainly offer advantages for many shippers, conversely, it might eliminate potential shippers looking to single source. Many shippers enjoy the “one stop shop” convenience of partnering with national parcel delivery companies that can handle all of their needs.

Lack of Brand Recognition/Image

FedEx and UPS spend billions to build and maintain brand awareness. In fact, both brands cracked the Top 100 Global brands in the 2012 SyncForce ranking (UPS was #65, FedEx was #89). Despite recent viral videos of isolated instances of unacceptable delivery practices, both of the national carriers are widely considered to have the most professional delivery service in the industry.

On the other hand, the majority of regional carriers use contracted drivers for pickup and delivery. These drivers may or may not be uniformed, and may lack the intensive training for which UPS is famous. Vehicle fleets are inconsistent, and may or may not include the regional carrier’s company logo decal.

FedEx reps are trained to emphasize the value of the FedEx brand and to raise the question, “When your customer receives a package in a purple FedEx envelope, what does that say about your company?” Of course, the obvious alternative is the question, “If your customers get a delivery from an unknown delivery company, the driver is chewing gum and not in uniform, and the rusty van he’s driving isn’t decaled, what does THAT say about your company?”

Shippers concerned about brand and driver image should include these items in their carrier evaluations.

Could Lose Revenue-Based Discounts with FedEx/UPS

FedEx and UPS encourage single sourcing through strict contract terms tied to pricing incentives. In most FedEx and UPS contracts today, incentives are revenue based tiers: the higher the revenue average, the greater the opportunity to improve discounts.

However, the opposite is also true. If volume decreases, incentives decrease. In fact, if volume falls below a certain threshold, shippers could lose all discounts! Shippers caught up in revenue based discounts are often reluctant to try other carriers for fear it would adversely impact their rates.

Shippers should carefully evaluate the impact on discounts with the national carriers when considering deflecting a percentage of business to regional carriers. Conversely, as competition enhances leverage, many shippers position regional carriers as a way to lower pricing with the national carriers.


Regionals can help shippers reduce costs, increase productivity, improve delivery times and provide a competitive advantage. Although there are potential disadvantages inherent with regional carriers, shippers looking to cut costs and expand their options from the big three national providers should carefully evaluate regional carrier options.


Rob Martinez, DLP is President & CEO of Shipware LLC, a parcel auditing and consulting company based in San Diego, CA. He welcomes questions and comments and can be reached at [email protected].