Unfortunately, it’s complicated. When Denise asked Keith what the 6.9% increase means for shippers, he pointed out that 6.9% is just an average.

“If you take the rates and average them all together year over year, then yes, you get to 6.9%, but within each individual sell those increases vary,” stated Keith. “And so you really have to get in and really analyze your shipping profile, understand your data, and essentially rerate your packages saying, okay, in 2022, I paid this much, but with this discount and this surcharge and these rates in 2023, I'm going to pay that so that you can understand what that increase is.”

Keith suggested that once shippers got a real handle on how these increases would affect them, they could figure out where to go next.

“I think for folks like us in the Regional space there is a lot of opportunity,” said Josh. 

Regional carriers might be an option for shippers feeling a little disillusioned with the rate hikes at FedEx and UPS.

Once shippers know where they stand, they can begin to plan for the future. Josh noted that, of course, the first things shippers must consider when looking at their shipping profile are rates and time in transit. If those numbers they’re seeing in relation to UPS and FedEx shipping aren’t working for them, it might be time to consider a future that involves stepping outside of the duopoly box many shippers get stuck in.

Josh made a note that Better Trucks utilizes a simplified pricing model to help its customers manage costs more effectively.

“At Better Trucks, we try to keep our pricing very simplified, and we think that's an advantage to the shipper and to the industry. The duopoly that Keith speaks to, you know, they've been around doing the same thing for decades upon decades. In the regional space that Better Trucks plays in we see simplified pricing as well as better tech as ways to improve customer experience. They get parcels to customers faster,” said Josh.

It's about the bottom line at the end of the day but serving your customers in the way they expect to be served is also a critical factor as shippers assess their carrier base. Keith pointed out that sometimes customers expect free shipping, but they’re not expecting it to be fast. Other times, they want that Amazon-Esque experience where they receive their order in two days. Shippers need to look closely at what their customers actually need from them and strike the right balance of fast and cost-effective.

“We typically cover more territory on a next-day and two-day basis than the ground providers in the national space,” said Josh.

Denise made note of the opportunity regional carriers have in the current market to make inroads. Shippers have more reason than ever to look at options they maybe hadn’t previously considered.

“I think it's a great opportunity to, as you would put it, Keith, fold Better Trucks into that optimization model,” stated Denise.

So, when should shippers consider pulling some of their volumes from those national carriers and sending it to faster and more cost-effective regional carriers?

Because regional carriers like Better Trucks can cover more territory on a next-day or two-day basis than national carriers, shippers looking to improve their customer experience without jacking up their transportation costs might think about sending applicable volume to regional carriers. Better Trucks can offer transit times only available with air service on a national carrier.

Shippers considering making a switch should also keep in mind that regional carriers, on the whole, don’t function that differently from national carriers.

“At Better Trucks, we function and look very similar to a national carrier in terms of the services that we provide. Our network is completely connected across all of the metros that we serve and will continue to be as we grow into next year. From that standpoint, the service that we provide is very similar to a UPS or FedEx, picking up packages at a customer's dock and getting it to the end customer regardless of what metro they live in or where the package is headed,” pointed out Josh.

From small businesses to the largest parcel shippers in the country, Better Trucks can help provide parcel shipping. Just don’t ask them to ship your frogs.

“Everybody wants to save costs, everybody wants to improve their customer experience,” said Josh. 

Costs are important, but customer experience matters, too. Reaching out to utilize regional carriers can offer some benefits in that arena that shippers may not have contemplated.

Better Trucks takes customer experience and engagement seriously.

“I like to equate our delivery technology to that of, like, a DoorDash or Uber. If you're waiting for your Uber to come, you can look at a map and see where the driver is. You can look at a map and see where your pizza delivery guy is. We have that same technology" said Josh. 

This is great for customers, but it’s great for shippers, too. This technology has led to higher successful delivery rates, and that can create a snowball of other positive effects.

“Chances are, with Better Trucks, you'll be able to save money even though you may lose some of that volume discount that you're accustomed to seeing,” noted Josh.

Both national carriers almost always include volume thresholds in all their contracts. That means shippers must give them so much freight or they lose volume discounts with those national carriers. These volume thresholds often leave shippers leery of turning over volume to regional carriers to take advantage of faster transit times and/or better rates.

Part of the service Shipware offers their customers is to help them figure out whether they’ve got room in that volume threshold to utilize other carriers, how much volume they can take from their national carriers, and even whether it’s worth it to say, “We don’t need no stinking volume discount.”

“There is always margin, there are always areas to take packages from the nationals. And even if you're worried about tripping that volume threshold, the savings that you may see are greater than what the volume threshold decrease at one of the national carriers,” said Josh. 

“Just about every UPS and FedEx pricing agreement, a portion of your discount is based off on how much you're spending with that carrier. But remember, it's a 52-week rolling average. If you move volume away, it takes time for that change to impact that calculation,” said Keith.

It’s about knowing how much room you’ve got, and that information is readily available on UPS and FedEx invoices. Some shippers may be able to move a significant portion of their volume without even approaching that threshold, while others may need to focus on quantifying their savings with another carrier versus the volume discount.

Keith also cautioned that shippers should also keep in mind customer experience.

2023 will be one of the most dynamic years on record for shippers. Here are some factors that are likely to affect shippers this year, both positively and negatively. Words like capacity, options, and *gasp* strike were thrown around.

Capacity

Both Keith and Denise pointed out that increased capacity will likely have a huge positive impact on shippers this year.

“There is capacity across the network. It's going to be a little bit easier to move packages, regardless of what carrier you're using,” said Keith.

“Typically during peak, we had no capacity. Right? UPS wouldn't take anything more than 10%. FedEx wouldn't take more than 10%. And what the regional carriers have given their clients is capacity,” stated Denise.

Optionality

Shipping options have expanded rapidly in the past several years, and our speakers think 2023 will come with continued expansion. We can look at Better Trucks’ expansion as an example of how regional carriers are working hard to cover more ground.

This means shippers have options now. In 2023, it’s expected that more shippers will turn to alternative shipping options.

“The regional carriers are just going to continue to emerge. There are other options besides UPS and FedEx,” said Keith. “I think as shippers start to really feel the pain of the 6.9% rate increase, they'll start to explore even a little bit more.”

Josh had this to say on optionality, proving that regional carriers like Better Trucks are sensitive to their shippers’ needs: “Transportation managers, some of their concerns that we hear regularly surround integration. (They wonder) how hard will it be to print labels to do the work to make sure that tracking is set up? We have leading technology that makes it almost seamless in a very, very short amount of time.”

And the Tailwinds

It’s never all great news. These are the things that our speakers thought might hold shippers back this year.

The national carriers are still a duopoly.

Almost no shippers can completely get away from national carriers, no matter how much they want to. Since there are really only two options, shippers are going to have to continue to deal despite unprecedented rate increases.

“It's still UPS and FedEx. They're great companies, but those rate increases aren't going away,” said Keith.

There has been a lot in the news surrounding the possibility of a UPS strike, which could majorly affect shippers. Denise pointed out that we’ve been hearing about a UPS strike for three decades straight, but shippers still need to prepare to mitigate the possible effects of a strike.

“If you do feel like it's a concern, say you've got all your volume tied up with UPS, make sure that you've got a relationship with your FedEx rep or find a regional carrier that can help,” cautioned Keith.

We want to send a great big ‘Thank You’ to our speakers and our host, Denise, for offering up these great insights into the shipping industry in 2023!