Will You Add Regional Carriers to Your Mix this Holiday Season?

Shoppers are already getting into the holiday spirit this year—a CreditCards.com poll found that more than half of shoppers (51%) plan to start their shopping before Halloween in 2021. And most projections expect 2021 holiday spending to top 2020 purchases, with Deloitte forecasting that ecommerce holiday sales will reach between $210B and $218B this holiday season, compared to $189B last season.

Such optimistic predictions may be a mixed blessing for retailers who are struggling with ongoing supply chain issues, or who fear a repeat of the shipping and fulfillment challenges that marked last year’s holiday shopping season. As you’re planning ahead to navigate these potentially challenging waters, it’s worth asking whether or not regional carriers should play a role in your shipping mix this year.

National and international carrier performance in 2020

Holiday shipping experienced an unprecedented surge in 2020. As NPR’s David Schaper reported in December 2020, much of this excess demand can be attributed to the annual 30-40% surge in holiday package delivery, coming on top of the roughly 30% increase that had already occurred due to the COVID-19 pandemic.

Delivery delays were the expected result of both these increases and pandemic-related supply chain disruptions, in addition to suspected volume constraints and conversations between the carriers and major retailers. 

Ongoing supply chain challenges

Most of the major carriers are taking steps to support increased volume this holiday season, though their ultimate impact remains to be seen. Like last year, USPS, for example, is exploring temporary rate hikes that would run from October 3rd to December 26th, 2021, in addition to bringing 138 new package processing sorters online to mitigate holiday shipping bottlenecks.

Further, if consumers do wind up shopping earlier in the year, as we saw last year and is predicted again this year, spreading a larger total number of packages across a longer time period could also help to limit backups and delays. 

That said, the wild-card both retailers and carriers will have to contend with is the impact of ongoing supply chain disruptions resulting from the COVID pandemic. With manufacturing centers like China, Vietnam, and Indonesia being hit hard by the Delta variant—leading not just to delays, but freight costs that are 50% to 100% higher than last year in some cases—it’s possible that slow-to-arrive inventory may result in orders being fulfilled deeper into the holiday season, even if consumers want them earlier.

Should you diversify with regional carriers?

So, with all of these different factors at play, what steps can you take as a retailer to ensure a holiday shopping season that’s as smooth as possible? One option to consider is diversifying your shipping portfolio with regional carriers.

As their name implies, regional carriers are smaller outfits that specialize in parcel deliveries within a limited geographic range. As an example, PITT OHIO promises “97% on-time service throughout the Mid-Atlantic and Midwest states,” with core service dedicated to the areas highlighted below in red:

Other regional carriers or local delivery services include:

• Courier Express
• Dicom
• GSO
• IntelliQuick Delivery
• International Bridge
• LaserShip
• LSO (Lone Star Overnight)
• Spee-Dee Delivery Service
• United Delivery Service

The benefits of regional carriers

Besides acting as a pressure relief valve for overburdened national and international carriers, regional carriers offer a number of other benefits.

• Their rates are often competitive and they may require fewer fees and surcharges.
• They generally offer high on-time delivery rates and delivery guarantees, given their stronger knowledge of their specific areas.
• Their customer service can be attentive, as they deal with a smaller customer network.
• You may be able to improve efficiency and reduce the travel distance and time of packages by keeping the entire distribution chain more localized.
  

It’s important to note, however, that regional carriers experienced the same increases in demand as larger carriers did during the 2020 holiday season—and it’s reasonable to expect that the same will be true this year. In addition to considering whether regional carriers are truly likely to improve your on-time delivery rates, ask yourself the following questions.

• How are your customers spread out, geographically? If they tend to be clustered in areas where specific regional carriers are active, adding those carriers to your mix may be beneficial.
• How much complexity will adding regional carriers introduce to your shipping program? Small- and medium-sized businesses (SMBs) may find that the burden of making arrangements with multiple regional carriers doesn’t justify potential cost savings or delivery improvements.
• Will working with regional carriers compromise any volume discounts you have with the major carriers? If so, the additional costs may not be worth the flexibility you’ll gain.
  

As you consider your carrier options for the 2021 holiday shopping season, it’s also a good idea to take a look at any other steps you can take to improve communications with your customers. Even if shipping delays are all but inevitable this year, you can still improve shoppers’ experience with tools like Narvar’s Track and Notify solutions, which will help them access the information needed to improve confidence in your businesses and its shipping practices.

Request a demo to see how these resources can help you create a magical holiday shopping experience for your customers.