Regional Carriers That Beat UPS and FedEx on Price

When it comes to shipping, most businesses instinctively reach for UPS or FedEx. For smaller packages, the USPS might come to mind. This limited menu has been the norm for many years. However, regional carriers are quietly offering faster and cheaper delivery across large parts of the country. They may not have the marketing might of a Super Bowl ad or car racing sponsorships, but they often deliver something far more valuable to small businesses: lower prices and quicker last-mile delivery in their service areas.

I first began exploring regional carriers about two years ago for a client in the Midwest. Their average Ground shipment via UPS cost about $9.40, while the same package through a regional carrier was only $6.80. That's a significant 30% savings, and deliveries were actually a day faster because the carrier's hub was located just 40 miles away, compared to UPS's 400 miles.

Why Regional Carriers Are Cheaper

The cost savings with regional carriers come down to logistics. UPS and FedEx run vast national networks, requiring each package to pass through multiple sorting facilities. A package might even travel across the country for sorting before making its way back to its destination. Each touchpoint and mile adds to the cost, and customers pay for this extensive infrastructure whether they need it or not.

Regional carriers, on the other hand, operate within smaller, more concentrated networks. A package typically goes from pickup to a local hub and then directly to the delivery truck. This streamlined process results in fewer handling steps, shorter travel distances, and ultimately lower costs.

One significant advantage is the absence or reduction of delivery area surcharges. While UPS and FedEx apply these extra charges for deliveries outside major metropolitan areas, many regional carriers do not, as those regions often fall within their core service areas.

The Major Regional Carriers

OnTrac (Western US)

OnTrac, the largest regional carrier in the Western United States, provides coverage in Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah, Washington, and parts of the surrounding states. OnTrac's ground delivery service competes directly with UPS Ground and FedEx Ground, often at a lower cost.

For example, OnTrac charges around $6.50 for a 5-pound package in Zone 3, compared to UPS's $9.20 and FedEx's $8.90. Their local transit time is typically 1-2 days, faster than the 2-3 days offered by the national carriers. Plus, OnTrac includes Saturday delivery at no extra charge, whereas UPS and FedEx charge a premium for this service.

Spee-Dee Delivery (Upper Midwest)

Spee-Dee Delivery has been a staple in the Upper Midwest since 1978, covering Minnesota, Wisconsin, Iowa, North Dakota, South Dakota, Nebraska, and parts of Illinois, Michigan, Missouri, and Kansas. For shipments to rural areas in places like Minnesota or Iowa, Spee-Dee often outperforms its national competitors in both speed and cost.

A typical 5-pound regional package costs about $5.80 with Spee-Dee, while it costs $8.70 with UPS and $8.40 with FedEx. Notably, Spee-Dee doesn't charge extra for rural deliveries, whereas UPS and FedEx add at least $3.85 to deliveries in extended areas.

LSO (Lone Star Overnight) — Texas and Surrounding

LSO started as an overnight service in Texas and has expanded its ground delivery services throughout the South Central United States, including Texas, Oklahoma, Louisiana, Arkansas, and New Mexico. LSO's pricing is particularly competitive for Texas-to-Texas shipments.

For instance, a 5-pound package within Texas costs about $5.90 with LSO, compared to $8.50 with UPS and $8.20 with FedEx. Their overnight service within Texas is priced between $12-15, nearly half of what UPS charges.

GLS US (Formerly GSO)

Backed by the European logistics giant GLS Group, GLS US covers California, Arizona, Nevada, New Mexico, Colorado, Texas, Oklahoma, Arkansas, Louisiana, Tennessee, Georgia, and is continually expanding. They have been integrating other regional carriers to broaden their reach.

A 5-pound Zone 3 package costs approximately $6.20 with GLS US, compared to $9.00 with UPS and $8.70 with FedEx. GLS US also offers competitive priority overnight rates and a lower fuel surcharge.

Delivery Solutions and Courier Networks

Beyond the larger regional players, a growing network of local courier services offers last-mile delivery in metropolitan areas. Companies like Veho and Pandion partner with e-commerce brands for same-day and next-day deliveries in select cities, providing rapid service tailored to high-value direct-to-consumer brands or mid-sized e-commerce businesses.

Cost Comparison: Regional vs National

The cost differences between regional and national carriers can be substantial. Consider these real-world examples:

Light Package (2 lbs, small box)

• LA to SF: OnTrac charges $5.20, while UPS is $8.40 and FedEx is $8.10. Savings: 36-38%.
• Dallas to Houston: LSO charges $4.80, while UPS is $7.90 and FedEx is $7.60. Savings: 37-39%.
• Minneapolis to Milwaukee: Spee-Dee charges $4.90, while UPS is $8.20 and FedEx is $7.90. Savings: 38-40%.

Medium Package (8 lbs, medium box)

• Portland to Phoenix: OnTrac charges $8.50, while UPS is $12.80 and FedEx is $12.40. Savings: 31-34%.
• San Antonio to OKC: LSO charges $7.80, while UPS is $11.50 and FedEx is $11.10. Savings: 30-32%.
• Des Moines to Fargo: Spee-Dee charges $7.20, while UPS is $12.20 and FedEx is $11.80. Savings: 39-41%.

Heavy Package (20 lbs, large box)

• Seattle to LA: OnTrac charges $15.40, while UPS is $22.50 and FedEx is $21.80. Savings: 29-32%.
• Houston to Little Rock: LSO charges $13.50, while UPS is $19.80 and FedEx is $19.20. Savings: 30-32%.
• Chicago to Omaha: Spee-Dee charges $13.20, while UPS is $20.40 and FedEx is $19.80. Savings: 33-35%.

Overall, businesses can save an average of 30-40% by using regional carriers for appropriate shipments.

The Hybrid Approach: Using Regionals Strategically

Shrewd shippers employ a hybrid approach, using regional carriers where they excel and national carriers where necessary. Here's a breakdown:

• Within regional coverage zone: Opt for a regional carrier.
• Cross-country shipments: Stick with UPS or FedEx Ground.
• Lightweight packages anywhere: Consider USPS.
• Rural deliveries within region: Regional carriers avoid surcharges.
• Time-sensitive long-distance shipments: Use FedEx or UPS Express.
• Saturday delivery within a region: Regional carriers offer this at no extra charge.

The key is a shipping platform that automatically routes packages to the cheapest carrier based on destination. Platforms like atoship and ShipStation integrate regional options alongside USPS, UPS, and FedEx, optimizing every shipment for cost and speed.

How to Set Up Multi-Carrier Routing

Map your shipping zones. Analyze your shipping data to see where most packages are headed. If a significant portion goes to areas covered by a regional carrier, integrate them into your shipping strategy.

Set up accounts. Most regional carriers offer straightforward online registration without contracts or minimums.

Use a multi-carrier platform. Tools like atoship, which integrates seamlessly with regional and national carriers, can automate rate comparisons for each package.

Test for 30 days. Run trials with regional carriers alongside your existing setup to compare costs and delivery performance.

Optimize and expand. Once you realize the savings, explore additional regional carriers to cover more territories.

Downsides and Limitations

While regional carriers offer numerous benefits, they aren't without limitations. It's important to be aware of the following:

• Limited coverage area: They can't handle all destinations, necessitating a hybrid strategy with national carriers.
• Less brand recognition: Customers might not be familiar with the carrier, which can be mitigated by proactive tracking notifications.
• Fewer drop-off points: This can be a challenge, but scheduling pickups is a viable alternative.
• Less robust tracking: While not as detailed as UPS or FedEx, using platform-level tracking can help maintain transparency.
• Claims process: Regional carriers may have smaller claims teams, so thorough documentation is key.
• Size/weight limits: These carriers might have stricter limits, so it's crucial to check before shipping large items.

To address brand recognition issues, send tracking notifications from your store with your branding and a tracking link that clearly shows the delivery progress.

Coverage Map Overview

Here's a general guide to which regional carrier covers which states:

• Pacific West: OnTrac covers California, Oregon, Washington, Nevada, Arizona, Colorado, Utah, and Idaho.
• Southwest/South Central: LSO serves Texas, Oklahoma, Louisiana, Arkansas, and New Mexico.
• Southeast expansion: GLS US is expanding into Georgia, Tennessee, and beyond.
• Upper Midwest: Spee-Dee services Minnesota, Wisconsin, Iowa, North Dakota, South Dakota, and Nebraska.
• Northeast: Various local couriers operate on a metro-specific basis.

Annual Savings Potential

By routing eligible packages through regional carriers, businesses can achieve substantial savings:

• 200 packages (50% regional eligible): Avg savings per package: $2.80; Monthly savings: $280; Annual savings: $3,360.
• 500 packages (50% regional eligible): Avg savings per package: $2.80; Monthly savings: $700; Annual savings: $8,400.
• 1,000 packages (50% regional eligible): Avg savings per package: $2.80; Monthly savings: $1,400; Annual savings: $16,800.
• 5,000 packages (50% regional eligible): Avg savings per package: $2.80; Monthly savings: $7,000; Annual savings: $84,000.

Even modest shipping volumes can lead to meaningful savings when you incorporate regional carriers into your logistics strategy.

Getting Started This Week

Begin by examining your shipping destinations. Pull data from the past month and sort it by state. If more than 20% of your volume targets regions covered by a regional carrier, you're likely missing out on potential savings.

Start by signing up with one regional carrier. Ship a batch of 20 packages and compare the cost and delivery speed to your current providers. The savings and efficiency gains will likely speak for themselves.

The dominance of UPS and FedEx has led many to believe they are the only viable shipping options. In reality, alternatives exist and often provide better solutions for small businesses looking to optimize their shipping costs and delivery times.