Organizations tend to follow a predictable trajectory as their shipping needs grow. When organizations have few packages to ship, they often deploy an ad hoc shipping strategy. Individuals who are responsible for sending packages may simply research rates online or request a spot quote. Then they select the carrier and delivery service option they or their customers prefer.
As an organization’s shipping needs grow, these ad hoc processes become excessively time-consuming and costly. Therefore, busy shippers need a better strategy to make shipping processes uniform and cost-effective. Often, this takes the form of selecting a single carrier strategy. The organization negotiates rates and contracts with a single carrier to handle all of its inbound and outbound shipping. This also streamlines decision-making and brings order to the organization’s shipping processes.
Yet, in spite of these benefits, a single carrier may still not be the most effective strategy for handling your shipping as volumes grow. In fact, a multi carrier shipping strategy offers several advantages over a single carrier strategy. In this post, we’ll talk about five of those benefits
When an organization opts for a multi carrier shipping strategy, there are several benefits. These include:
When your organization selects a single carrier, typically the aim is to lower costs. This also reduces the time required to research rates and process each shipment. However, not all carriers handle every type of shipment equally well.
Organizations using a multi carrier shipping strategy have more flexibility. They can choose the carrier that provides the best service for each shipment. You can consider not just the big three global carriers. You can also leverage regional carriers and “local heroes”.
Of course, researching every rate, route and delivery option for each shipment is no easy feat. You need the tools to simplify the process and an extensive network of carriers to choose from.
There’s a reason people advise against putting all your eggs in one basket. And that advice never rang more true than when it comes to your shipping operations. Shipping is subject to significant risk: carriers can change their service levels or eliminate service to some regions altogether. More commonly, problems may develop with shipments getting lost in transit or delayed due to inclement weather. When you use only one carrier, you’re more at risk when any of these problems arise. With a multi carrier strategy you mitigate these risks.
One of the biggest problems with a single carrier strategy is that you’re somewhat at the mercy of that carrier. Leaving them for another carrier is also time-consuming. This makes it is necessary to research and negotiate rates with the new carrier, sign new agreements and so on. This process can often take several months.
Because of these challenges, carriers and shippers in an exclusive relationship may become somewhat relaxed about their relationship with each other. As long as parcel service is generally meeting expectations, shippers may not be keeping abreast of services that other carriers offer. Carriers may also not offer existing customers their most competitive service options or rates, especially if the customer seems satisfied with what they’re getting.
With a multiple carrier strategy, organizations gain negotiating power. You’re constantly informed of the best rates, routes and service levels available. Carriers also know they need to earn your business on every shipment. This allows you to negotiate lower rates and drive down shipping and freight costs, increasing profitability and margins.
Customers themselves may have preferences about which carrier you should use. B2B customers, for instance, may prefer that you ship packages or freight to them on their account. Consumers may wish to take advantage of special carrier services such as carrier drop-boxes or pick-up/drop-off (PUDO) options.
When you’re locked into a contract with a single carrier, you’re unable to satisfy these kinds of requests without creating problems. Your preferred carrier may even penalize you with higher rates or loss of favored shipper status.
On the consumer side, cost and service options are a crucial aspect of the purchase decision. According to a study by 3PL firm Dotcom Distribution, 87 percent of online shoppers identified shipping as a key factor in their decision to repeat shop with an e-commerce brand. In another recent study, 86 percent of online shoppers gave shipping cost as a reason for cart abandonment — a perennial problem for omni-channel retailers. A multi carrier shipping strategy positions your organization to meet these customers’ rising expectations around shipping.
Return shipping is becoming a bigger challenge for shippers everywhere, particularly as more businesses sell goods through mobile and online channels. Online sales, unfortunately, are subject to significantly higher rates of returns than goods sold in brick-and-mortar stores — three times higher, in fact.
The higher volumes of returns associated with omni-channel selling creates a business challenge for many shippers that are committed to a single carrier strategy. That’s because while some carriers may excel at shipping outbound parcels, they are less adept at managing reverse logistics. Shippers that do handle forward and reverse logistics well, may not offer the most competitive rates.
Organizations that want the best rates and service for both their outbound and reverse shipping may find that it takes more than one carrier to get the job done — making multi carrier the better strategy for handling all aspects of their shipping business. A multi carrier strategy offers shippers greater flexibility to reduce risk and cost, adjust to meet the needs of each customer and shipment, and shop for better rates, faster routes and more service options for all shipments.
Precision Software, a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, Precision Software assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. Precision Software’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about Precision Software, visit www.precisionsoftware.com.