Transportation makes up a significant portion of a product’s landed cost. Parcel shipping, in particular, is an expensive business, especially for expedited, overnight delivery. Shippers who sell goods business-to-consumer have to contend with the fact that customers are unwilling to pay high delivery costs.
Last-mile delivery service is a big deal for shippers because it takes a lot of time and money. The costs involved in providing excellent last-mile delivery services are way too high and comprise labor costs, fuel costs, cargo carriers’ costs, and drivers’ salaries.
Statistics show that the last mile delivery market was valued at 18.7 billion USD in 2020, and it is expected to reach 62.7 billion USD by 2027. Along with the CAGR of 18.9%, during the forecast time period, the challenges are also expected to grow. A failed delivery only increases this already expensive process.
At times when the economy is bullish, unemployment is low and GDP is rising, controlling transportation spend may not seem particularly important. However, in this current period of inflation and at a time of economic uncertainty, ensuring that transportation is as cost-effective as possible is critical. To do this, best-in-class organizations have turned to multi carrier shipping solutions.
Organizations typically select a single carrier with the aim of lowering costs. Large volume shippers can negotiate favorable rates by working with a single carrier for all shipments. Nonetheless, this is not always the most cost-effective strategy.
Furthermore, by standardizing on one carrier, staff do not have to research and compare rates, which saves time. Having said that, all carriers have their strengths and weaknesses. Some are better than others at particular types of shipments or offer better transit times in certain geographies.
An organization using multi carrier shipping software always chooses the carrier and service that can deliver the goods within the promised timeframe at the lowest possible cost.
Additionally, a comprehensive multi carrier shipping strategy fully considers global trade requirements to not only significantly lower transportation costs, and manage the outbound flow of goods but also to mitigate regulatory risks. Today’s technology solutions help manage and simplify global trade in conjunction with multi carrier shipping activities.
International shipping and manufacturing comes with an array of regulations and paperwork — none of which shippers should ignore. Global trade missteps, when making shipping decisions can result in customs hold ups, lost shipments, missed delivery deadlines, loss of export privileges and fines.
Enterprise-level software solutions should automate the most time consuming processes of global trade, when planning and executing shipments, by ensuring all export and import processes are met, including trade compliance, documentation production and customs reporting. By automating compliance checks, manufacturers can perform due diligence, mitigate risks and create audit-ready electronic reports.
To be clear, multi carrier shipping is not simply having two or more carriers to choose from. Many companies use one carrier for domestic shipments and a second carrier for international deliveries. That is not multi carrier shipping, but rather, many carrier shipping.
Instead, a truly multi carrier shipping solution allows an organization to seamlessly switch between carriers for both domestic and international shipments. Here are six ways multi carrier shipping solutions help lower parcel delivery costs.
Multi carrier shipping gives an organization more flexibility. Consequently, organizations always use the lowest cost carrier and service that will meet the promised delivery date. In addition, with thousands of carrier services to choose from around the world, organizations can also include local and regional carriers in their network.
Furthermore, although it is possible to rate-shop every shipment, high volume shippers use multi carrier shipping along with a configurable automated routing guide. As a result, shipments are automatically routed to the lowest cost carrier and service depending on the parcel’s characteristics, such as weight, delivery address and customers to name a few.
When an organization uses a single carrier, they can be vulnerable to higher prices. Should an organization wish to switch carriers, they will have to spend significant time negotiating rates with the new carrier, a process that can take months.
If the carrier is generally meeting expectations, many organizations tend to leave well enough alone. But this does not mean that the organization is getting the most competitive rates and services from the carrier. If the customer is mostly satisfied with the service, there is no motivation to offer lower cost options.
With a multiple carrier strategy, organizations are in a better negotiating position. The organization always has access to the best rates and routes that will deliver your parcel on time. Therefore, carriers have to earn your business on every parcel. As a result, your organization has the power to negotiate more favorable rates and drive down shipping costs.
Enterprises can make additional cost savings by consolidating shipments bound for the same region or country. Of course, carriers do offer consolidation services, but at a price. Instead, high volume parcel shippers can manage consolidations in-house using the zone-skip functional of their multi carrier solution.
Consolidation is especially important when you ship internationally. Organizations can use one carrier for the international leg of the journey and a local carrier or carriers for the last mile. For organizations that ship to Europe or Asia this is particularly advantageous as there are a vast number of carriers across both regions, and leveraging these local carriers can result in significant savings.
There is another distinct advantage to consolidating international shipments — less regulatory headaches. A consolidated shipment requires one customs declaration, whereas each parcel sent separately would have needed its own customs declaration.
If your enterprise sells goods through online channels, returns are almost unavoidable. Consumers return online purchases in much higher quantities than goods bought in-store. In addition, when consumers purchase items from a physical outlet, they are also more likely to return unwanted goods the same way.
The high volume of returns can be a challenge to manage, particularly if an organization uses a single carrier. A carrier that excels at outbound shipping does not necessarily have processes in place that make reverse logistics a core strength. Furthermore, a carrier that provides both outbound and reverse logistics may not offer the most cost-effective rates.
Therefore, in order to get the best rates and services for both outbound and reverse shipping, more than one carrier is generally necessary. This is even more so the case when an enterprise has multiple locations across a number of different countries.
By leveraging a multi carrier network, shippers have more flexibility for returns, and can ensure that goods coming back do so at the lowest possible price.
Every carrier has a number of rules and requirements. The largest, global carriers have stringent rules regarding labeling and electronic communications. They must enforce these standards in order to efficiently process high volumes of parcels through their networks.
Remaining compliant with a number of different carrier standards can be a challenge, particularly if you ship from multiple locations. However, with a multi carrier shipping solution, your provider ensures that you remain compliant with changing carrier requirements.
Certain organizations, particularly those that ship B2B, may have to accommodate customer requirements regarding carrier selection. For example, B2B customers may prefer that you ship parcels to them on their account. An organization using a single carrier cannot accommodate these types of requests without significant hassle. In addition, the preferred carrier may even penalize your organization with loss of favored shipper status and higher rates.
With a multi carrier shipping strategy, an organization can easily meet these customer expectations around shipping.
Learn how QAD Global Trade and Transportation Execution (GTTE) can help your organization lower parcel shipping costs and boost competitive advantages.