Parcel shippers need to control costs, now more than ever. In this
QAD Precision Report, we look at how multi carrier shipping software
helps drive down transportation costs.
Economies are beginning to reopen, albeit slowly and at different
paces around the world. Although there may be great will to return to
business as usual, the Covid-19 pandemic and subsequent lockdowns will
have a substantial
impact on the global economy. As global enterprises and
multinational corporations look to restart operations, it will be
necessary to cut costs and increase efficiencies wherever possible.
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. In 2018, the global
average last mile delivery cost was just over US$10. Shippers,
however, charged customers an average of US$8. As a result, shippers
were charging customers less than they themselves paid, but — and this
is crucial — a lot more than what most customers were willing to pay,
which was a mere US$1.40 per delivery.
At times when the economy is bullish, unemployment is low and GDP is
rising, controlling transportation spend may not seem particularly
important. However, 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.
Single Carrier vs Many Carrier vs Multi Carrier Shipping
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. As a result, a comprehensive
multi-carrier shipping strategy allows shippers to significantly lower
But 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 we outline six ways multi carrier
shipping solutions help lower parcel delivery costs.
Six Ways Multi Carrier Solutions Reduce Parcel Shipping Costs
GET THE BEST RATES, ROUTES AND SERVICE LEVELS
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.
LEVERAGE A BETTER NEGOTIATING POSITION
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.
ACHIEVE FURTHER SAVINGS WITH CONSOLIDATIONS
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.
GET MORE FLEXIBLE AND CHEAPER RETURNS
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
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
ALWAYS REMAIN CARRIER COMPLIANT
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.
KEEP YOUR CUSTOMERS HAPPY
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 on 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.
LET’S KEEP IN TOUCH
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About QAD Precision – Trusted Global Trade and Transportation Execution
QAD Precision, a division of QAD Inc., provides industry-leading global
trade compliance, and multi carrier transportation
execution solutions from a single, integrated platform. An
ISO-certified company, QAD Precision assists companies to streamline
and transportation operations, optimize deliveries, and increase
logistics ROI. QAD Precision’s scalable and extensible solution easily
integrates with existing ERP and WMS solutions. Industry leaders in
every region of the world rely on QAD Precision’s global support
centers to leverage thousands of carrier services and manage millions
of global trade and shipping transactions every day. For more
information about QAD Precision, visit www.qadprecision.com.