Parcel shippers need to control costs, now more than ever. In
this QAD Precision Report, we look at how multi carrier shipping
software helps shippers save time and money.
In 2020, parcel volumes skyrocketed as shops closed in response
to the Covid-19 pandemic and government mandated lockdowns. However,
it is fair to say that the pandemic only accelerated a trend that was
well underway. Parcel volumes have been steadily increasing every
year. 2020 may have been an anomaly, but parcel shipping volumes will
continue to rise in the years ahead.
Transportation makes up a significant portion of a product’s landed
cost. Small parcel shipping, in particular, is an expensive business,
especially for expedited, overnight delivery. One issue is clear:
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. However, customers were only willing to pay, which
was a mere US$1.40 per delivery.
At times when the economy is bullish 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 a transportation management system with multi
carrier shipping software optimizes delivery costs. The software
chooses the carrier and service that can deliver the goods within the
promised timeframe at the lowest 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 to
global players, organizations can also include local and regional
carriers in their network.
It is possible to compare carriers and rate-shop every shipment, but
this is not practical. 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. The routing uses a company's business rules on
how to handle specific parcels. For example, the parcel’s weight,
dimension, delivery address or customer to name a few. The solution
also automatically generates carrier compliant shipping labels and
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. This is 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. Once the goods arrive, parcels can be delivered using a local
carrier for the last mile.
For organizations that ship to Europe or Asia this is particularly
advantageous. 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 goods in-store, they are 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
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. Furthermore, they can ensure that goods coming back do so
at the lowest possible price.
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.
BETTER CUSTOMER SERVICE
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.
MINUTE EXPLAINER: WHAT IS MULTI CARRIER SHIPPING SOFTWARE?
PEAK SEASON SHIPPERS NEED MULTI CARRIER SHIPPING SOFTWARE
BENEFIT OF MULTI CARRIER SHIPPING SOFTWARE FOR LOGISTICS PROVIDERS
LET’S KEEP IN TOUCH
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