The Benefit of Multi Carrier Shipping Software for Logistics Providers

The global pandemic had a significant impact on how and what we shop. In this QAD Precision Report we look at how 3PLs can manage these challenges with multi carrier shipping.

E-commerce has revolutionized the way we shop. Everything and anything, from groceries to gaming consoles can be bought online. In 2019, global e-commerce sales grew around 20 percent.

Industry experts forecast that online sales would grow around the same percentage in 2020. According to payments company, ACI Worldwide, online sales surged 74 percent in March 2020 compared to the same month last year.

E-commerce may not continue to experience such skyrocketing growth in the years to come. However, the rapid growth of e-commerce has been underway for many years. The pandemic merely sped up the process.

How E-Commerce Has Impacted Logistics

Long before any of us had heard of coronavirus, logistics providers were experiencing a seismic shift in their operations. The unstoppable growth of e-commerce means that 3PLs are sending significantly more smaller shipments to more places than ever before. 

This is certainly true in the retail portion of a 3PL’s business, but not exclusively so. E-commerce has impacted the way many industries do business. The demand for expedited shipping is certainly not the sole preserve of retail. Before the global pandemic, parcel shipping volumes were forecast to surpass 100 billion parcels in 2020.

Small parcel shipments have increasingly become a part of a 3PL’s distribution operations. More parcel shipments and more destinations, means logistics providers often need to work with more carriers than ever before. Consequently, multi-carrier shipping has become ever more important. Multi carrier solutions help 3PLs manage carrier relationships, remain compliant with carrier standards, and control parcel shipping costs.

Why 3PLs Need Multi Carrier Parcel Shipping Software

Logistics is a competitive business. As a result, efficiency is crucial. A 3PL’s large customers have exacting requirements. This is unsurprising — their customers are equally demanding too.

Last year’s Third Party Logistics Study found that 3PLs need to be able to rapidly respond to customer service requirements. In particular, the “always-on, always-open shopping experience” that online shoppers expect.

This means that 3PLs need to manage carriers, ensure that orders are fulfilled efficiently and at the lowest cost. This is no easy task. Let’s take a look at how multi carrier parcel shipping software can help 3PLs meet these demands, as well as save time and money.

BETTER RATES, MORE ROUTES AND DELIVERY OPTIONS

When a 3PL partners with a single carrier, this is usually to reduce costs via volume discounts. It is also easier to manage one relationship and remain compliant with that carrier’s standards. These are advantages, true, but having said that, not all carriers are the equal. They don’t all offer the same services, routes and delivery options.  

A transportation management system with multi carrier shipping offers more flexibility. A 3PL can switch between carriers and use the best service for each shipment. This could also include regional and local carriers that offer lower rates or better routes for certain shipments.

With a  multi carrier solution, a carrier has to win your business for every shipment. This results in lower rates allowing you to drive down transportation costs.

Furthermore, using a multi carrier solution, a 3PL can automate carrier selection. This automation uses a parcel’s characteristics, delivery destination, customer requests and the 3PL’s own business rules. As a result, there is no need to compare carriers and research rates — the solution does this automatically. The solution also generates shipping labels and all necessary documentation, for both domestic and international shipments.

shipment. This results in lower rates allowing you to drive down transportation costs.

Furthermore, using a multi carrier solution, a 3PL can automate carrier selection depending on a parcel’s characteristics, delivery destination, customer requests or the 3PL’s own business rules. As a result, there is no need to research rates for the best carrier and service for each parcel — the solution does this automatically.

MITIGATE SERVICE DISRUPTIONS

Moving goods around the world is a complicated business. As we have seen in recent weeks, carriers can change their service level offerings, as well as reduce or even cancel services to some geographies. Even under so-called normal business conditions, disruptions are a fact of life. Storms, mudslides, heavy snowfall and other weather events can make certain routes impassable, resulting in delays and missed delivery deadlines. 

A 3PL using a multi carrier strategy can mitigate these risks. Goods can be sent via different routes bypassing storms or other unavoidable delays.

MEET CUSTOMER DEMANDS

Logistics providers sending out large volumes of packages can generally negotiate favorable rates from parcel carriers. However, it is fair to say that the same is true for a number of their customers. As a result, it is not uncommon for a customer to favor a particular carrier.

Global manufacturers of retail goods, electronics and so forth, can get the lowest rates possible from parcel carriers. This is due to the huge amount of packages they ship. These customers expect their logistics partners to ship their goods using their carrier account to avail of the lower rates. 

A logistics provider that processes all parcel shipments with a single carrier cannot meet these requirements without a number of difficulties. A preferred carrier may penalize you with loss of favored shipper status along with higher rates.

Managing customer accounts manually — particularly for multiple customers — is very time consuming. Furthermore, the technology 3PLs use to manage freight orders is often not optimized for such a task. As a result, many logistics companies are forced to separately manage their own carrier accounts, and their customer carrier accounts. A 3PL using multi carrier shipping solution can manage all these accounts, for all modes of transportation, in one system.

FLEXIBLE RETURNS

Goods ordered online come back in far larger numbers than items bought in-store. On average, consumers return only one in ten items bought at a bricks-and-mortar shop. For online shopping, it is an average of three in ten, but as much as a quarter of all clothing purchases.

Unsurprisingly, many retailers and other industries want their 3PL partners to assist with returns and reverse shipping. 3PLs need to efficiently manage this process with parcel carriers to prevent items being lost or delayed in transit. In addition, logistics providers must ensure that goods come back at the lowest possible cost.

The high volumes of e-commerce returns creates a significant challenge for a 3PL that uses a single carrier. Some carriers are better than others at reverse shipping. Carriers that are proficient at both outbound shipping and returns may not offer the lowest rates. A multi carrier strategy allows 3PLs to get the best service and lowest costs for both outbound and reverse shipping.

A multi carrier strategy offers logistics providers better flexibility. This also enables a 3PL to reduce both risk and cost, plus meet the requirements of each customer and shipment. In addition, a 3PL can leverage better rates, faster routes and more service options wherever they ship.

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Further Reading

3 MINUTE EXPLAINER: MULTI CARRIER SHIPPING SOFTWARE AND 3PLS

WHY PEAK SEASON SHIPPERS NEED MULTI CARRIER SHIPPING SOFTWARE

SIX WAYS MULTI CARRIER SHIPPING LOWERS PARCEL DELIVERY COSTS