There’s a lot of buzz around multi-carrier parcel shipping and how it helps overcome current industry challenges. Many organizations, however, resist onboarding additional carriers, fearing they’ll lose their current discounts.
If you haven’t implemented multi-carrier shipping yet, you may be asking a few questions:
- What carriers should I evaluate?
- How do I know if I’m getting a good deal with these carriers?
- When should I start negotiating?
- How do I ensure our primary carrier discounts stay intact?
Great questions! Let’s dig deeper.
What Carriers Should I Evaluate?
A deep dive into your shipping program data to identify what you’re doing well and what you aren’t is the starting point of your evaluation.
These data segments often lead to an aha moment:
- Low performing regions or markets
- Average time in transit for a particular service
- Excessive cost due to package size or weight
- Carriers with higher accessorial charges
Isolate data segments of high cost and low performance, then evaluate carriers with a solution to solve your challenge.
How Do I Know If I’m Getting a Good Deal with These Carriers?
Modeling outcomes to future scenarios through comparing carrier proposals helps identify the long-term impact of your decisions before they’re made.
A carrier proposal model analyzes every relevant variable of your current shipping program and compares it to each carrier’s proposal, showing risks and opportunities. For example:
- Can a carrier reduce time in transit for deliveries without increasing costs?
- How will discounts shift across services as my volume grows?
- Which carrier is the most cost-effective for big & bulky shipments?
Let the data tell the story, and more importantly, decide the proper course of action to optimize your parcel shipping program.
When Should I Start Negotiating?
Yesterday. Carriers are marking earlier new-customer cutoff dates due to market volatility. The sooner you create a diversified mix of carriers, the better you'll execute balancing capacity among them, leading to shipping operations primed for volume spikes and peak season.
Understanding what you offer the carrier and how the carrier performs for you is crucial before negotiating. For instance, a high-volume, heavy goods shipper is likely more attractive to a carrier excelling in ground deliveries. Understanding how profitable you are to the carrier and their areas of low performance will lead to striking a mutually beneficial agreement.
Budget for multi-carrier shipping software prior to carrier evaluation & negotiation. Often, companies struggle to compete on shipping in Q4 when they’ve standardized on a single carrier and don’t have relationships or technology in place to support a diversified strategy.
How Do I Ensure Our Primary Carrier Discounts Stay Intact?
Create and automate shipping rule sets distributing the right percentage of volume to your primary carriers to ensure you won’t fall below your revenue band commitment and risk falling into a lower discount tier.
Then create other automated shipping rules to divert excess volume to your non-primary carriers once your primary commitments are hit. For example, “Ship everything through my primary carrier until I hit my revenue band, then…
- Rate shop to select the carrier with the lowest rate
- Review each carrier’s time in transit, and select the carrier with the shortest time
- Review DIM fees and other accessorials, and select the lowest overall cost
The key to a successful multi-carrier parcel shipping strategy is flexibility. Shippers that have technology in place that enables them to pivot quickly when unexpected market shifts occur will have the upper hand long term.
Coby Nilsson is the CEO & Co-Founder of Enveyo, a shipping optimization software provider that is revolutionizing the way technology drives logistics. As the only multi-carrier parcel TMS provider enabling end-to-end parcel shipping visibility, organizations are optimizing their shipping operations with Enveyo's cloud-based suite of solutions. Enveyo Insights, Modeling, Cloudroute, Alerting, and Audit solutions leverage enterprise-level technology and big data experience to empower organizations to make business-transforming shipping decisions. Powered by a robust data management platform, Enveyo provides real-time access to meaningful reporting to increase efficiencies for customers across industries including retail, medical, aerospace, fulfillment & 3PL companies. Learn more at enveyo.com.