In the evolving world of logistics and e-commerce, companies are continually exploring ways to optimize their shipping strategies. One approach that has gained popularity is the use of multicarrier parcel solutions, where businesses leverage multiple shipping carriers to meet their various logistical needs. While this strategy promises flexibility and potential cost savings, it can come with significant drawbacks that can outweigh the benefits.
When considering using a multicarrier parcel solution, it's essential for each company to weigh the benefits against the potential drawbacks. The complexity, increased operational overhead, and possible cost implications need to be carefully considered. For businesses with specific needs that align with the advantages of a multicarrier strategy, implementing such a solution can provide significant benefits in terms of cost optimization, flexibility, and risk mitigation. However, for many businesses, the services offered by one carrier may already meet their needs, making a single-carrier approach more efficient and cost-effective. This article delves into the reasons why relying on a multicarrier parcel solution may not be the best choice and how a single global, national, or regional parcel carrier can offer all the necessary services effectively.
Dilution of Volume Discounts
Shipping carriers typically offer volume discounts to businesses that commit to a certain level of gross spend. By spreading shipments across multiple carriers, companies may miss out on these discounts, resulting in higher overall shipping costs. As volume increases, so does the opportunity for more significant discounts from a single carrier. If these shipments are distributed among multiple carriers, the business may not meet the volume threshold for discounts with any one carrier, leading to higher shipping expenses.
Complexity and Integration Challenges
One of the primary disadvantages of a multicarrier parcel solution is the potential complexity involved in integrating multiple carriers into a cohesive system. Each carrier operates with its own set of APIs, software, and operational procedures, leading to significant integration challenges. The complexity can result in increased IT costs, extended implementation timelines, and potential disruptions to the supply chain. For example, an e-commerce company attempting to integrate services from UPS, FedEx, DHL, USPS, and/or regional carriers might face months of development work to ensure seamless operation. Each carrier requires different data formats, label printing processes, and tracking systems, which can complicate the integration and lead to frequent technical issues.
Increased Operational Overhead
Managing multiple carriers entails dealing with different billing systems, customer service departments, and performance metrics. This adds administrative overhead, as businesses need to reconcile invoices from various carriers, handle multiple points of contact for support, and monitor performance across different service providers. A company using a multicarrier solution may find itself overwhelmed with the task of reconciling shipping invoices from various carriers, each with different billing cycles and formats. This increased workload can lead to errors, inefficiencies, and higher administrative costs.
Inconsistent Service Levels
Different carriers offer varying service levels, delivery times, and reliability. Using multiple carriers can lead to inconsistent delivery experiences for customers, resulting in a negative impact to customer satisfaction and brand reputation. If a shipper uses multiple carriers, some deliveries might be delayed due to the variability in service levels among the carriers. This inconsistency can lead to dissatisfied customers and negative reviews, damaging a company’s reputation.
Why a Single Global Carrier Can Suffice
UPS and FedEx, and, in some instances, DHL and the USPS, have established themselves as industry leaders, offering comprehensive services that can meet the needs of most businesses. Here’s why relying on a single global carrier can often be more efficient and beneficial:
1. Comprehensive Service Offerings: UPS and FedEx provide the greatest range of services, as well as specialized shipping, logistics solutions, and value-added options. This includes a variety of reliable and cost-effective ground shipping solutions, including lower-cost hybrid services that may include utilizing the USPS for final delivery. There are also a variety of faster express delivery options for more time-sensitive shipments, same-day for immediate delivery, and various international options to most countries worldwide. There is a premium cost associated with this convenience, which should be weighed when considering all factors.
2. Advanced Technology and Tracking: These carriers invest heavily in technology to provide advanced tracking and real-time visibility into shipments. This technology allows businesses to monitor their shipments closely and provide accurate delivery information to their customers. A business can integrate these solutions into their systems, providing customers with real-time updates on their orders and enhancing the overall customer experience.
3. Consistent Customer Support: The major carriers have robust customer support teams that can assist with a wide range of issues, from tracking inquiries to resolving delivery problems. This level of support is often more consistent to what multiple carriers can provide and ensures minimal disruption to the business while maintaining customer satisfaction.
4. Global Reach and Reliability UPS and FedEx have extensive domestic and international networks, ensuring reliable delivery services worldwide. Their established infrastructure and partnerships allow for more efficient shipping, making them ideal for businesses with global operations. By offering reliable domestic and international service offerings, shippers can avoid the complexities of dealing with multiple carriers.
5. Customizable Solutions UPS, FedEx, and DHL offer customizable solutions tailored to specific business needs. Whether it’s customized delivery options, flexible pick-up and drop-off points, or specialized handling requirements, these carriers provide the flexibility that businesses often prefer.
Why a Single Regional Carrier Can Suffice
While national and international carriers offer extensive networks and comprehensive services, regional parcel carriers present unique advantages that make them an attractive option for many shippers. The cost savings, faster delivery times, personalized customer service, flexibility, reduced shipping zones, local market knowledge, and environmental benefits all contribute to the value of using regional carriers.
For businesses that primarily ship within a specific geographic area, regional parcel carriers can provide significant benefits that enhance efficiency, reduce costs, and improve customer satisfaction. By leveraging the strengths of regional carriers, companies can optimize their shipping strategies and gain a competitive edge in the market. As the logistics landscape continues to evolve, the role of regional parcel carriers continues to grow, offering shippers a viable and often superior alternative to traditional national carriers.
Multicarrier Isn’t Always the Best
While multicarrier parcel solutions offer flexibility, the associated complexities, increased operational overhead, and potential cost implications can make them less appealing. The major carriers provide comprehensive service offerings, advanced technology, strong customer support, global reach, and customizable solutions that can meet the needs of most businesses. By focusing on a single carrier, businesses can streamline their operations, reduce costs, and provide a consistent and reliable delivery experience for their customers.
Thomas Andersen is Partner/EVP of Supply Chain Services for LJM Group.
This article originally appeared in the September/October, 2024 issue of PARCEL.
