Diversify or Risk It All: The Case for Multi-Carrier Strategies in Parcel and Freight Shipping
Unlock the unmatched benefits of going multi-carrier in the modern logistics landscape
There was a time when business seemed more stable and predictable. Shipping operations followed a straightforward path, with many companies comfortably relying on a single carrier to handle all their parcel and freight needs. This strategy offered simplicity, cost predictability, and a certain level of assurance that deliveries would be made on time.
However, these times are far gone. The effects of a global pandemic and the rise of e-commerce have dramatically shifted the logistics landscape. What was once a steady and anticipated aspect of business has now become a complex, fast-paced environment where customer expectations continue to grow.
The significance of online shopping has placed unprecedented pressure on carriers. From $15.4 billion in 2019, U.S. parcel volumes grew to $21.7 billion in 2023 and is predicted to only increase moving forward. As order volumes have continued to reach and surpass record-breaking numbers, finding carriers with the capacity to take them all during peak seasons has become more difficult. Because of this shift, many businesses are seeing the single-carrier model is increasingly becoming a liability rather than a strength in modern commerce.
The Pitfalls of a Single-Carrier Strategy in Today’s Market
In a technologically advanced and rapidly evolving supply chain world, a single-carrier strategy, once considered the gold standard for simplicity and reliability, now presents challenges that can hinder a business’s growth and adaptability, including:
Limited Flexibility: As e-commerce continues to expand, the complexity of shipping needs grows in tandem. Having one carrier limits your ability to handle shifting circumstances, from varying parcel sizes or different freight requirements to an influx of order volume or consumer demands for faster delivery. A single-carrier strategy often forces businesses into a one-size-fits-all situation, which can be costly and inefficient.
Increased Vulnerability to Disruptions: There is industry volatility and the threat of disruption constantly looming over the modern shipping landscape. Capacity constraints, labor shortages and strikes, cybersecurity risks, destructive weather, or unexpected surges in demand can all occur at any moment. Relying on a single carrier puts your shipping operation at risk if something affects it. Shipping delays, missed deliveries, or even temporary service suspensions can lead to unhappy customers, lost sales, and a damaged brand reputation. [Discover how shipping software helps to master market volatility].
Reduced Scalability: A single-carrier approach may work for smaller operations, but as your business grows, your shipping needs will inevitably become more complex. Whether you’re increasing order volumes, expanding into new markets, or adding more product lines, relying on one carrier can quickly become a bottleneck, affecting your ability to efficiently scale and remain profitable.
In an environment where agility and adaptability are key to success, the pitfalls of a single-carrier strategy are too significant to ignore. To remain competitive and resilient, businesses need to consider the benefits of a diversified carrier mix that offers the flexibility, cost control, and scalability necessary to thrive in today’s market.
Addressing Your Concerns
Transitioning to a multi-carrier shipping strategy can seem daunting, especially when you’ve relied on a single carrier for years. However, the benefits of shifting carrier strategies outweigh the challenges, and many common concerns can be addressed with precise planning and utilizing the right tools. Before we dive into some of the broader benefits, let’s address the biggest objection to going multi-carrier: losing your negotiated discounts.
A major concern of going multi-carrier is the risk of losing the discounts that come with a single-carrier relationship. While most shippers may initially believe they’ve negotiated the lowest rates possible with a single carrier, the reality is often different. Many shippers believe that spreading their volume across several carriers will reduce their bargaining power and increase shipping costs. However, this is false.
A single-carrier strategy often limits your ability to negotiate competitive rates. Without the ability to rate shop across multiple carriers, you may find yourself locked into higher shipping fees, particularly during peak seasons when surcharges and capacity limits come into play. Without pricing flexibility, your profit margins can take a significant hit, making maintaining cost-effective operations a challenge.
It is true that some carrier discounts are dependent on volume, however, this doesn’t mean you’ll automatically completely lose out by diversifying. Not only does working with multiple carriers give you access to a wider range of services, but it also strengthens your negotiating position. When you go multi-carrier, you can still negotiate as many carriers are more likely to offer competitive rates, discounts, and flexible terms when they know they aren’t your only option. Maintaining relationships with multiple carriers gives you the power to negotiate more competitive deals, secure better contract terms, and ultimately gain greater control over your shipping strategy.
Top-tier multi-carrier shipping solutions offer advanced rate shopping functionality that enables shippers to compare rates from multiple parcel and LTL carriers simultaneously. This automated process allows businesses to select the most cost-effective and best-fit carrier for each shipment based on pre-defined criteria such as transit time, rates, and specific shipping needs. By leveraging this tool, shippers can significantly reduce transportation costs, offset any potential differences in carrier discounts, and ensure they receive the best value for their money. Additionally, integrating regional carriers for specific routes or shipment types further optimizes costs and helps avoid the hefty surcharges often imposed by national carriers, ultimately enhancing ROI.
The Benefits of a Diversified Carrier Mix for Both Parcel and Less-than-Truckload (LTL) Shipping
For both parcel and less-than-truckload (LTL) shippers, diversifying your carrier mix produces several advantages that can help your business enhance operations and remain competitive in a rapidly evolving industry.
Enhanced Flexibility and Scalability: One of the most important benefits of broadening your carrier mix is the increased flexibility it provides. Having a variety of carriers to choose from helps your business better fix a wide range of different needs. From handling smaller parcels for e-commerce orders to managing larger freight shipments, you can have the options to select the best carrier to fit each individual situation. Leveraging this flexibility is especially valuable during peak seasons or when unexpected events occur because you aren’t tied to a single carrier that can leave you stuck. Instead, you have other options that will help your business effectively adjust accordingly.
Improved Delivery Performance: The modern consumer expects faster and more affordable shipping options, especially with the rise in the availability of overnight and 1-day delivery options. As customer satisfaction is closely tied to delivery performance, a diversified carrier strategy can significantly improve your ability to meet customer expectations. Different carriers can offer a variety of services, from faster delivery times to service to certain regions. By reviewing your shipper profile and then partnering with those carrier services, shipper can use technology to select the most suitable carrier for each shipment, improving delivery accuracy, reducing transit times, and offering customers a wider range of shipping options.
Streamlined Operations Through Technology: Introducing additional carriers in your carrier portfolio may seem like it will complicate things. However, with the right multi-carrier shipping software (MCSS), you can integrate both parcel and LTL carriers seamlessly onto a single platform, leaving shipping operation complexities behind and allowing you to manage all your shipments in one centralized location. Advanced MCSS solutions automate processes such as label printing, rate shopping, and tracking, turning tedious shipping tasks into a breeze and making it simple to choose the best fit carrier for each shipment without additional steps in your workflow. By leveraging technology, you can take advantage of the benefits of going multi-carrier without putting efficiency at risk.
Strategies for Implementing a Multi-Carrier Approach
Implementing a multi-carrier shipping strategy requires careful planning but can result in substantial benefits when it comes to cost savings, flexibility, and customer satisfaction. Here are some important steps to take for this process:
- Assess Your Current Shipping Needs: Take a step back and evaluate your current shipping needs including factors like volume, the regions you serve, and your peak seasons. Getting a good idea of these variables will help your business choose the best fit carriers for your needs.
- Identify the Right Carrier Mix: Do some research on different carriers such as national, regional, and specialized carriers to get a good understanding of their different offerings. Choosing carriers that complement each other can help you optimize costs, improve delivery times, and enhance overall efficiency.
- Leverage Multi-Carrier Shipping Software: Implementing the right MCSS can significantly simplify the process of utilizing multiple carriers from a single platform. When selecting a multi-carrier shipping solution, you want to look for advanced features such as automated rate shopping for both parcel and LTL, seamless integration, real-time tracking, and scalability. These capabilities will streamline your operations and set your business up for long-term success.
Varsity Logistics: Your Top Choice for Multi-Carrier Shipping Solutions
Varsity Logistics, the leading provider of native multi-carrier parcel and freight shipping software for the IBM i (AS/400) Power Systems, offers a comprehensive software suite of advanced tools designed to simplify and optimize shipping operations. Whether you’re managing parcel or freight shipments, our software provides the flexibility and control you need to navigate the complexities of modern logistics.
Varsity’s solution is the only plug-and-play MCSS designed for the IBM i (AS/400) Power Systems. It integrates seamlessly with all the major IBM i enterprise resource planning (ERP) and warehouse management systems (WMS), as well as your existing home-grown or customized-in-house systems. This capability allows for a seamless transition to a multi-carrier shipping strategy. Varsity also proudly holds strong relationships and software integrations with leading carriers in North America, making them easily available to add to your carrier portfolio.
Within our complete multi-carrier shipping software suite, Varsity offers several advanced ShipSoft-Parcel and ShipSoft-Freight modules, providing benefits that make us stand out as a premier shipping solution, including:
- Automated Rate Shopping: Varsity’s MCSS allows shippers to compare rates across carriers based on criteria such as transit time, cost, mode, and carrier preference, allowing shippers to choose the optimal carrier every time while meeting routing guide and business requirements. [Uncover how shippers avoid manual carrier selection].
- Flexibility: Varsity allows shippers to manage their operations autonomously without being tied to the constraints of a single carrier and their terms. It also enables workflow customization and the ability to switch carriers effortlessly, ensuring shippers have reliable options available at any given time.
- Real-Time Communication: Varsity’s solution provides real-time access to delivery status and tracking online, providing end-to-end visibility and up-to-the-minute order status. This ability lowers the risk of late deliveries, streamlines communication, and boosts customer satisfaction. [Explore the era of modern shipping transparency].
- Scalability: Varsity is designed to scale quickly to meet increasing demand, whether expected or not. This enables shippers to handle fluctuating volumes with ease, ensuring that operations continue to run effectively and remain profitable.
Diversifying your carrier mix is a powerful way to enhance your shipping operations, reduce costs, improve delivery performance, and take your business to the next level. Are you ready to go multi-carrier? Reach out to our team of Varsity Logistics shipping experts or schedule a pressure-free demo to explore the next steps in going multi-carrier for long-term success.