There’s no doubt about it: Using multiple carriers to send your company’s goods to your customers isn’t easy. It requires more management and attention. Further, it can reduce volume discounts and other efficiencies you may have come to rely on.
But working with FedEx and UPS, along with any regional carriers could also be good for your business. If part of your market is highly specialized, maybe you need a specialty carrier who is too. Or if many of your customers are concentrated in one location, maybe a regional carrier can offer more competitive pricing than national brands.
Neither strategy is right or wrong for every company. What matters is whether a single or multiple carriers make sense for you.
Understand Your Company’s Needs
Reveel preaches knowing your data above almost everything else. To understand how a company can reduce its shipping spend, its leaders must know what they ship, how much of it they ship, where it goes and how long it takes. Once that data has been organized into a shipping profile, leaders can begin to consider changes to their contracts.
First, how much volume does the business ship? Most of the major carriers have incorporated revenue-based discounts into their contracts — and set them up in such a way that, if shippers moved some of their business elsewhere, they would suffer huge losses in discounts.
Understanding how changes in revenue-based discounts would affect your business requires complex cost-benefit analyses. If your company-wide shipping spend climbs into the millions, it could be divided among multiple carriers and each account would still be big enough to command volume discounts. However, if you’re a specialty manufacturer with a relatively small account, splitting your business might cost you discounts.
Second, how specialized are your products? If you’re part of a niche industry supplying niche customers, there may be carriers whose specific mission is to serve you. This is most common in the transportation of perishable products, like pharmaceuticals and food.
Carriers in those spaces must compete not only against one another but against comparable services from national brands, meaning they may be willing to offer exceptions that national carriers are not. This is highly industry-specific, however, so consult with experts in shipping intelligence to understand whether your company might benefit from such a relationship.
Understand Your Customers’ Locations
Next, how well does your company know where parcels go? Local and regional carriers can be cost-effective alternatives to national companies, especially for companies that ship high volumes within dense metro areas or fulfill orders solely in one part of the country.
Understanding whether a regional carrier makes sense for you also starts with knowing your data: National carriers charge largely the same rates for shipments of comparable distance, but regional carriers might calculate pricing at the ZIP code or county level. When company leaders are able to map their parcel data with that level of detail, they can model how much they might benefit — or lose — in a shift to regional service.
Further, an understanding of the level of service smaller carriers can provide is critical. Part of what makes national carriers so effective is that they can leverage enormous networks to ensure packages arrive within two days. If a regional carrier can’t guarantee the level of service your customers demand, they could cost you customers — and revenue — in the long run.
Are You Ready to Manage Multiple Contracts?
Finally, consider: Are you ready to negotiate contracts and manage relationships with multiple carriers? While shifting some business to a carrier’s competitor might keep both companies on their toes, getting the best possible deal requires hours of research — not to mention ongoing examination of how well each carrier is serving your needs.
Companies that use multiple carriers have to sign contracts with each, likely including revenue commitments. These negotiations require careful research and preparation. Reveel’s consultants specialize in helping executives prepare for such negotiations, however, and we can help your team fully understand their options.
Managing relationships with multiple carriers is time-consuming, too. Many companies use carrier-supplied platforms to track their activity; those seeking multiple carriers have to seek out new third-party platforms. Multiple carriers also means auditing twice as many invoices and, possibly, twice as much time on the phone with customer service.
Plus, as multiple carriers increase rates and modify surcharges every year, evaluating how those changes will affect your company — including whether your current service mix still makes sense — becomes ever more complicated. Reveel’s reporting and analytics tools can help companies stay on top of those relationships.
Some businesses benefit from contracts with multiple carriers. For many others, sticking with one national brand is easier and more efficient. Finding out which is right for you starts with putting your shipping data to work to see how much you could save.