Explore how to evaluate carrier risks for national, regional, postal, final mile, and same day carriers, and how to use shipping software to mitigate them
After the chaos of the pandemic, every shipper knows that selecting the right carriers is a critical decision. It's a decision that can make or break the efficiency and cost-effectiveness of your supply chain. Recent studies indicate that shipping cost is nearly 3x more important than speed in consumers’ e-commerce delivery decisions.
To enhance cost-effectiveness, brands should find ways to optimize their operations for slower delivery speeds. Many enterprise shippers struggle to balance this choice between speed and cost-effectiveness when it comes to carrier selection, and as customer shipping expectations evolve, those who cannot will fall out of favor with customers.
The performance of carriers can significantly impact the efficiency and cost-effectiveness of your operations. Brands first must research and make informed choices to assess carrier risks based on the factors most crucial to their shipping profile. This article will explore several risk factors and apply them to different carrier types. Finally, it will divulge how automated decision-making within supply chain technology, like multi-carrier shipping software (MCSS), can help mitigate these risks, ensuring smooth and efficient supply chain operations.
8 Carrier Risks to Evaluate
Before looking at specific carrier types, it’s key to uncover the risk factors that play a role in carrier selection. The key factors that will be included are:
- Flexibility: The carrier's ability to adapt to changing circumstances and demands.
- Technology: The level of technological integration and innovation in their operations.
- Capacity: Their capacity to handle shipping volume, especially during peak times.
- Coverage: The extent of service network and geographic coverage.
- Customer Experience: How well and often they meet delivery promises and address customer expectations.
- Cost Model: Pricing structure and its alignment with budget.
- Weight: Consideration of dimensional weight (DIM) and its impact on costs.
- Tenure: The carrier's experience and reputation within the industry.
While this list is not exhaustive, it covers most of the risks that affect enterprise shippers in the retail, manufacturing, healthcare, and third-party logistics industries.
Evaluating Carrier Types
Now that the risk factors have been identified, a selection of common carrier types can be assessed based on these criteria. Here, as well, not all risks will be applied to each carrier type. Shippers need to consider their unique business needs and complete an in-depth analysis and assessment.
To help you visualize this assessment, we've used radar or spider charts. These charts use values ranging from 0 to 7, where 0 indicates that this carrier type does not possess this characteristic, and 7 signifies a high correlation to the characteristic. An ideal carrier would have a score of 7 in every factor. In these charts, a higher number is better, indicating a carrier's effectiveness in managing that particular risk factor.
We’ve also enlisted the expertise of industry veterans, Nate Skiver (Founder at LPF Spend Management) and Justin Cramer (ProShip Co-Founder) to provide their insights into how these risk factors stack up across different carriers. Review the carrier charts below to see a high-level assessment of the risk factors.
National carriers are well-known for their extensive coverage, capacity, and tenure meaning they can handle large volumes of shipments. While they provide a wide range of service options, this doesn’t ensure flexibility and many shippers are left with strict contracts, pull times, and cost models, which can potentially lead to higher expenses. Examples of national carriers include UPS and FedEx [Learn more about this year’s GRIs and surcharges].
Regional carriers offer local expertise, which can be highly beneficial for businesses with specific regional needs. Their flexibility can be a key strength, as they meet local demands. However, while they excel within their region, they struggle to provide nationwide coverage and lack the tenure of well-established carriers.
Capacity can likely be an issue during times of high volume, i.e., peak season. Careful consideration and evaluation are necessary when utilizing regional carriers within your shipping strategy. Examples of national carriers include OnTrac, LSO, and Better Trucks.
These carriers are ideal for lightweight shipments and last-mile delivery, making them an important part of the supply chain for high-volume shippers. They often rely on established and fine-tuned postal networks, ensuring ample cost-effective deliveries. While they score well in capacity and coverage, their flexibility might be limited as well as different weight options, as they typically offer standard services with less room for customization. Examples of lightweight/postal carriers include the USPS, Pitney Bowes, and DHL.
Final Mile Carriers
Final mile carriers play a pivotal role in delivering a positive customer experience. Their flexibility and customer-focused approach are the cornerstones of their business, ensuring that packages reach their destination quickly and accurately. However, they can be more expensive than other carrier types, lack the tenure of established well-known carriers, and cannot always meet the needs of shippers with large shipments, requiring more time spent managing them to control expenses. Examples of Final Mile carriers include TForce Logistics, AxleHire, and Roadie (note some of these also fall under Asset Light/Platforms).
Platforms connecting shippers with a network of carriers offer flexibility and the technology to enable a wide range of carrier and service options. They can be especially beneficial for businesses needing diverse shipping solutions because of a broad and varying customer base.
However, coverage can vary among platforms, and many are new entrants to the carrier market. Shippers must conduct a thorough evaluation of options to ensure they align with your specific needs and service expectations. Examples of Asset Light/Platform carriers include Veho, Pandion, and Maergo (note some of these also fall under Final Mile carriers).
Same Day Carriers
Same day carriers are well known for their speed and customer satisfaction, which makes them ideal for urgent or critical shipments. However, many have limited coverage and capacity [rural vs. urban areas]. Additionally, their services may not be cost-effective, whether that is standard time shipments or oversize and bulky shipments. Examples of Same Day carriers include Point Pickup and DoorDash.
Utilizing a variety of carrier types with your shipping strategy can help meet diverse and increasing customer demands. By carefully evaluating the strengths and weaknesses of each carrier type and considering how they will match with your needs, businesses are on their to making informed decisions that balance cost-effectiveness and service quality. The final step in this process is leveraging a supply chain technology solution that can automate the carrier selection process and execute shipments quickly and accurately.
Leveraging Multi-Carrier Shipping Software
Multi-carrier shipping software is a powerful tool for mitigating carrier risks. It empowers businesses to not only mitigate those carrier-related risks, but also offers several benefits that contribute to a more adaptable, cost-effective, and customer-focused supply chain operation.
Seamless Carrier Integration
Multi-carrier shipping software seamlessly integrates a broad library of carriers into your operations. It simplifies the often-complex task of managing different carriers by providing a unified platform to handle all shipping needs. This integration ensures a smoother workflow and minimizes the risk of disruptions caused by carrier-related issues. [Learn more about access to a variety of carriers in ProShip’s extensive carrier library.]
MCSS empowers brands to make informed carrier choices by leveraging real-time data. This not only ensures optimized carrier selection, but through business intelligence solutions, can collect and assemble this data into actionable insights.
Based on this real-time carrier and shipment information, shippers can make strategic decisions rooted in data insights. This data-driven approach reduces the risk of carrier performance issues and empowers brands to quickly and effectively make changes to optimize transportation spend. [Explore how Business Intelligence solutions can up your shipping game.]
Optimized Cost-Effective Carrier Selection
MCSS streamlines the carrier and service selection process through rate shopping. It considers factors such as cost, service levels, and delivery options to compare rates from different carriers and services. [It’s worth noting that advanced MCSS solutions can consider factors like trailer pull times, contracted dates, label creation time, and customer choice.]
By thoroughly evaluating these variables, it ensures the selection of the most cost-effective and time-efficient carrier for each shipment. This leads to significant cost savings on your bottom line by reducing unnecessary expenses. [Discover the three types of rate shopping and what they are best suited for.]
Enhanced Customer Experience
Ensuring on-time delivery and meeting delivery promises is not just a box to check in your supply chain; it's a critical element of a positive customer experience (CX). MCSS provides precise delivery time estimates and enables brands to consistently meet customer expectations. This leads to significantly higher customer satisfaction, increased loyalty, and reduced risks related to customer returns. Additionally, robust customer support is integral to this equation, offering assistance and reassurance at every step of the shipping process. [To dive deeper into enhancing your CX through optimized shipping solutions, check out How Shipping Software Cultivates a Positive Customer Experience.]
Efficient Shipping Process
MCSS seamlessly integrates into your Enterprise Software Stack, enhancing your operations – especially if you utilize innovative omnichannel fulfillment strategies [a requirement in today’s e-commerce world]. By streamlining shipping processes, MCSS automates manual tasks, reduces errors, and optimizes routing, ensuring faster order fulfillment and significantly reducing operational risks. These efficiency gains contribute to substantial cost savings and a smoother, more integrated supply chain operation. [Read the Parcel Pro’s Guide to Omnichannel Fulfillment to see how the right MCSS brings inventory closer to customers and improves the overall CX.]
All shippers know that carrier selection is a strategic decision. Understanding carrier risks and leveraging carrier-agnostic parcel shipping software can significantly impact the efficiency and cost-effectiveness of your operations. By evaluating carriers based on factors like flexibility, technology, capacity, coverage, customer experience, cost model, weight, and tenure, you can make informed choices that not only enhance your supply chain, but help you better understand your business. Investing in the right technology to navigate these risks successfully will streamline the flow of your operations and boost your competitive advantage.
The Parcel Experts at ProShip
Contact the shipping experts ProShip to learn more about making informed carrier choices to optimize your shipping operations. One key differentiator for ProShip is that we stay carrier-agnostic, meaning we want you to find the best carrier for your business, not one that lines our pockets. With a tenured team who have both the knowledge and relationships to facilitate strong carrier partnerships, ProShip’s broad carrier library is just a bonus. Discover how industry-leading multi-carrier shipping software from ProShip can transform your supply chain today!