How does your business choose which carriers to ship with? The difference between carriers comes down to more than rates—also important is their level of service and reliability to deliver your products. There are various factors that influence whether you should utilize a particular carrier, and these factors make diversification important.
Shippers should strategically analyze their carrier coverage and develop a plan that can withstand market fluctuations, especially during tight capacity and peak season demand.
How many carriers do we need?
The right number of carriers for your business depends on your shipping volume and the service each carrier can provide. One guideline is to have a few carriers that you give most of your business. The rest of your business can go to other, lesser-used carriers already established in your network, as the situation calls for it.
The idea is not putting all your metaphorical eggs in one basket but most, which allows you to better systemize your workflows and benefit most from the one or two carriers that are the best fit. The rest is for diversification. In case something unexpected arises, you have many additional options.
How to narrow down your network of carriers
To decide which carriers to include in your network, evaluate your options in terms of cost, service, and reliability. Rates, including discounts and surcharges, are a big motivator behind choosing a carrier, but there are other important considerations. Can the carrier meet all your needs or are there areas of weakness in what they offer? Are they able to deliver reliably, where you can be confident in giving them most of your business because they are trustworthy and have the capacity? Do you have other options, like a regional carrier that can take your shorter haul deliveries?
As a shipper, you need options, and you want to avoid having too many carriers that aren’t a good fit, as well as too few carriers, limiting your shipping capabilities.
How to diversify your network of carriers
To have more options when capacity is tight, or during peak season, you may need to prepare and expand your network now for future needs. Diversifying helps protect your business from being caught in a tough situation if a carrier is unable to deliver.
Get rate quotes from a variety of carriers, including local carriers in your key shipping regions. Compare rates, including any surcharges and volume discounts, while taking into account the service they’re able to provide, and plan out to the full extent what it would look like to utilize a particular carrier.
If you have different shipping profiles, such as for different types of products, it will be necessary to maintain a wide network. Each profile should be diversified to adequately give options where they’re needed.
After the planning phase, establish working partnerships with your new carriers before you need them. The result of your planning should be an internal routing guide, showing your primary and backup carriers and when to use each.
Getting complete carrier coverage
By reassessing your carrier strategy, you can ensure you’re adequately covered to make the best decisions for your business even when different situations arise. Peak season can often throw curveballs, and having a list of reputable carriers in your network helps your business quickly adapt.
Find out what industry experts from UPS, PARCEL Industry, and Netstock have to say about carrier diversification, preparing for peak season, and more by accessing our on-demand Smart Shippers 2022 virtual roundtable recording here.