The Real Cost of a Single-carrier Strategy

In the fast-paced world of logistics, every penny spent on supply chain management counts – and nowhere is this more evident than in the decision to commit to an exclusive carrier strategy. Shippers, manufacturers, distributors, and retailers often believe that a single-carrier setup provides stability and predictability, but the reality is far more complex. By embracing this short-sighted approach, businesses restrict their choices and expose themselves to a premium that could reach as high as 30% of their shipping expenses. 

In this in-depth exploration, we’ll uncover the hidden costs of exclusivity in carrier partnerships and illustrate why diversifying your carrier base is crucial for not just cost-efficiency, but also customer satisfaction and supply chain resilience. 

The Downside of a Single-Carrier Approach 

For many businesses, sticking with one carrier might seem like a simple, hassle-free option. After all, it involves less administrative work, and it could potentially lead to stronger relationships with the chosen carrier. However, this strategy is not without its drawbacks. 

Limited Selection, Reduced Leverage 

By sourcing all shipping from a single carrier, companies inadvertently give up the power that comes with choice. Access to a variety of carriers means more negotiating power and the ability to leverage different service offerings and competitive rates. It’s akin to grocery shopping at only one store when you’re not tied to a single supplier, you have the freedom to shop around for the best value. 

Surcharge Sticker Shock 

National carriers typically impose surcharges during peak seasons or for specialized services, and these surcharges can quickly add up. However, these additional costs are not universal; for instance, some regional carriers may not pass these expenses on to their clients, providing a cost-effective and transparent shipping solution more in line with peak demand times. 

Flexibility on the Line 

A single-carrier strategy severely curtails shipping flexibility. With only one carrier, businesses are often limited in their ability to ship from all origin points, choose optimal delivery times, or switch to alternate routes when necessary. In an environment where customer expectations are continually evolving, this lack of flexibility can place a strain on service levels and brand reputation.  

Scope of Service Limitations  

Certain customers may expressly require delivery through specific carriers due to their existing infrastructure or service agreements. This constraint can lead to missed opportunities and potential conflicts with clients, underscoring the importance of maintaining diverse carrier partnerships to meet varying customer needs. 

Why You Should Diversify Your Carrier Base 

The advantages of a multi-carrier approach are not just theoretical – they translate into tangible benefits that have a direct impact on the bottom line.  

Weathering Supply Chain Disruptions 

In supply chain, disruptions are not a matter of ‘if’ but ‘when.’ When you rely on a single-carrier your vulnerability is heightened to logistical disruptions. Should the chosen carrier face operational challenges, such as strikes, weather-related delays, or systemic failures, the entire supply chain can be put at risk. Diversifying carriers can mitigate these risks, ensuring that any single point of failure doesn’t bring operations to a halt. A diversified approach mitigates the risk of these disruptions, allowing for quick pivots and ensuring the smooth continuity of operations, even in the face of unexpected events.  

Lowering the Cost of Transportation 

One of the most significant drivers of change in carrier selection is cost. By utilizing multiple carriers, businesses can select the most cost-effective option for each shipment, ultimately reducing their overall transportation spend.  

Meeting Evolving Customer Expectations 

Customers today expect a variety of shipping options, from the speed of delivery to the supplier. A multi-carrier approach provides the agility needed to meet these diverse demands and ensures that businesses do not fall behind in the race for customer satisfaction. 

The Path to Smarter Carrier Selection 

Choosing and managing multiple carriers may seem daunting, but with the right strategies and tools, the process can be streamlined and simplified.  

Utilizing Modern Multi-Carrier Shipping Software  

Multi-carrier shipping software can save time and money by automating the carrier selection process. These solutions, driven by intelligent planning and analysis, ensure that the best carrier is selected for each shipment, based on factors such as cost, service level, and historical data. 

Negotiating Smart Carrier Agreements  

When you diversify your carrier network, negotiating smart agreements becomes more critical. Focus on consolidating your overall freight spend instead of carrier-specific volume commitments to secure more favorable terms. 

Incorporate a 3PL into your carrier network  

Incorporating a third-party logistics provider (3PL) into your carrier network expands your carrier options and lowers costs. Shippers that partner with the right 3PL to leverage their pricing power to significantly reduce freight costs and their established carrier relationships to offer new customer services. 

Success with Multi-Carrier Strategies 

Case Study: ursource leverages 3G’s Carrier Network to optimize shipping and save $200,000 per year 

The ursource team embraced the multi-carrier strategy and implemented 3G to meet the needs of their growing business and customer expectations, which resulted in the following: 

• Reduced shipping costs by $200,000 per year 
• Use of regional parcel for a better choice of services and rates 
• Combined LTL/freight with parcel zone skipping to optimize end-to-end shipping costs 

Read the ursource story here to learn more. 

Conclusion: The Multi-Carrier Advantage 

The multi-carrier approach is not just a band-aid for the wounds caused by an overreliance on a single carrier; it’s a strategic move towards building a more adaptive, cost-efficient, and customer-centric operation.  

In the complex ecosystem of supply chain management, the ability to pivot and adapt quickly can be the difference between profit and loss. It’s time for shippers, manufacturers, distributors, and retailers to reassess their carrier strategy and unlock a world of cost savings and operational agility. By transitioning to a multi-carrier approach, businesses not only lower costs but also position themselves as leaders in a market that values versatility and resilience.  

For those who are committed to crafting a supply chain that stands out for its efficiency and customer-centricity, the path is clear – and it’s paved with the benefits of a multi-carrier approach.