The Importance of Carrier Diversification Ahead of Peak Shipping Season
by Jarrett Streebin
As we look ahead to the fall season, e-commerce businesses are scrambling to prepare for peak shipping season. Last year’s e-commerce orders in December alone saw a 19.3% increase with 22.3 million orders, so it’s no wonder that companies are preparing earlier and earlier each year to keep up with rising demand.
Perhaps one of the most impactful shipping strategies this year is carrier diversification, and companies of all sizes can benefit.
What is carrier diversification?
Any e-commerce company needs to carefully select carriers to transport their orders from Point A to Point B. The carrier selection process revolves around collecting product and customer information while factoring in the budget to ultimately facilitate an enjoyable shopping experience for customers.
But, putting all of your eggs in one basket rarely ends well. The same holds for companies solely relying on the same 2-3 carriers to ship their abundance of packages.
The list of carriers is expansive on the regional, national, and international levels. With shipping giants, some e-commerce companies are hesitant to utilize other carriers even if it means better rates, faster shipments, and an improved experience for their customers. However, as more businesses rely on the same carriers, it puts even additional stress and volume on these carriers, significantly reducing their efficiency and reliability ahead of peak season.
As market conditions are still reverting to regular delivery windows in the wake of the pandemic, this year’s peak shipping season preparation is more important than ever.
Common misconceptions about carrier diversification
Unfortunately, small businesses to Fortune 500 companies shy away from utilizing a diverse carrier mix for reasons that aren’t true.
Are regional carriers untrustworthy?
This is one of the most common misconceptions surrounding carrier diversification. The thought is that larger carriers are recognizable and ship larger volumes because their services are reliable and consistent.
While these are undoubtedly great options for your packages, these companies are under intense pressure to keep up with widespread demand. The larger the volume, the larger the room for error.
Regional carriers can only service a set territory, resulting in smaller package density and less room for error. These smaller carriers have the time and resources to focus on sorting and sending shipments faster and with fewer delays.
You may feel apprehensive about switching to a smaller carrier, but a 2020 Parcel Media survey reflects that 25% of respondents noted that the high quality of service was the No. 1 reason for using regional carriers. This number was up from 5.4% in 2019.
Do fewer carriers mean better deals?
Another common train of thought is that companies will get better deals by using a limited number of carriers. In reality, offering a major carrier a higher shipment volume can be a risk as these carriers are maxing out their demand with many of their customers. This holds especially true during August-January, the peak shipping season months.
When a carrier is over capacity, it will be that much more expensive to get your shipments out on time. Exploring other carrier options can give you access to better deals and more on-time deliveries.
The benefits of carrier diversification
Diversifying your carrier mix ahead of peak season isn’t only recommended, but it’s also crucial to a successful shipping strategy. Any delays in shipments mean missed opportunities and lost sales. One poor delivery experience and your customers will swiftly shift their focus to your competitors.
Faster, less expensive deliveries
Regional carriers are specialized to make deliveries in smaller areas, allowing them to fulfill orders that much faster. Remote delivery areas are no problem for regional carriers and there is less risk of delivery exceptions because there are fewer handoffs in the process.
Zone skipping is another tactic utilized to increase shipping speed; this process doesn’t deliver shipments straight to the carrier but instead consolidates packages based on region. This allows for larger yet fewer shipments into the destination region. Regional carriers also have core competencies in their regions, allowing for white-glove carriers to operate at increased efficiency.
More personalized attention
If you need to get in touch with your regional carrier, it is easier to do so than national carriers. If you detect budding issues, chances are higher that you’ll be able to resolve the issue before the customer feels any impact.
As you’re tracking shipments to their final destination and you notice a bottleneck, you can reach out to regional carriers to detect the issue and make modifications accordingly. Hands-on attention from carriers will benefit you even more significantly during the peak shipping season.
Stay ahead of fluctuations
Using only one or two carriers is a risky move, particularly when today’s last-mile delivery market is constantly changing. Even seemingly minuscule factors such as business closures, strikes, or upticks in Amazon Prime purchases can have a ripple effect on your consumers.
Distributing your shipment load amongst additional regional carriers can lessen the shock your business feels during increased capacity. You’ll likely find that regional carriers have higher on-time delivery percentages as well.
Tips to diversify your carrier mix
It may seem daunting to begin your search for additional carriers, but a little bit of research goes a long way in finding the right shipping carriers that check all of the boxes (literally and figuratively). To have a good idea of what carriers will suit your needs the best, make sure to have a thorough understanding of shipping volumes. This will make it clear the types of carriers that can meet your needs.
Once you have an understanding of your tactic for each region, begin testing with different carriers to see if they live up to your expectations. This means holding them accountable to hit key performance indicators such as transit time, cost, and the number of delivery exceptions. The best regional carriers should provide consistent updates to prove they are a valuable resource for your business.
Finding the right carriers can be a trial-and-error process, but one that is worth your time and energy. With the right carriers on your side, your e-commerce business can create an even better customer experience free of common frustrations and delays.
This article was originally published on Supply & Demand Chain Executive.