Shipper’s Market vs. Carrier’s Market: Who Holds the Power?
by Jaidyn Farar
For years, carriers have called the shots when it comes to rates and contract negotiations. When the Covid-19 pandemic began, , and their leverage only intensified. As shipping volumes skyrocketed, businesses were willing to pay whatever it took to make sure their packages got shipped in time.
But now, the tides have turned (). Read on to learn what causes a carrier’s market vs. a shipper’s market, how a shipper’s market can benefit your business, and what you should do to take advantage of it.
What’s a carrier’s market?
In a carrier’s market, carriers have more bargaining power than shippers when it comes to setting rates and negotiating contracts.
It all comes down to supply and demand. When lots of businesses want to ship their products, and there aren’t enough carriers to handle all the shipments, carriers are in a great position. Carriers set the rates they want, knowing that customers are unlikely to take their business somewhere else.
According to Tyler Diestel, senior product manager at , Covid-19 strengthened the carriers’ position. “There was a huge surge of shippers trying to fulfill all these ecommerce orders. And the carriers didn't have the bandwidth to fulfill them all, so they could just say, ‘All right—who's the highest bidder?’”
What’s a shipper’s market?
A shipper’s market is the exact opposite of a carrier’s market: because shipping demand is low, businesses (shippers) have more power to negotiate rates, and they can afford to be choosy about the carriers they partner with.
We’re currently in a shipper’s market! Now that the world is moving out of the pandemic, ecommerce order volumes are decreasing. With fewer packages needing to be delivered, carriers have to compete with each other for business. To attract more customers, they’ve begun reducing rates. Shippers have the power of choice—and they’re using it to their advantage, choosing the carriers that offer the best prices.
In addition to lower rates, a shipper’s market comes with other big advantages for ecommerce businesses. These will vary based on the carrier but might include things like:
- Free package insurance. Some carriers have started including insurance in the price of the label.
- Combined service levels. This lets you access the advantages of the more expensive service for the price of the cheaper one.
- No peak season surcharges. Normally during peak season, carriers charge extra fees known as demand surcharges. This year, however, some aren’t doing this. Check out the .
How to take advantage of a shipper’s market
Good things come to those who wait—but also to those who act. Now that we’re in a shipper’s market, organizations should act fast to take advantage of it.
Step 1: Determine your goals
Whatever your goals are, defining them is the first step to accomplishing them.
Step 2: Find carriers that will help you accomplish your goals
Next, begin researching carriers, keeping your shipping and logistics goals in mind. Find the ones that are best equipped to help you achieve your aims.
Usually, working with a single carrier isn’t enough. If you work with a single carrier, one disruption could shut down your order fulfillment instantly. Partnering with a mix of large, regional, and local carriers is a better strategy. With a strong multi-carrier shipping approach, your operations won’t grind to a halt if disaster strikes.
Step 3: Use technology to find the right rates
Integrating with carriers individually takes lots of time and effort. But with technology, the process is drastically simplified. With shipping technology, businesses can integrate with an extensive network of carriers, compare rates, and automatically print shipping labels. Even better, these solutions often offer great discounts for top carriers like UPS, USPS, FedEx, and DHL.
Step 4: Lock in rates while they’re low
, listen up: don’t let yourself be paralyzed by FOBO (fear of better options). Take advantage of great rates before they start rising again! Tyler recommends locking in rates with carriers while it’s still a shipper’s market. He says, “Yes, the rates might continue to go down, but right now the rates are so good that it's hard to see them getting better.”
If you don’t want to lock in rates now, just keep an eye on things. If you start to see prices go up again, consider negotiating a deal when you next have an opportunity.
More on the shipper’s market
Want more tips for taking advantage of the shipper’s market? Listen to Episode 9 of the podcast. Find the episode , on , or on your favorite podcast platform! Make sure to subscribe to catch a new episode every week.