Consider These Things When Diversifying Parcel Carrier Mix

When it comes to diversifying your parcel carrier mix, there are several important considerations to keep in mind. Not only does this process involve engaging the right departments within your organization, but it also requires careful attention to legal aspects, IT integration, labels and the overall carrier performance. In this blog post, we will guide you through these considerations, providing valuable insights and recommendations to help you find the solution that best fits your needs.

Legal  – Assess and Mitigate Risk

Your in-house legal team plays a vital role in protecting your business from risks. While they may lack expertise in carrier contracts, there are certain aspects that should be considered:

1. Termination Fees: Some carriers include termination fees in their contracts to stabilize volume and prevent rate wars. It is important to evaluate the risk and understand the commitments involved before  accepting termination fees. Establish an open dialogue with your carrier and work towards a mutually beneficial agreement.

2. Privacy Clauses: In today’s landscape, privacy laws are constantly evolving. Ensure that your chosen carrier can guarantee compliance with these laws. Understand how they handle personal identifying information and deletion requests. This is critically important, as any violations of your customers’ rights could result in lawsuits.

3. Payment Terms and Methods: Negotiating payment terms and methods is essential. Work with your carrier to find an arrangement that works for both parties. Flexibility and understanding are key in building a strong partnership.

Information Technology – All about Your Data

IT teams are a no brainer to engage when looking at changes to your parcel carrier mix, but there are some important considerations to remember as you embark on a carrier diversification journey.

1. TMS Integration: Engage your IT team and Transportation Management System (TMS) provider early on when aligning with new carriers. These teams are often strained for resources, so timing is crucial. Communicate your needs promptly to avoid unnecessary delays and ensure a smooth integration process.

2. Parcel Label Issues: Not all carrier labels are created equal, and they can become a common point of failure during launch. Prepare for potential label-related challenges and allocate sufficient time for resolution. Attention to detail in this area can save you significant headaches down the road.

3. Data feed: Understanding how often the data will be updated, so you can make sure it aligns with what you are tracking and plan to track.

Operations – Keep the Supply Chain Moving

With parcel transportation teams falling within the Operations team, the Operations element is should definitely be taken into consideration when looking at small parcel carrier diversification.

Operational Performance and Invoice Auditing: From day one, measure your carriers’ on-time performance and billing accuracy. Promptly address any discrepancies to minimize financial damage. Identifying the root causes of errors will enable your team to take effective action and maintain a high level of operational efficiency.

1. Understanding Package Movement: Different carriers may have varying capabilities in terms of first- and middle-mile capacity. It is crucial to fully understand how your packages will move, including pickup procedures, destinations and tracking methods. This information will help you align your expectations and ensure a smooth shipping process.

2. Returns: Returns are a hot topic for shippers today. Not all carriers have the capacity to handle returns directly to your facility. Establish clear guidelines for handling return scenarios, including damages and rejected freight. Implement guardrails to eliminate any doubts and ensure efficient handling of returns.

Ultimately, the decision to diversify your small parcel carrier mix involves all functions within your organization, so make sure it is a collaborative effort. Diversifying your parcel carrier mix is also an iterative process in which each progressive step requires careful consideration.

Two bonus tips:

1. Evaluate Your Internal Capabilities: Assess your team’s ability to manage change and handle increased complexity in operations. Consider the cost reduction benefits against the potential expense to the broader organization. Embrace trial and error, as new and innovative models for parcel delivery have emerged post-pandemic.

2. Timing and Capacity: Thoughtfully time the onboarding of your Transportation, IT, Legal and support functions. Peak seasons and concurrent transitions can lead to avoidable challenges, such as capacity issues. Plan accordingly to minimize disruptions and ensure a seamless onboarding experience.

By engaging the right departments within your organization and following these considerations, you can successfully navigate the challenges and reap the benefits of a diversified parcel carrier mix. Remember, every onboarding experience is unique and unexpected challenges may arise. With time and experience, your team will become more proficient in managing carrier diversification. Embrace the journey and seize the opportunities that lie ahead.

About Author:

Robyn Meyer

Senior Vice President, Parcel Strategy & Solutions

Robyn is the Senior Vice President of Parcel Strategy & Solutions at Transportation Insight, leading small parcel strategy and solution development across various platforms and transportation modes. With nearly 26 years of experience, she specializes in e-commerce and international trade compliance. Robyn enhances digital supply chain platforms by addressing common shipper challenges and driving innovation.