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When Do You Need A Multi-Carrier Parcel Solution?

Tue, 06/10/2014 - 12:16pm
Evan Puzey, CMO, Kewill

Often this is a complex decision, but it can be narrowed down to one simple question — “Do you want to be held hostage by a carrier?” Whether you want to admit it or not, a carrier knows if they are the only game in town. When a company commits to moving most, to all parcel freight with a single carrier they are signing away their freedom to truly be flexible. 

The other, often overlooked problem with being a single carrier customer is getting talked into leveraging a carriers “free” software solution to ship with. They bring in their solutions, tie them into your workflows, and offer as much free help as needed to automate processes, leaving you with a warm and fuzzy feeling. The problem that can arise comes one or two years down the road when you go to negotiate your next contract, and the carrier knows that you are dependent on them. You have invested time, resources and energy into having these systems embedded into your workflow and now have a potential costly change to consider. Furthermore, using this system has become second nature to how you operate every work day, leaving you with the feeling of being held “hostage” to your carrier. Often it seems that the only choice you are left with is to continue to negotiate knowing in the back of your mind there is not much you can change. This is the scenario that some carriers want to happen.

How can you avoid this potential trap?  Do you put in a multi-carrier parcel solution from the start and internally take on the upfront costs – which can be very high for some smaller volume shippers? The quick answer to this is yes, but there should be a strategy in place. The best approach is to invest in a solution that is committed to the market and will give you the possibility of leveraging many carriers, with basic and specialized services. The immediate upside is the true independence that you will receive around carrier choice The additional benefit is that if the carriers know that you have a 3rd party solution, they will tend to accommodate your needs even further, because you have the freedom to select from a variety of carriers, giving you a competitive edge.

In addition, you’ll be able to quickly respond to market trends offering your customers more options in delivery. Many experts have talked about the trend to leverage regional carriers and last mile services and how this provides cost savings in a growing market of “free shipping.” According to Gartner, by creating a shipping model that benefits your bottom line without turning off your customers is the key to understanding what matters most to your highest value customers when they buy your particular product. If you have a system that can grow with you, then you won’t be using more expensive, traditional services trying to keep up with a competitor that is saving more on the bottom line.

If you think ahead and understand where you want your organization to be a few years into the future, a larger up front cost might save your business more in the long run, and you can avoid being held hostage by a single carrier solution.

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