Research suggests adults make, on average, 35,000 remotely conscious decisions each day. What should I eat for dinner? What movie should I watch? What outfit should I wear?
You get the point.
Most choices happen naturally with minimal effort. But some decisions require a significant amount of time, research, reflection, consultation, and energy. For example, selecting a logistics partner tailored to your business is a big decision.
We sat down for a conversation with Derek Lossing to chat about how to choose the right parcel carrier for your shipping operations and the process of getting started.
FOUNDER OF CIRRUS GLOBAL ADVISORS
Derek is a supply chain professional with 15 years in e-commerce strategy, procurement, and product, spanning across the global mile, middle mile, and last mile transportation networks. In 2022, he started his advisory practice supporting air cargo, cross-border and e-commerce clients. With a deep understanding of global e-commerce transportation and executing large and complex contract negotiations with global providers, Derek helps develop new and innovative supply chains.
Choosing the Right Parcel Carrier
What are differentiators to look for in partners?
“The best place to start with all new carriers is understanding their core competencies and where they really are successful, down to the zip code level,” stated Derek.
“I see too many carriers offer national coverage or expanding lists of cities and metropolitan areas. But being honest, carriers still have strengths and weaknesses in their network,” he continues, “Understanding whether carriers will run daily linehauls to a metropolitan region or every other day linehauls is important to leveraging the carriers’ speed.”
Derek shared, “What is their commitment to SLA? What is real data on their delivery times?”
The data doesn’t lie. Don’t let industry jargon and noise cloud the truth. Leverage a multi-carrier shipping solution to let the data give you an accurate picture of carrier performance and costs.
How should shippers begin the research process?
“Many of the large players are at industry conferences, and with enough research, I’d recommend setting up 1:1 with their commercial team to understand their network prior to attending the conference,” noted Derek.
Conferences can be a great way to get face-to-face with carriers, technology providers, and other shippers. Trade shows are very educational and informative while being collaborative.
Connecting with industry professionals and seeking advisors is a great place to get started.
Enlisting help from peers in your network, other shippers, and trusted technology providers can allow you to gain practical and applicable knowledge.
What is a realistic timeline for implementing a new carrier?
Adding new carriers to your current tech stack shouldn’t take weeks or months! Moving volume to a different parcel carrier doesn’t have to be time-consuming and headache-inducing.
With the right technology, data, and team in place, shifting volume to a new carrier doesn’t have to be scary.
Derek stated, “Timelines are driven by both tech bandwidth, as well as the carrier’s bandwidth based on their new customer onboarding.”
He shares two things to keep in mind when implementing a new carrier:
- Volume prioritization — It’s critical to have open and honest communication about contract negotiations with the existing partner and potential new partners.
- Peak season — I don’t recommend significant network changes during or right up into peak season. Having new carriers integrated by mid-summer allows you to build operational processes and get baseline volumes injected into the carrier. While capacity in 2023 should be more available than in 2022 or 2021, the last-minute ramping of carriers is not good for shippers, the carriers, or, ultimately, the customers.
Understanding the Goal
“I see too many shippers not understanding what their true goal is. It’s easy for the CEO or C-Suite to communicate, ‘Go faster, improve reliability, and do it cheaper than you are today.’ But I would start with truly segmenting the customers based on geography and understanding what they need to grow your companies’ margin,” mentioned Derek.
“Some customers want things faster. Are they willing to pay for that? Do you know what shopping cart abandonment is related to estimated delivery dates?” He continued, “If your leadership team wants 3 business day SLA nationally, does that mean if 50% of the packages deliver next day and 50% of the packages deliver in 7 calendar days, the leadership team will be happy you hit the 3 business day SLA?”
“Too often, I see shippers chasing goals based on set-up assumptions that may not be true to improve the margin of their business. Start with the customer, then see what carriers and 3PLs can help you achieve those goals.”
Efficiently communicating these goals and expectations to your partners is key to ensuring that all providers have a clear understanding.
“If you can’t articulate your exact goal, how will a partner help you build solutions to move the needle in your network?” Derek stated.
Taking the Next Step with Trusted Technology
- What regions do you service?
- What shipment times can you promise in these areas?
“Make sure you look at examples for urban, suburban, rural, and super rural. Don’t let a parcel carrier tell you they do California in two business days. Understand their actual commitments,” stated Derek.
- How will you scale to meet my business needs?
He shared, “Understanding projected zip code growth and SLA improvement of the partners and knowing how their network fits today and in 18 months will help you make an informed decision on integrations.”
- What are my options for adding more volume on short notice?
- Can I see a detailed list of all surcharges, even if it doesn’t directly pertain to my shipments?
“For me, always start with surcharges, and be honest about what you are getting charged with today and what you are getting for speeds today. Often, I have worked with clients that were being invoiced surcharges they didn’t even know,” he commented. “Make sure you have clean data from your parcel auditor to get to an appropriate all-inclusive comparison between carriers.”
- What are your customer support processes?
- What makes you different from other parcel carriers?
Having genuine conversations with potential carriers about past experiences, goals, and expectations is important for the relationship and negotiations.
Derek states, “Some companies are hesitant to over-share their shipping data with potential partners, but this is critical to avoid renegotiations and have an honest start to a relationship.”
Questions to Ask Your Parcel Carrier
With all the market volatility, it’s time to evaluate your parcel carrier network. With logistics optimization software, you can model carrier contracts against one another to identify the best next step. Let the data tell the story and determine the appropriate course of action for adding or optimizing capacity.
To effectively manage a multi-carrier parcel network and quickly add new carriers, you need a technology solution that understands implementation. Carrier integrations can get complicated quickly without a fast and flexible solution. A streamlined integration process can save time, money, and personnel resources.
With insights into your parcel performance and spend data, you can confidently and accurately make decisions. See your parcel shipping analytics and data in real-time with easy-to-use tailored reporting.
Partner with industry-leading technology and data management experts to help you diversify your parcel carrier network, rapidly integrate, and get complete data visibility.