Multi Carrier Shipping: 8 Ways to Avoid the Shortsightedness Of Chasing The Least Cost Carrier
When you are looking to choose a carrier when it is time to ship your freight, it might seem obvious to go with the carrier that provides you with the lowest “sticker price.” After all, the fees paid to carriers, which are most of your transportation costs, can comprise up to more than 5% of your cost of total sales. For reference, if your sales are $5 Million, the transportation costs of your business are $250,000. The best practice, even speaking broadly, in the world of LTL shipping and most modes, is to have a multi-carrier shipping mind set.
That said, it is often not the case that choosing the least cost carrier is the best bargain. You have to think about several factors beyond just the freight rate.
A holistic review of a carrier will often demonstrate that low cost is not an indicator of the overall value that a carrier has to offer. To provide full value at every step of each transaction, a carrier must have sophisticated, tested systems in place.
You might find that a carrier with a slightly significant upfront cost is the best carrier for your business. Before you make your final decision, be sure to quiz your would-be carrier on all of these major issues -- areas where very low costs often underperform!
1) Do Your Carrier Offer High Service Levels?
It’s one thing to promise results and quite another to put the expected quality of service in writing in your contract. Your carrier should be able to offer you an important guaranteed service quality as well as a proven record of delivering that level.
2) Does Your Carrier Specialize In Your Geographic Location?
No matter where you are, the particular geography of the region, where you do business, is an important consideration. A smaller regional carrier can have a great deal of insights in their area of expertise but may lack some of the quality factors of a larger carrier.
3) Is Your Carrier Connected?
Immediate access to clear, accurate data is increasingly critical to excellence in the logistics world. At Cerasis, for example, we make use of the CarrierLINK portal, which allows all of our carriers quickly to review information on outstanding and upcoming invoices in real time.
4) Does Your Carrier Offer Best-In-Class Billing?
Fast, efficient billing is key to making sure that you save money while meeting all contractual obligations. The faster and clearer your billing is, the easier it will be to note areas where you might have been charged incorrectly and reclaim funds when there are inaccuracies on the freight bill you receive vs. the quote you got before choosing a carrier.
5) Consider Transit Time
In such a fast moving world where getting freight to your warehouse inbound or outbound to a customer who needs your product, transit time often will trump price. Now, we aren't advocating you throw a price out the window as a consideration, but if you need it there in a certain time frame, you often have to choose a carrier who can get it done at a premium. We all know that if you can't deliver consistently to your customer, there are options for them to go elsewhere. So think about it like this...how much is that customer worth to you? Paying a little more to get the freight to them on time is worth it.
6) Consider Limit of Liability and Insurance
One of the hottest trends in business and the supply chain is risk mitigation. There is a reason publications include getting insurance is included in all of those BuzzFeed-type articles that say something like, "18 Reasons you're finally becoming an adult." Getting the right insurance and limit of liability to mitigate the risk of freight loss or damage may cost you a bit more for that freight shipment, but like keeping your customer happy on transit time, keeping the boss happy too because you chose the right carrier for that freight's need is a plus too. Imagine if you picked only on price, didn't get enough to cover your freight, and it vanishes in transit? Trust us that is not a good feeling.
7) Using a Multi-Carrier Shipping Transportation Management Solution
Often, it is vital to have a multi-carrier shipping mindset to simply meet the demands of your customer or unique freight shipment situation. How easily are you able to reach out to several carriers manually without using all the time of your day for 1 of 100 weekly shipments to get all of the information you need to make the best choice? Think about how inefficient it is to not only find the best price but to meet your specific needs. A web-based transportation management system will eliminate several hours of headaches and trial and error. After you've entered your origin, destination, and class info into the TMS, it will take you to a decision page. On that decision page, you then can choose the best carrier for your price, transit times, and insurance needs.
8) Employing Carrier Relationship Management in Multi-Carrier Shipping
After deploying a transportation management system solution, shippers can often shift their focus from tactical execution to more strategic initiatives. An example of such an initiative is improving carrier relationships and overall performance through collaboration and evaluating important transportation metrics.
This is an area of transportation management that can yield huge benefits. A TMS combined with managed services can identify opportunities for improvement that were not apparent before the system’s implementation. Some call the ignorance of not knowing, bliss, we call it an opportunity to lose money out the back door.
There are some reasons why managers who do not have the support of TMS technology can find it difficult to keep up with the strategic demands of an effective carrier relations strategy. They might lack the in-house resources needed to work on these issues, or are simply too busy with tactical, day-to-day management tasks to spend time on effective carrier relationship management. That is why, in conjunction with our TMS, for you to start to adopt a multi-carrier shipping mindset and strategy, Cerasis offers our customers a carrier relationship management program to include:
- Negotiate contracts pricing with our carriers, including dedicated lane rates for LTL and Truckload freight services.
- Discuss further cost savings opportunities for our current shippers with our Account Executives.
- Maintain long-lasting, sustainable relationships with our carrier partners to better align our goals, our customers' goals, and the carriers' goals to continue to give the BEST options for our shippers.
- Update and configure all customer-specific and dedicated lane rates in our transportation management system, the Cerasis Rater.
- Provide freight data and shipment analysis for carriers to uncover further cost savings year-over-year and give intelligence such as capacity reports and on-time shipment reports to better improve carrier operations.
- 24/7 web-based access to our CarrierLINK portal where carriers have on-demand reports showing open freight invoices and when they are due.
- Proactively working with our carrier partners rather than only reaching out to them when Cerasis or shippers have a need or when it's the yearly time to negotiate freight rates.
As you can see, the cheapest carrier isn’t always the best: There is always a balance to be struck between cost and lasting value. A carrier with sound operational practices can help you impress your customers and expand your business. Get into the mind-set of multi-carrier ship multi-carrier will reap the benefits.
How do you go about employing a multi carrier shipping mindset? Let us know in the comments below!