Editor’s note: This story highlights takeaways from a Sept. 16 event hosted by Supply Chain Dive, Retail Dive and Marketing Dive. Register here to watch the replay on demand.
Carrier diversity is key to executing an effective last-mile strategy this holiday season as shipping costs rise, experts said during a panel at a holiday outlook event hosted by Supply Chain Dive, Retail Dive and Marketing Dive.
Shippers have been dealing with rising delivery costs, with parcel carriers implementing surcharges as the Iran war escalates the price of fuel. Diesel prices, for instance, surged past $6.28 per gallon as of Sept. 14, up almost 69 cents compared to prices on Aug. 31. The U.S. Postal Service, FedEx, UPS and Amazon are also rolling out surcharges and rate hikes ahead of the holiday season, starting this month through January.
To help navigate the price crunch, shippers should “sync up” with alternative carriers, understand what their cost structure is and whether it's a good fit for their business, Sheila Berry, chief revenue officer of last-mile delivery company UniUni, said
“Saving two to three, or even more dollars per order on shipping fees can free up a lot of capital to do other things with your business,” Berry said. “So, the advice I'd say is look for carriers that do not have extra charges, fees, delivery area surcharge, peak delivery surcharge, etc.”
Brian Bianchetti, CEO at People's Choice Beef Jerky, agreed, noting there is “not a whole lot you can do” if a company is working with only a handful of carriers.
“It's much easier to have a tough conversation with a carrier when you have backups and you have options to use instead of just one main carrier,” Bianchetti said.
Beyond higher costs, a shipper working with just one or two carriers becomes much more susceptible to operational issues, such as capacity shortages or constraints, according to Berry.
“A carrier could go down because of various weather events if they're regional,” Berry said during the panel. “So, all of these types of risks are mitigated when you add more carriers in, and not just adding them for adding them's sake, but thinking about where they have distinct advantages.”
This includes considering which regions carriers deliver well in, and adding those carriers to fill specific delivery gaps, Berry said.
However, there is always a trade-off — more volume concentrated among a few carriers leads to better pricing but doesn’t provide as much protection against a risk like a truck breakdown, Bianchetti said. People’s Choice Beef Jerky, which works with three to four different carriers, will justify paying a little more on postage to hedge against disruption.
“While that's really powerful on the back end and making sure that we have our supply chain in a healthy place, it’s also better for our customers” because they can select their preferred carrier and shipping speed, Bianchetti said. This is especially critical during the holidays when people have “all kinds of requests,” Bianchetti said.
“I think the optionality for your customers but also for your business, and having multiple carriers, is really an essential part of e-commerce and shipping today,” Bianchetti said.
