In the fast growing world of last-mile delivery, companies constantly debate the strategic decisions that can unlock their growth potential. One of the most crucial decisions in last mile strategy is choosing between a single-carrier or a multi-carrier shipping setup. While both options have their pros and cons, the best choice often depends on the business needs and its customer base. Today we are going to look into these two models and the pros and cons of them to help you better understand and decide which might be the best fit for your company.
In this blog article, we will explain what a single and multi-carrier shipping approach is and delve into the disadvantages that come with having a limited carrier provision for businesses.
What is the Single-Carrier and Multi-Carrier shipping approach?
The Single-Carrier and Multi-Carrier shipping approaches refer to different strategies that businesses and individuals can adopt when it comes to selecting and utilizing carriers for their delivery needs.
The Single-Carrier approach involves relying solely on one carrier to fulfill all the shipping or service requirements. In this model, a business or individual signs an exclusive contract with a single carrier, and that carrier becomes their primary and often only option for transporting goods or providing specific services. This carrier could be a shipping company or a courier service.
On the other hand, The Multi-Carrier shipping involves diversifying carrier relationships by partnering with multiple carriers simultaneously. Instead of relying solely on one carrier, businesses or individuals split their shipping or service needs among various carriers, each offering different strengths and capabilities. This approach is also known as "carrier diversification."
Single-Carrier Approach: Simplicity and Consistency
The single-carrier strategy can be compared to putting all your eggs in one basket. In some cases, this isn't necessarily a negative thing and sometimes you need to double down on a good strategy.
- Simplicity of one carrier system
Working with a single carrier can simplify your business operations and require far less resources, as you need to maintain a relationship with only one provider. This means also your systems will need to be built to communicate only with one carrier system. In the end, your business will require way less management hours and less IT resources to have an optimal setup.
- Consistency of delivery service
Additionally, the single-carrier model in some cases may also lead to more consistent delivery service and in a way has a better control over customer experience. To many product categories this is a very crucial part and one of the deciding factors to use this strategy. However, the customer experience can be also at risk if the delivery partner is facing big interruptions in their services.
- Power of negotiation
The third big factor in favour of this strategy is the negotiating power. By giving all volume to only one carrier, the company naturally holds the highest possible negotiating power as in the last mile industry the volume is the deciding factor of the costs. When a company starts to split the volume against more carriers, they will have to pay more for the same level of service.
Multi-Carrier Approach: Flexibility and Resilience
On the other hand, the multi-carrier approach provides independence and resilience in your last mile delivery processes. By introducing more carriers, you insure your operations against unexpected disruptions with one service provider, ensuring your business has a strong backup plan in place.
- Tailor shipments for optimal delivery
One of the biggest advantages of the multi-carrier shipping is that different carriers often excel in different areas. With increased global network complexity, certainly it is not possible for one carrier to be strong in every area. Some might have very strong domestic delivery networks, while others might have great international connectivity or strong pickup point networks. By leveraging different carriers and merging them into your multi-carrier shipping strategy, your business can match each delivery requirement with the best suited carrier for the job. In this way your business can improve service quality and also increase your customer satisfaction.
- Competitive environment that works in your favour
Although you might not be able to obtain the best prices with multiple carrier setups, there is still a strategy you can utilise to keep carriers interested and provide better prices. With multiple carriers you can play them off each other to negotiate better rates. In a way you create a competitive environment that works in your favour.
- Increased operational costs and complexity
One of the weakest links of multi-carrier shipping strategy is the required resources to manage the multiple relationships, integrate with different carriers and their IT systems and maintain different service standards. In many cases, if the business lacks the knowledge of how to manage such a setup in an effective way, businesses can increase operational costs and complexity and end up demanding more advanced systems and expertise.
Choosing the Right Approach: A Matter of Balance
The decision between a single-carrier and multi-carrier shipping strategy ultimately depends on your business needs, markets in which you operate and business risk tolerance. If you are operating only domestically and flexibility is not crucial to your business you might want to consider the single-carrier model. However if your business is growing rapidly and extending it's geographical reach a multi-carrier shipping approach has to be prioritised in order to not limit your business growth.
It is also important that these decisions don't necessarily have to be one or the other - there is also a hybrid approach - your primary carrier accounts for approximately 80% of your deliveries and the other 20% are divided over carriers who supplement other needs or regions.
Why Multi-Carrier shipping is the future
By the rapid growth of the e-commerce industry, the shift towards customer-centric deliveries and increased focus on the resilience in supply chain, many experts believe that the future of last mile delivery leans more towards multi-carrier shipping strategies. With the globalisation effect, more and more businesses are selling their products over multiple geographical locations and this trend is not likely to stop. However, the innovation will play a crucial part in order to ensure businesses can run these multi-carrier based setups at lowest possible costs. The rise of advanced multi-carrier shipping software is making it easier than ever for businesses to manage multiple carrier partnerships seamlessly.
At Swotzy, we understand the complexities and dilemmas faced by businesses in developing their last mile strategy. That is why we have designed a platform to offer our customers the flexibility of both single-carrier and multi-carrier shipping models, depending on the business preferences and requirements.
Our platform consolidates volume and allows us to achieve better rates and acts as a single point of contact for all your delivery needs. This allows you to enjoy the benefits of a multi-carrier shipping approach - including increased resilience, competitive pricing, and the ability to match carriers to specific delivery needs - without having to manage the increased operational complexity which typically is associated with multi-carrier shipping strategy.
We take care of all integrations and management tasks for you and we ensure we have strong relationships with the carriers. There is no need for you to maintain multiple relationships or navigate through different IT systems. Our goal at Swotzy is to take the headache out of the last mile delivery management. We manage the complexities behind the scenes so that you can focus on your own business.
At Swotzy, we understand the importance of shipping and the complexities companies face to set up an effective delivery network. That is why we have designed our platform to offer our customers both - flexibility and competitive pricing. You don't need to rely on only one postal company to ensure your delivery process and you can enjoy increased resilience and ability to match carriers to specific delivery needs without increased costs or having to manage operational complexity. Our goal is to make shipping easy and accessible and we manage the complexities behind the scenes so you can focus on your own business.