Updated: May 13
Daily, many businesses decide to install a free, carrier shipping system vs. dipping into their tight budget for an integrated, multi-carrier system offered through a third-party.
From a purely initial dollar for dollar cost standpoint FREE wins every time! But, think about it…when has ANYBODY given you ANYTHING for FREE? Approving the installation of a FREE carrier shipping system is akin to hiring a FREE IRS agent to do your taxes. In both cases, the task is complete but, and this is a very big but, who benefits in the long run?
Simply put, a FREE carrier system limits your ability to competitively choose the services and rates that best suit your shipping needs. Independent, multi-carrier systems offer benefits that FREE carrier systems can’t, and those benefits can save you (and your customers) hundreds and even thousands of hard dollars in shipping costs.
It’s common knowledge, among shipping industry experts, that installing the correct multi-carrier system can cut shipping costs from 10%-15% or more.
Does a Multi-Carrier Parcel and LTL Freight Shipping System Make Sense?
First, integrated, multi-carrier systems select the lowest-cost service based on your delivery objectives. Third party systems allow you to set up business rules that determine how each package will be shipped based on parameters you control. These types of features minimize shipping mistakes by eliminating operator errors. In short, the software makes the decisions, not the person doing the shipping.
Many multi-carrier shipping software vendors focus on allowing shippers to compare rates side by side and let the shipper choose the best rate for each shipment. Does this make sense in a business shipping environment? Most business owners, CFO’s and shipping managers do not want their employees wasting time looking at a list of rate options and making the decision, on their own, how to spend the company’s money. Next generation software products, on the market today, make all those decisions, without operator intervention based on when the parcel or pallet needs to be received by their customer.
Real World Example
Let’s take a quick minute to compare FREE carrier systems with high quality, integrated, multi-carrier systems for a certain type of shipment that is processed thousands of times each day…
If I process an overnight package to Las Vegas from Los Angeles using my FREE carrier system, it will offer me overnight rates to Las Vegas based on the OVERNIGHT rate discounts I have negotiated with that carrier. Speaking of rate discounts, most people I’ve talked to over the years tell me they have the very best rates. It must be true, because the carrier rep has told them. Is it possible for all of us to have the very best rates?
When I process the same shipment via my high quality, integrated, multi-carrier system it will immediately choose the best price for GROUND service among several carriers, based on the GROUND rate discounts I have negotiated with ALL carriers. Why are we sending it GROUND?? Multiple carriers GUARANTEE OVERNIGHT GROUND delivery from LA to Las Vegas. Even if it needs to delivered before 10:30 am it may still be sent ground. The company ordering only need to the know the ususal am deliver the carriers typically arrive.
Maybe you already knew that because you’re a savvy business shipper. Do ALL your employees know that? Probably not, and that’s the fundamental problem with FREE carrier systems that look out for the carrier and their money vs. a high quality, multi-carrier system that looks out for you AND your money.
Keeping All Your Eggs in One Basket
Mark Twain famously said, “Put all your eggs in one basket and watch that basket!” That may be funny but in the world of just-in-time shipping does it make sense to keep all your business with one carrier? Do you think they’ll take away all your discounts if you decide to invest in a high quality, multi-carrier system that “takes bids” across the board for each shipment processed and uses YOUR business rules to automate processing for each shipment?
Think about it, just like in your industry, competition among carriers is increasing, and it’s a clever idea for every business to put their shipping business out to bid periodically. High quality, multi-carrier shipping systems put your shipping business “out to bid” on every shipment you make. IF UPS, FedEx, DHL or any other carrier sees a significant shipping volume drop from you, they know it’s time to sharpen their pencil and adjust your rates to get back in the game. Why? Your high quality, multi-carrier shipping system bases all its decisions on the best rate it sees in the system that delivers your parcel, pallet or even critically important documents to your customers on time, based on your rules, every time.
Besides that, having an independent system installed versus a FREE carrier system makes it super easy for you to switch carriers whenever you need to. Don’t let a carrier labor strike cripple your ability to ship or force you to waste time installing and learning how to use another FREE shipping system. A high quality, multi-carrier system allows you to change carriers anytime easily, without being tied to one carrier.
Are Incorrect Surcharges Driving You Crazy?
To get a complete picture of the cost of shipping a parcel or LTL pallet, you need a system that displays not only the shipping rate, but also any real-time “gotcha” surcharges, including fuel surcharges, special restricted material fees and, especially these days…DIMENSIONAL WEIGHT FEE “ADJUSTMENTS.”
We all know that carrier rates increase each year, but many businesses are so focused on keeping their rates in check that they completely forget about keeping their surcharges from eating them alive. How many times have you quoted a shipping price to a customer, shipped the package out, got the bill and ended up losing money on that shipment due to additional surcharges? Worse yet, do you even know how many times that’s happened or how many thousands of dollars it costs you in the long run?
For the most part, all carrier and third party residential shipping systems calculate residential delivery surcharges correctly. The key differentiator is whether or not the system you’re using KNOWS it’s a residential delivery. Systems with real-time address validation capabilities identifies the commercial vs. residential setting correctly.
Additonally, high quality shipping systems with direct links to the carriers know the correct dimensional rating factor based your agreed upson negotiated rates. Other shipping systems may not be able to adjust the dimension rating factor as easily and this has the potential to cost you a lot more than you though for each shipment.
Again, a high quality, multi-carrier system that’s linked 24/7 to all carrier servers will minimize surcharges because your staff is pulling real-time negotiated rates from the carrier’s rate tables…avoiding surprises when you receive the final bill.
Surcharges you’ll want to be aware of include:
Residential delivery area surcharges
Address correction fees
Saturday delivery charges
Dimensional rating charges
A high quality, multi-carrier shipping system with automatic address correction helps you avoid unnecessary costs. Did you know that incorrect addresses can result in multiple delivery fees on a single shipment or additional fees for address correction? When you think about it, this can add up to a lot of excess payments!
Needs to Be Easy to Use
If a single-carrier system limits savings, maybe we should install FREE systems from all the carriers, right? Not so fast!
Having lots of FREE Systems makes a lot of sense up front but does it make sense from an operational standpoint? Simply put, NO.
All FREE systems use different applications and user interfaces, complicating integration with the order entry system and requiring more training for your employees. Each employee will have to jump from one station to the next or juggle multiple screens and programs to find the best rate to ship EACH PACKAGE. There is only one reason for bad craziness like this. The people who made those FREE System decisions aren’t going through all that excess pain and don’t realize the high labor and excess hard dollar costs related to this process.
Do you think that at the end of the day, when everyone is under lots of pressure to get everything shipped out, employees are going from one screen to the next looking for the best rate? Wrong! They’re logging onto whatever system is open, shipping the package and moving onto the next one. It’s not their fault…it’s the tools they are using.
Doesn’t it make more sense to have one high quality, multi-carrier system installed behind your firewall, on your corporate server, with all the carriers fighting for your business…every time you ship a package? Of course, it does!
One system that does everything is also easier for you and your IT department to manage and will be simpler and more accurate for your employees to use.
With a high quality, server-based, multi-carrier system, you can install software once on your central server and enable access to the system for unlimited users at single or multiple shipping locations across your enterprise. Why does this make sense?
You’ll achieve consistently accurate pricing that saves lots of money.
Your CFO will be able to run detailed, ACCURATE shipping cost reports.
You can easily update and maintain the system through the central server.
Employees can ship and track packages from the warehouse, their desk or even remote locations without bothering shipping managers for help.
What System Is Best for Us?
To select a shipping system with the highest ROI, look for the following:
Real-time carrier rating via a direct link to each carrier’s server.
Real-time carrier routing and shipment update information.
Automatic “Best Way” rating service based on your business rules for each shipment to eliminate all the time employees waste reviewing complex side-by-side comparisons before choosing a shipping method.
Seamless integration with your order entry, ERP, WMS or another enterprise platform you’re using.
Quick installation and integration services. High quality, premise based, multi-carrier systems should be installed and operational in 2 weeks or less.
The system eliminates manual re-entry of order info. A huge time waster.
Provides detailed reporting capabilities and includes a powerful, easy to use report designer so authorized users can easily create the reports they need.
Easily automates and enforces your shipping business rules
Includes real-time, domestic and international address validation
Includes inbound, outbound and drop-ship freight/LTL rate discounts
Allows you to quickly customize screens, fields, labels, forms, and reports
Bottom-line, shipping is a mission-critical business function. Whether you’re sending out a few parcels a day or shipping several thousand parcels and processing dozens of inbound, outbound and drop ship LTL shipments, your shipping system is the link between you and your clients, customers and partners. It delivers the goods, completes the business cycle.
Many companies don’t take time to think about this, but FREE systems are simply NOT FREE. Intelligent selection of delivery services at the best rates, via a high quality, multi-carrier shipping system yields satisfied customers and significant hard dollar cost savings.
Most real-world businesses I have worked with end up realizing that the money they thought they were spending for a high quality, integrated, multicarrier
system was being spent already in the form of excess costs and expenses related to their FREE carrier system.
When you take the time to do your research and find the high quality, multi-carrier system that works for you, it will pay for itself in hard dollar cost savings, and you’ll have the satisfaction of knowing you are getting the “best rates” after all. Good luck and Good Shipping!
OnShip takes immense pride crafting state of the art, enterprise level, domestic and global shipping technologies at a fair price. The OnShip Group’s technical team has well over 75 years of shipping industry experience and has helped well known, name brand, companies streamline their shipping process.