Carrier diversity is becoming increasingly important for retailers and shippers preparing for the holiday season, particularly as transportation and delivery costs continue to rise, experts said during a panel discussion at a holiday outlook event hosted by Supply Chain Dive, Retail Dive and Marketing Dive.
The pressure on shipping budgets has intensified as parcel carriers introduce additional fees while fuel prices climb amid the escalating war in Iran. Parcel carriers have been adding surcharges, while higher fuel costs are putting further pressure on FedEx and UPS shippers.
Diesel prices reached $6.53 per gallon as of Sept. 21, representing an increase of 24 cents from Sept. 14. At the same time, the U.S. Postal Service, FedEx, UPS and Amazon are introducing surcharges and rate increases ahead of the peak holiday period, with changes beginning this month and extending through January.
For shippers facing this cost environment, working with a broader mix of carriers can provide greater flexibility while helping control expenses.
“Sync up” with alternative carriers, understand their cost structures and determine whether their services match the needs of the business, Sheila Berry, chief revenue officer at last-mile delivery company UniUni, advised.
Berry stressed that even relatively small savings can have a meaningful impact when multiplied across thousands of orders.
“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. She advised shippers to look for carriers that avoid additional charges such as delivery-area surcharges, peak delivery surcharges and other extra fees.
Brian Bianchetti, CEO of People’s Choice Beef Jerky, also pointed to the importance of having alternatives. Companies that rely on only a small number of carriers have considerably less leverage when problems arise.
“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.
The benefits of carrier diversification extend beyond pricing. Berry said businesses relying on only one or two carriers are more exposed to operational disruptions, including capacity shortages and regional constraints.
A carrier can also experience a service interruption because of weather-related events, particularly when its network is concentrated in a specific region, Berry explained during the panel.
Adding more carriers can reduce those risks, but Berry cautioned that diversification should be strategic rather than simply increasing the number of providers. Shippers should examine where each carrier has a particular advantage and use those strengths to address specific gaps in their delivery networks.
Regional performance is one factor to consider, with businesses able to select carriers based on the areas where they provide the strongest service.
There is nevertheless a clear trade-off between diversification and pricing. Concentrating more volume with a limited number of carriers can generate better rates, but it can also leave a business more vulnerable when a disruption occurs, such as a truck breakdown.
People’s Choice Beef Jerky currently works with three to four different carriers. Bianchetti said the company is willing to accept a slightly higher postage cost in exchange for greater protection against disruptions.
That strategy also provides benefits on the customer side, allowing shoppers to choose their preferred carrier and shipping speed.
“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.
That flexibility becomes particularly important during the holiday period, when customers may have a wide range of delivery requirements and requests.
“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.
