Carrier “Rate Shopping” Was Never Really a Thing – But Carrier Service Optimization Is

Rate shopping? Most shippers understand what their comparative parcel carrier service costs are because they negotiated so hard to get them. But the shift to omni-channel fulfillment, evolving customer preferences, and more diverse carrier networks have complicated decisions about how, when, and where to use specific services to ensure cost-effective, on-time deliveries. That’s where carrier optimization comes in.

Rating parcels

eCommerce Complexity Gives Rise to Carrier Service Optimization

“Rate shopping” is commonly used to describe how shippers decide which carrier service to use based on delivery cost. But this is misleading since most shippers are well aware of their relative carrier costs without having to constantly shop them.

Historically, shippers negotiated a single-sourced, primary parcel carrier agreement–always convinced that they had the “best” rates. They often had alternative carriers to use on an exception basis for reasons other than cost, such as using USPS for PO Box deliveries. Rate shopping was a concept that existed primarily in the fearful minds of carrier sales and marketing personnel.

More recently, as Amazon drove shippers to implement omnichannel fulfillment strategies to meet customer demand for more personalized delivery options, selecting the best carrier services is much less straightforward. Carrier rate structures have become more variable with incentive tiers and a proliferation of surcharges, so choosing the best carrier service (while avoiding others) is much more complex. This has set the stage for carrier optimization: the ability to automate data-driven carrier service selection decisions based on a myriad of factors.

Modern Parcel TMS Systems Require High-Speed Optimization

Legacy multi-carrier parcel systems were designed primarily to automate carrier label printing in the last 100 feet of a warehouse conveyor belt. Decisions about which carrier services to use were made somewhere upstream in the fulfillment process. As complexity crept into the parcel industry, expensive custom programming was required to enable shipping systems to apply business rules to carrier service selection processes. Consequently, shippers have become increasingly frustrated by their inability to adapt quickly to the ever-changing dynamics of the parcel industry. Today, parcel Transportation Management Systems (TMS) are filling that void.

Technology advances in response to industry challenges. Parcel TMSs adopt cloud-native, microservice architectures to add optimization intelligence to multi-carrier execution capabilities. Like more well-established freight TMSs, parcel TMSs enable users to configure business rules for mode shifting, planning, and simulation modeling instead of having to rely on IT or system integration engineers.

Sendflex Parcel TMS incorporates an in-platform optimization engine capable of calculating 20,000 parcel rates, times in transit, and configurable routing instructions per second. This opens the door to automating complex, upstream decision-making in digital storefronts, order allocation, and fulfillment at high speeds.

Configurable Optimization Instructions Maximize Agility, Reduce Time to Benefit

Today’s logistics managers face more parcel service decision factors than ever before. Sendflex Parcel TMS makes it easy to consider those factors without costly and time-consuming programming. Using optimization wizards, logistics managers can define and apply business rules (“instructions”) anywhere in the fulfillment process.

Those instructions can include:

  • Carrier Selection Criteria: Automate carrier selection based on a combination of rates, surcharges, special services, time in transit (both published and actual), and carrier pickup limits. Take into account tiered incentive rates and carrier performance metrics like damage rates, billing accuracy, and sustainability practices.
  • Shipment-Specific Optimization: Apply rules based on shipment attributes like weight, dimensions, and special handling needs (e.g., hazardous materials, fragility). Incorporate cartonization logic to select optimal carton sizes, DIM factors, and packing sequences, ensuring compliance with shipping regulations and cost efficiency.
  • Destination and Routing Logic: Configure routing instructions tailored to specific destinations, considering factors such as delivery area types (residential, commercial, PO Boxes, military) and specialized routes for challenging locations.
  • Regulatory and Compliance Adherence: Automate compliance with regulatory requirements, particularly for hazardous materials and cross-border custom rules, by applying predefined labeling and documentation instructions directly within the shipping process.
  • Customer-Centric Adjustments: Leverage the system’s ability to customize rate markups, discounts, and delivery preferences based on customer type or specific customer requests, enhancing the personalization of service offerings.

Sendflex Parcel TMS equips logistics managers with powerful tools to fine-tune their carrier service choices and ensure adherence to regulations, effectively cutting costs and boosting operational agility. This technology reshapes how companies tackle the complexities of parcel delivery, making it easier than ever to commit to reliable, timely shipments.

Experience the Future of Parcel Logistics with Sendflex

Discover the power of Sendflex Parcel TMS and see how our customizable optimization solutions can streamline your shipping operations. Our cutting-edge technology helps you navigate the complexities of modern parcel delivery and equips you to handle everything from intricate routing decisions to compliance challenges in a user-friendly platform designed for today’s fast-paced logistics environment.

Don’t let outdated processes slow you down. Discover how Sendflex can transform your approach to parcel logistics. Schedule a demo and consultation with our experts today.


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