Carrier Selection Conundrum

Parcel carriers are stuck in a difficult position. When working with shippers on annual rates, their levers to scale business in a world of rising costs are:

• Have the most coverage
• Give the lowest rate
• Incentivize volume
  

Service is a base expectation, so the levers to work with on an annual rate card are quite limited.

More coverage = more trucks = more cost = higher rates

Carriers trying to expand need the costs to be higher to cover their capital needs, lest they spread their funds too thin. The major carriers are competing against each other, and need to offer competitive rates, but as we’re seeing with the changes at UPS and the accelerated growth of Amazon shipping services, the large national hold on the market may not be as ironclad as it seems.

Shippers are left with limited options and escalating pricing, which trickles down to fewer free shipping offers, longer delivery times, and a generally frustrated parcel ecosystem on all sides of the table.

But what if there was a way for carriers to maximize the returns from each route and give shippers the rates they want?

There is! Dynamic pricing!

When carriers can offer lower than rate card rates on parcels that align to their existing routes and truck capacity, the cost of their trucks effectively goes down because usage and revenue is up. Rates are down, which makes shippers happy, and the customer gets the same service they signed up for.

Everyone wins!