What is a Single-Carrier Strategy
We define a single-carrier strategy as the strategic choice to work with a single carrier to deliver all your outbound shipments.
This is only sometimes an option; a carrier must be up for the job. It depends on how varied your shipping scenarios are if this option is open to you. The more varied your goods and the more comprehensive your sales area and customer shipping preferences, the less likely you’ll be able to work with one carrier to deliver them all. If you ship only packages that must be delivered fast, you could get by with a single Express carrier. If you also ship pallets to brick-and-mortar stores, you’ll probably work with a Road carrier as well.
A wholesaler selling garden ornaments to garden centers in the Netherlands and Belgium can adopt a single-carrier strategy and have, for example, DHL Freight take care of all shipments.
Benefits of a Single-Carrier Strategy
Following a single-carrier strategy has two main advantages, namely simplicity of the shipping process and the potential to negotiate high-volume discounts.
By working with a single carrier, the logistics department doesn’t have to compare rates and can book and keep track of all shipments in one place (read: the carrier’s user interface). This simplicity keeps both labor costs per shipment and the risk of errors under control.
Shipment volume is one of the most important factors that influence a shipper’s negotiating position in relation to carriers. The more shipments a carrier transports from A to B for a shipper, the lower the rate per shipment will be.
Also, the more business you bring to a carrier, the more leverage for negotiating volume discounts you have.
Disadvantages of a Single-Carrier Strategy
High carrier dependency
If you work with a single carrier, you’re dependent on that carrier’s performance. Since you haven’t established relationships with other carriers, switching to alternative carriers in case your regular carrier is dealing with strikes, driver shortages, or other issues will cost you precious time and money.
Say your carrier is getting your shipments from A to B, but not according to your service standards, then a single-carrier strategy can also be a drag. Your contract is based on a certain volume of shipments and possibly exclusivity, so you’ll be stuck with that carrier for the rest of the contract term.
Although the potential volume discounts you can get with a single-carrier strategy may seem alluring, don’t think this automatically means you get the best deal.
Carriers can’t be excellent at everything. Their network is optimized for either industrial or residential areas, for example. And carriers that are strong internationally often don’t have the best local networks. So, what we see most of our customers do is work with one carrier to deliver shipments from their warehouses to a local hub and have a local carrier pick up the last-mile delivery. If the international and local carriers for both legs of the transportation are predetermined, this is an example of a many-carrier strategy. If there are multiple local carriers taking care of the last-mile deliveries, this would be an example of a multi-carrier strategy.
Single-Carrier Strategy Scenarios
In some scenarios, adopting a single-carrier strategy makes sense. We’ll list a few we’ve come across.
When you only use Road transportation
Multi-carrier strategies aren’t a thing in road transportation. You’ll get much better prices from Road carriers with fixed agreements.
When you have a low volume of shipments
If you can work with one carrier for all your shipments and have a relatively low volume of shipments, a single-carrier strategy could be your only chance at negotiating a good deal.
When starting a new business
When starting a new business venture, your priority will be to verify a product-market fit. Setting up an optimal shipping strategy will be a second-order or third-order concern.