After months of negotiations with the Teamsters Union, UPS has been able to avoid what would have been the largest single employer strike in U.S. history. Fortunately, the labor disputes were resolved before any major disturbance to the economy, but the situation has forced brands — and any business that relies on national carriers — to reconsider their shipping strategy by embracing a multi-carrier approach.
In fact, the evolving conversation about carrier diversification has become one of the more interesting byproducts of labor uncertainties at UPS. The situation has made clear that putting all of your eggs, or packages in this case, in one basket could put your business at risk. What does an ecommerce brand tasked with shipping thousands of packages per day do if delivery services abruptly stop?
The practice of working with multiple carriers not only ensures service continuity, but a multi-carrier approach can optimize capacity, improve customer satisfaction and reduce costs.
How Last Mile Delivery Services Elevate the Customer Experience
According to Deloitte, brands that diversify their carrier mix with non-legacy carriers can “support growth and service performance.” In the large urban markets where most customers live, regional carriers that provide last-mile delivery services often are better equipped to provide faster turnaround times, higher on-time delivery rates and more personalized service than national carriers — all at a price point comparable to the national carriers’ ground rates.
Industry reports show that brands are quickly catching on to the benefits of a multi-carrier strategy that leverages last-mile delivery services. Industry analysts forecast the global last mile delivery market will reach more than $140 billion this year and is expected to climb to $200 billion in the next four years. Small regional carriers are the fastest-growing sector in last-mile delivery.
The Seven Questions to Ask before Partnering with a Last Mile Delivery Provider
If your brand is considering a multi-carrier approach that includes last-mile delivery providers, it’s important to make sure the shipping service’s capabilities align with your customer experience strategies. Savvy brands know that a poor delivery experience can seriously jeopardize a brand’s reputation and negatively impact the bottom line.
The following seven questions can help you determine if your last mile delivery provider has what it takes to meet and exceed customer expectations.
#1. How fast and reliable is the delivery service?
The standard ‘free shipping’ option for most online retailers is two- to five-day ground service from one of the national carriers. If you’re among the growing number of retailers that have decentralized your inventory, you can often cut a day or more off delivery times by working with regional carriers and bypassing legacy carriers’ hub-and-spoke distribution networks.
Also, because customer expectations are high, with same day delivery services up by 50% since 2020, brands that are able to offer next- and same-day service gain a sizable competitive advantage. It’s important to find regional carriers that can provide expedited delivery services with on-time delivery rates that exceed your current delivery partners.
#2. How do the costs compare with national carriers?
Consumers want delivery fast and free, but a large majority will choose ‘free’ over ‘fast’ — a brand’s ultimate goal is to provide both, exceeding customer expectations on delivery times and fees. Next-day delivery at a price point comparable to national carriers’ ground rates is the sweet spot for top-end regional carriers. When reviewing last mile delivery service costs, be sure to look for straightforward competitive pricing without added surcharges for fuel, residential delivery or peak-season deliveries.
#3. Are service levels flexible enough for my needs?
If one-size-fits-all doesn’t fit your business needs, look at what levels of flexibility a carrier can provide. Can you customize your customer’s experience with personalized and branded messages? Can the carrier provide white label tracking capabilities? Is there flexibility around injection times and how packages are bundled for optimized delivery times at the carrier’s sortation centers? If a load is delayed in transit, can the carrier accept packages late and still get them to your customer on time? Is the carrier able (and willing) to make accommodations for any special requirements you might have?
#4. Can they scale?
Package volumes can scale due to peak seasons, promotional offers or simple organic growth. It’s critical that you partner with a carrier that can scale up and down with you. Asset-light regional carriers — delivery service providers that are not reliant on expensive, company-owned assets — have the advantage of being able to spin up sortation and warehouse capacity quickly in urban centers. And there is a ready-made supply of gig drivers looking for the consistent payout that batched last-mile delivery routes can offer. Whichever carrier you choose should be able to demonstrate how their technology and operations support your scalability needs.
#5. Is real-time tracking available?
A consumer survey from before 2020 highlights just how high customer expectations are around the delivery experience, with 93% of customers expecting visibility throughout the delivery process. They want in-transit status updates from the moment they complete their order to its arrival date. And if a brand fails to provide this visibility, 47% of consumers said they would not order from a brand again. .
To keep customer satisfaction high, your last-mile delivery partner should provide real-time status updates, from the warehouse to your customer’s doorstep, including real-time driver location information when the package is out for delivery. This is a value-added capability that not all carriers can provide. Poor tracking capabilities can cause confusion and create negative experiences for your customers, which not only damage your brand’s reputation but could cost you repeat business.
#6. How quickly can you be up and running?
In a recent survey, carrier integration was listed as the top last mile operational pain point for shippers. With traditional carriers it can take months to get up and running. With the right technology, the best regional carriers can reduce the onboarding process from months to mere weeks. Look for carriers that have pre-built integrations with your existing shipping platform or last-mile delivery providers that offer simple, well-defined APIs and web hooks to optimize technology integrations. When it comes to operations, you want a carrier that can provide flexibility on package injection locations and times to match with your operational parameters.
#7. How are they addressing sustainability concerns?
We hear a lot about electrification, but the reality is that the transition to electric and other alternative fuel sources will take decades to accomplish. In the meantime, strategies like reducing unnecessary miles and optimizing vehicle utilization can help reduce fuel consumption and CO2 emissions. Sorting packages closer to the end customer and dynamic routing technology can reduce last mile travel distances.
The use of gig drivers and a variety of vehicle types also allow for better matching of load to vehicle capacity. Adding alternative fuel vehicles where appropriate can further reduce CO2 emissions. Your carrier should employ all of these strategies.
It’s Time to Consider a Multi-Carrier Approach with Last-Mile Delivery Partners
With a labor agreement now in place at UPS, many shippers are breathing a sigh of relief and some will continue on with business as usual. For others, the past few months have served as a wakeup call. Brands realize that existing logistics models that rely on a single national carrier have the potential to wreak havoc on their customer experience strategies.
As an ecommerce business, you can get everything right — from the product selection, cost, customer service and ordering process — but if the delivery is subpar, the customer will not be happy.
That’s why it is crucial to explore your shipping options going forward. The potential benefits of diversifying your carrier mix can pay off in multiple ways, from the costs you save on shipping to the repeat business you’ll earn from loyal customers who will become your biggest brand advocates.
Raj Ramanan is the CEO of AxleHire, a last-mile delivery company that helps retailers and brands meet or exceed their customers’ expectations. Prior to being named CEO, Ramanan was the COO for Scorpion, a digital marketing services provider for local businesses. Earlier roles include leading Loku, which he co-founded, and various positions at The Walt Disney Company, Nexstar Media Group, and McKinsey. Ramanan is a graduate of the Ross School of Business at the University of Michigan.