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Page 18

By Nate Skiver

BEYOND CARRIER DIVERSIFICATION: Re-thinking the Approach to Adding Parcel Carriers to Your Network “Insanity: Doing the same thing over and over again and expecting different results.” Albert Einstein While Einstein was not describing shippers’ approach to parcel carrier sourcing, it can be an accurate description of the strategy commonly referred to as carrier diversification. All too often, shippers look for opportunities to add a new carrier to fit into their existing program by “peeling off” a small portion of volume, but this approach is flawed and doesn’t always achieve the desired results. Don’t believe me? Let’s find out why this is the case and what shippers can do to change it. 18 PARCELindustry.com  MARCH-APRIL 2021

First, let’s define this concept a bit. Executed well, carrier diversification can provide several benefits such as increased capacity, operational flexibility, improved speed to customer, and reduced expense. But does arbitrarily adding carriers for the sake of having more options achieve these benefits? Usually not, and the solution to this issue begins with shippers’ ability and willingness to think differently when assessing their parcel program. Common Carrier Diversification Mistakes Even the most experienced sourcing and transportation professionals are susceptible to making mistakes when evaluating their parcel programs. Below are a few common pitfalls, which can impede carrier base optimization efforts. 1. Focusing on current constraints. “I can’t move volume from my primary carrier, or I will lose my discounts.”

Sound familiar? This is the first point of focus for many shippers when assessing their parcel program, which can often end the process before it begins. For those who press on, this constraint often dictates the process as shippers seek solutions that fit into their current program. This issue is not limited to carrier volume and revenue requirements, as shippers often focus on reasons why they can/should not add carriers, such as technology constraints or implementation risk. While these constraints cannot be ignored, they are often introduced into the process too early, and focusing attention here first is a very effective way to derail carrier diversification plans. 2. Jumping to solutions. Einstein once shared this view on problem-solving: “If I were given one hour to save the

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