Relying on a single shipping carrier might feel simple, but is it costing you? As your volume grows, that one-size-fits-all approach can lead to surprise fees and frustrating delays. You know it’s time for a change, but the options feel endless. How do you choose between major carriers, regional specialists, and the various Shipware competitors? Making the right choice is key to successful carrier contract optimization. This guide breaks down the pros and cons of carrier diversification, giving you a clear path to a smarter, more resilient shipping strategy.

Single-sourcing isn’t necessarily bad, especially as a new company. It’s easy to process packages and it minimizes pick-ups, simplifies accounts payable, and concentrates your buying power to get the best possible incentives. But as your company grows, the risks of single-sourcing begin to outweigh these benefits.

Relying on a single carrier can expose your business to carrier-specific issues like strikes, capacity constraints, equipment failure, weather, complacency, excessive rate increases, or the carrier making a unilateral decision to cancel your contract. Contracting with multiple carriers, known as dual-sourcing or multi-sourcing, reduces the impact of such disruptions, but also comes with its own risks.

The process of minimizing these risks and maximizing the potential benefits of multi-sourcing is called carrier mix optimization, or CMO. The factors to consider are universal but prioritizing them comes down to your company’s unique situation.

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Is Carrier Diversification Right for Everyone?

While all shippers should weigh the costs and benefits, it is generally easier for larger shippers to diversify their carrier mix. There are three main reasons: pricing, software, and locations.

PRICING: Shipping rates eventually hit a floor, regardless of how much a company spends. The typical UPS or FedEx pricing agreement includes spending tiers that provide additional incentives as new plateaus are achieved – for example, spending between $5,001 and $10,000 per week yields 50% off, while $10,001-$20,000 per week gets 52% off. There is, however, a limit to the savings. It’s impossible to spend so much that shipping becomes free.

For SMB shippers, tiers are relatively narrow with incentives increasing substantially at each new plateau. The incentives start much lower than those of their larger competitors, so racing to the next savings tier may be literally a matter of survival. In this case, concentrating volume with a single carrier may make sense until a minimally acceptable incentive is achieved, despite the risks.

For larger shippers, wider tiers come with smaller incentive gains, making it relatively easy to justify adding another carrier.

SOFTWARE: Routing decisions, the criteria used to select the best carrier and service for each shipment, become more impactful as options increase. Cost, time-in-transit, pickup time, where you stand with your contractual carrier commitments, and other factors are balanced to select the optimal carrier and service for each shipment. Once programmed with the proper decision criteria, computers do this much faster and more effectively than a human. (NOTE: To ensure you get the desired results, audit your systems periodically to ensure the accuracy of dimensions and other package characteristics.) Larger companies typically choose a transportation management system (TMS). A good TMS can easily cost six or seven figures, but it ties together multiple legacy systems and often pays for itself after only a few months. Smaller companies with simpler transportation requirements and fewer locations may find all the benefits they need in an inexpensive online platform. These platforms may also offer discounted pricing programs with the major carriers, making it easy to begin multi-sourcing.

LOCATIONS: The rise of e-commerce has given every online seller a national customer base, but fulfillment is increasingly a regional game. Some carriers (e.g., Better Trucks, CDL, GLS, LSO, OnTrac, Sonic, Spee-dee Delivery, UDS, and more) have excellent service at very competitive prices but deliver to a limited number of states. While it is possible to access these networks from other parts of the country, having a pickup location within their delivery territory is still the easiest way to use them, giving the advantage to shippers with fulfillment sites in multiple states.

The Pros and Cons of a Multi-Carrier Strategy

The biggest advantage of a multi-carrier strategy is building resilience. You’re no longer at the mercy of a single carrier’s disruptions, whether it’s a labor strike or a regional weather delay. This approach also creates leverage. When carriers have to compete for your business, you’re in a much better position to negotiate favorable rates and terms. A smart carrier diversification strategy allows you to optimize for cost and transit time on a per-package basis, using data to select the best service for every shipment. This flexibility not only saves money but can also improve your customers’ delivery experience by ensuring you always have the most efficient option available.

On the flip side, the primary drawback is complexity. Managing multiple carrier relationships means juggling different contracts, coordinating various pickup schedules, and reconciling several invoices. This can create a significant administrative burden. Splitting your shipping volume can also dilute your negotiating power with any one carrier, potentially keeping you from reaching their highest discount tiers. Without the right technology to automate rate shopping and reporting, the operational overhead can quickly cancel out the cost savings, making a robust spend management portal essential to keep everything running smoothly.

The Right Time to Diversify Carriers

The best time to diversify is before something goes wrong. But even without the benefit of hindsight, understanding the potential trade-offs of multi-sourcing should enable most shippers to make the right decision before it’s too late.

Here are some of the main benefits of multi-sourcing, along with common challenges companies face when implementing more than one carrier for the first time:

Benefits	Challenges
Better customer experience	Operations (sorting, staging, multiple pickups)
Stokes competition between carriers	Managing multiple spending tiers
Emergency access to multiple networks	Diluted buying power
Reduced time-in-transit	Requires new software
Increased operational flexibility	Internal training (departments, locations)
Minimize peak surcharges	Preferences of longtime customers
Maximize carrier strengths	More limited third-party integrations
Reduced exposure to carrier whims	Keep pace with marketplace shipping KPIs

Selling through an online marketplace illustrates how CMO provides a better experience for both the merchant and the end consumer, ultimately driving higher sales and even better margins. Almost half of US e-commerce gross merchandise value (GMV) currently flows through Amazon. As performance requirements evolve over time, using multiple carriers enhances the merchant’s ability to manage KPIs like time-in-transit, first scan visibility, carrier rating, and consumer experience. Solid carrier performance and a good consumer experience rating are vital to controlling the buy box, which snowballs into better visibility and topline revenue growth. Similarly, eBay punishes the merchant when their carrier performs poorly. The consequences are severe: losing a top-seller rating increases fees by as much as 10%.

Market Signals That Point to Diversification

Beyond internal pressures, the shipping market itself sends clear signals that it might be time to diversify. The industry is incredibly competitive, with a growing number of regional carriers and technology platforms all vying for your business. This competition is a huge advantage for shippers. It drives innovation and creates opportunities for better rates and service levels. If you’re not regularly evaluating these options, you’re likely leaving money on the table and missing out on efficiency gains. The conversation in logistics has shifted from simply getting a package from A to B to strategically using shipping data to cut costs and improve the customer experience. This strategic focus is a major market trend, and a multi-carrier approach is often the key to taking advantage of it.

How Do I Get My Carrier to Play Along?

The CMO process takes deliberate planning and consensus building, both internally and externally. Of all the parties and steps involved in the process, your current carrier may be the biggest hurdle. If possible, find a win-win scenario, or at least one where they maintain steady business, but don’t let a vendor stand in your way if they refuse to bend. You may have more options than you realize.

The Avoidance Option: Perhaps the easiest way to avoid a standoff with your current carrier is to siphon off any growth in package volume to a new carrier. Just be sure your current carrier agreement does not include an early-termination/minimum-commitment clause requiring you to send a certain percentage of package volume with the incumbent carrier. (And if you have one of these, seek more reasonable and enforceable terms the next time you renegotiate.)

The Win-Win Option: Creating a win-win with your current carrier usually requires allowing them to choose which parts of your business they wish to retain. Both UPS and FedEx have been actively curating their networks for years through the rates they charge. They may appreciate the opportunity to cherry pick the packages they want, especially if you have some big legacy discounts on surcharges or a high dimensional weight divisor. For example, your carrier may regret having waived Residential Surcharge for you a few years ago, and this might be your opportunity to find a carrier that doesn’t care about that designation. Or maybe there’s something about their network that damages one of your SKUs at a rate higher than normal. Your national carrier might happily offload those packages onto a regional carrier that uses fewer sorts to deliver your shipments (fewer sorts means fewer buildings, often with fewer belts, fewer slides, and fewer turns). They win, your new carrier wins, your customer wins, and you win.

Diverting problematic packages from your current carrier should improve their margin on your account, so it’s reasonable to insist they deduct any associated spend from minimum commitments and rolling average requirements without lowering your incentives or otherwise penalizing you.

The Business Realities Option (aka, Avoiding a Lose-Lose): The choice isn’t always between the status quo and some worse option. Your current carrier rep may need some education before they can sell this internally, but if the status quo has become unsustainable, you may be faced with the need to alter your carrier mix or face insolvency. Nobody wins if you can’t pay your bills. In these situations, it’s important to lay out the facts and give them the opportunity to solve the problem. Consider any proposal they give you but remember that you are not obligated to accept an offer just because it’s slightly less devastating to your business.

Marketplace sellers provide an easy example. If your current carrier cannot meet new time-in-transit requirements unless you upgrade to a service that eliminates your margin, you cannot afford to ship with that carrier. If you are not price competitive, you lose the sale, but if you try to subsidize the carrier’s rate to make the sale, you go out of business. There isn’t an option for them to keep charging the same rate and keep winning the business.

How Do I Find the Right Carriers to Add?

The dramatic growth in parcel shipping needs during the pandemic, coupled with the aggressively large rate increases imposed by the legacy carriers, funded the introduction of new carriers and the expansion and improvement of other pre-existing carriers. Depending on their needs, shippers today have dozens of options outside of UPS and FedEx. Each carrier has a slightly different profile of strengths and weaknesses relative to your needs. It takes time to meet them, get a quote, and analyze the true opportunity, but the payoffs can be huge. If you’d like to shorten your timeline and be confident that you’ve found a good fit, some consultants have established relationships with many of them already and can introduce you to the ones most likely to fit your needs.

By Josh Taylor & Zareh Ambarsoom

Josh Taylor is the Senior Director of Professional Services at Shipware, LLCHe previously spent 17 years at UPS in Revenue Management Strategy, Pricing, and Sales. He uses his broad industry knowledge and specific expertise in parcel pricing and services to help clients optimize their supply chain. He is a frequent speaker at industry conferences and webinars, and his opinions and articles are regularly published in industry-specific and mainstream outlets.

Zareh “Z” Ambarsoom is the National Director of Sales at Shipware. A 12-year veteran of UPS who led a team of sales professionals overseeing a book of business of $300M+/year. During his tenure, he helped in the successful negotiation, re-negotiation, and SOP development of $1.8B+ of shipper spend. Z has an intimate knowledge of logistics, carriers, e-commerce, and their respective inner workings, which he now leverages to help shippers and businesses level the playing field.

This article originally appeared in the September/October, 2023 issue of PARCEL.

### Exploring the Major Carrier Landscape Once you’ve decided to diversify, the next step is to understand your options. While the big two, UPS and FedEx, dominate the landscape, they are far from the only players. Each carrier has unique strengths, and finding the right mix can unlock significant savings and service improvements. The goal isn’t to replace your primary carrier entirely but to supplement them with partners who excel where they don’t. This strategic approach allows you to route each package with the carrier best suited for the job, whether that’s based on cost, speed, or destination, creating a more resilient and cost-effective shipping operation. #### UPS As a primary competitor to FedEx, UPS has built an incredibly robust ground delivery network. For many businesses, this focus on ground shipping can translate into lower costs, especially for domestic shipments that aren’t extremely time-sensitive. If your shipping profile leans heavily on ground transit, leveraging UPS could be a smart financial move. However, simply adding them to your mix isn’t enough. To truly benefit, you need to ensure your contract is structured to your advantage. Negotiating favorable terms is a complex process, but a well-optimized agreement is fundamental to making a multi-carrier strategy work. #### DHL If your business has a global footprint, DHL should be on your radar. They are renowned for their extensive international shipping network, offering a reach that few can match. DHL provides specialized supply chain solutions tailored for larger companies, handling the complexities of cross-border logistics with expertise. For businesses that frequently ship overseas, integrating DHL for international parcels can streamline operations, improve delivery times, and enhance the customer experience. They are a powerful ally for managing the intricacies of global commerce, from customs clearance to final-mile delivery in foreign markets. #### USPS The United States Postal Service (USPS) remains a vital component of the domestic shipping ecosystem. Its key advantage is its universal service mandate, meaning it delivers to every single address in the U.S., including P.O. boxes and remote rural locations that other carriers may charge a premium to serve. USPS often offers some of the most affordable rates, particularly for lightweight packages, making it an excellent choice for certain segments of your shipping volume. Integrating USPS into your carrier mix can be a highly effective strategy for cost control and ensuring complete delivery coverage across the country. ### Considering LTL and Freight Specialists Diversification isn’t limited to parcel shipping. If your business moves larger quantities of goods, looking at Less-Than-Truckload (LTL) and freight specialists is a critical step. These providers are experts in handling shipments that are too large for parcel carriers but don’t require a full truck. Integrating LTL carriers and Third-Party Logistics (3PL) providers into your strategy can open up new avenues for efficiency and cost savings. They offer specialized services that can manage complex supply chain needs, from warehousing to final delivery, giving you more flexibility and control over your freight and overall distribution costs. #### XPO Logistics XPO Logistics is a major player in the LTL space. LTL shipping is designed for freight that doesn’t fill an entire truck, allowing multiple shippers to share space and cost on the same vehicle. This makes it a cost-effective solution for moving pallets or oversized items. By partnering with an LTL specialist like XPO, you can move larger shipments more economically than you could with traditional parcel services. This is especially valuable for B2B shipments or for moving inventory between your own facilities, helping you manage costs without sacrificing reliability on your larger, bulkier shipments. #### C.H. Robinson For businesses seeking a more comprehensive logistics solution, a Third-Party Logistics (3PL) company like C.H. Robinson can be a game-changer. A 3PL goes beyond just transportation; they can manage significant portions of your supply chain, including warehousing, fulfillment, and freight management. Partnering with a 3PL can offload the operational burden of logistics, allowing you to focus on your core business. They bring expertise and established networks to the table, but it’s crucial to ensure your 3PL contract is optimized to align with your business goals and deliver real value for your investment.

Navigating Shipping Management Platforms

Managing a multi-carrier strategy without the right technology is like trying to conduct an orchestra without a baton—it’s chaotic and inefficient. This is where shipping management platforms, including Transportation Management Systems (TMS), come into play. These software solutions are the brains of your shipping operation, automating decisions, providing visibility, and consolidating data from all your carriers into one place. A powerful platform can analyze factors like cost, transit time, and carrier performance in real-time to select the best shipping option for every single package. While a high-end TMS can be a significant investment, the efficiency gains and cost savings it delivers often result in a rapid return on investment, making it an essential tool for any serious high-volume shipper looking to implement a sophisticated logistics strategy.

Key Features in Shipping Software

When evaluating different platforms, it’s easy to get lost in a long list of features. However, a few key capabilities stand out as non-negotiable for any business looking to optimize its shipping operations. You need a system that not only executes shipments but also provides the intelligence to make smarter decisions over time. The right software should act as a central hub for your logistics, connecting your carriers, your business systems, and your team. Focus on platforms that offer robust tools for auditing, analytics, and integration, as these are the features that will drive the most significant impact on your bottom line and operational efficiency. #### Automated Invoice Auditing Carrier invoices are notoriously complex and prone to errors. From incorrect surcharges to late delivery fees on guaranteed services, these mistakes can add up to a significant overspend. Automated invoice auditing software scours every invoice for discrepancies and automatically files claims on your behalf. This single feature can recover thousands of dollars in lost revenue each year. At Shipware, our invoice audit and recovery service is entirely automated and works on a contingency basis, meaning you only pay a portion of what we save you. It’s a risk-free way to ensure you’re never overpaying for your shipping. #### Advanced Analytics and Reporting Data is your most powerful asset in logistics. A great shipping platform doesn’t just process packages; it turns raw shipping data into actionable insights. Look for software that offers advanced analytics and customizable reporting dashboards. These tools help you track key performance indicators (KPIs), monitor carrier performance, identify cost-saving opportunities, and understand shipping trends. With clear reporting and analytics, you can move from reactive problem-solving to proactive strategy, making data-driven decisions that continuously improve your shipping operations and reduce costs across the board. #### Business System Integrations To achieve true operational efficiency, your shipping software must communicate seamlessly with the other systems that run your business. This includes your Enterprise Resource Planning (ERP), Warehouse Management System (WMS), and e-commerce platforms like Shopify or Amazon. Strong integrations eliminate the need for manual data entry, which reduces errors and saves countless hours of administrative work. When your systems are connected, order information flows automatically, tracking data is updated in real-time, and your entire fulfillment process becomes faster, more accurate, and more scalable.

Understanding the Software Alternatives

The market for shipping software is diverse, with different platforms designed to meet different needs. Some are focused purely on data analysis, while others are built to provide broad access to a multitude of carriers through a single interface. Understanding these distinctions is key to finding the right fit for your business. You’ll want to consider whether you need a tool primarily for analytics and contract management or a more execution-focused platform that simplifies the day-to-day process of printing labels and managing shipments across various carriers. Each type serves a valuable purpose in a diversified shipping strategy. #### Data-Driven Platforms like Reveel and Sifted Platforms like Reveel and Sifted specialize in using data analytics to help businesses understand their shipping spend and identify savings opportunities. They analyze your shipping data to provide deep insights into carrier performance and cost drivers. These tools are powerful for businesses that want to take a more analytical approach to their logistics. They empower you with the information needed to negotiate better carrier contracts and make smarter, data-backed decisions. This data-first approach aligns closely with our philosophy at Shipware, where we combine a powerful technology platform with expert guidance to deliver comprehensive savings. #### Multi-Carrier Integrators like Shippo Multi-carrier integrators like Shippo are designed to provide easy access to a vast network of carriers through a single platform. With connections to dozens of carriers worldwide, these tools are particularly popular with e-commerce businesses that need the flexibility to ship with different providers based on the destination and service level required for each order. They simplify the process of rate shopping and label generation, making it easier to manage a diverse carrier mix without complex, individual integrations for each one. This can be an excellent starting point for businesses beginning their diversification journey.

How to Choose the Right Shipping Solution

With a clear understanding of the carrier landscape and the technology available, the final step is to choose the right combination of solutions for your unique business needs. This decision shouldn’t be taken lightly, as it will have a lasting impact on your costs, efficiency, and customer satisfaction. The best approach is a methodical one: start by looking inward at your own shipping profile and operational requirements. From there, you can evaluate potential partners—both carriers and software providers—based on how well they align with your specific goals. A successful shipping strategy is not one-size-fits-all; it’s a tailored solution built from the best components for the job, designed to support your business now and as it scales in the future.

Assess Your Shipping Volume and Needs

The first step is to conduct a thorough assessment of your own shipping data. What is your average daily volume? What is the breakdown of your shipments by weight, zone, and service level? Do you have seasonal peaks? Answering these questions will help you understand your shipping profile, which is essential for determining which carriers and software solutions are the right fit. A solution designed for a small business shipping 100 packages a month will not be suitable for a high-volume shipper moving thousands of packages a day. Your specific needs should guide your search from the very beginning.

Evaluate International and Specialized Capabilities

Next, consider any specialized requirements you may have. If you ship internationally, you’ll need partners with strong global networks and expertise in handling customs and duties. If you ship oversized items or hazardous materials, you’ll need carriers that are equipped and certified to handle them. Don’t overlook these critical capabilities. Choosing a partner that can’t meet your specialized needs will lead to service failures, delays, and unhappy customers. Make a list of your must-have requirements and use it to vet potential carriers and software providers to ensure they can support every aspect of your business.

Confirm Critical Software Integrations

Finally, before committing to any new technology, confirm that it can integrate seamlessly with your existing systems. A lack of integration can create data silos and force your team into time-consuming manual workarounds, defeating the purpose of adopting new software in the first place. Verify that the platform can connect with your e-commerce store, accounting software, WMS, and any other critical business tools. A smooth integration process is a hallmark of a well-designed solution and is absolutely essential for creating a streamlined, efficient, and scalable shipping operation that can support your business as it grows.

Frequently Asked Questions

Is there a specific shipping volume or spend where it makes sense to start diversifying? There isn’t a magic number, but there is a tipping point. It’s less about a specific dollar amount and more about where you are in your current carrier’s pricing structure. If you find that you’re spending a lot more to achieve very small, incremental discounts, it’s a strong sign that your buying power with that single carrier is maxed out. That’s the perfect time to start exploring how a second or third carrier could handle specific lanes or package types more cost-effectively without hurting the great rates you’ve already secured.

Will adding more carriers automatically lower my shipping costs? Not necessarily. The goal isn’t just to add carriers, but to add them strategically. Simply splitting your current volume between two carriers could dilute your spending with each, potentially causing you to fall into a lower discount tier and actually raise your costs. True savings come from a smart strategy where you use data to send the right package to the right carrier—for example, using a regional carrier for short-haul deliveries and your national carrier for cross-country shipments.

How can I add a new carrier if my current contract has a minimum spending commitment? This is a common hurdle, but you have options. First, review your agreement to understand the exact terms of your commitment. One of the simplest approaches is to direct any new growth in your shipping volume to a new carrier, which allows you to meet your existing commitment while still exploring other options. You can also have a frank conversation with your current carrier rep, proposing a win-win where you offload the types of packages that are less profitable for them, which can be a surprisingly effective negotiating tactic.

Managing multiple carriers seems complicated. How much extra work does it really add? It can be complex if you try to manage it manually with spreadsheets and phone calls. However, the right technology makes it completely manageable. A good shipping management platform or Transportation Management System (TMS) automates the entire process. It can rate shop for you in real-time, select the optimal carrier for each package based on your rules, print the right labels, and consolidate all your data into one place for reporting. With the right software, the day-to-day operational lift is minimal.

What’s the very first practical step I should take to start this process? Before you even think about calling another carrier, start with your own data. A thorough analysis of your shipping profile is the most critical first step. You need to know exactly what you’re shipping, where it’s going, and what you’re paying for it. Understanding your own patterns—like your most common shipping zones, average package weights, and mix of residential versus commercial deliveries—will give you the clarity you need to identify which parts of your business could benefit most from a new carrier.