Automated Rate Shopping Benefits for Parcel Shipments

What are the benefits of using automated rate shopping/carrier selection for parcel shipments?

The growth of e-commerce (projected to reach US$3,226.00bn in 2024) has given a whole new dimension to the number of parcel shipments crossing the globe. And although everyone wants to meet their customers where they are at, too many companies do not have the means to ship parcels efficiently. Many logistics managers, supply chain executives, e-commerce businesses, transportation planners, and SMEs seeking cost-effective shipping solutions, are struggling to efficiently manage parcel shipping. One way to work smarter is to opt for multi-party rate shopping (or automated carrier selection) from a Transportation Management System (TMS). So, why are so many shippers lagging in best practices for parcel shipping, how does rate shopping/carrier selection within a TMS work, and what are the benefits? Read on for insights.

It takes time and investment to transition from status quo

With the “do more with less” strategies of most companies today, logistics professionals have more projects to complete than at any time in the past. Prioritizing where to focus their energy is difficult, especially when the Return on Investment (ROI) is unclear. If parcel shipping only takes up a fraction of a shipper’s volumes, some companies may think that the effort to reduce costs in parcel shipping is not worth the energy.

Adding to this, many shippers have a process that is working today, albeit not optimally, and at a higher cost than a solution with automated rate shopping/carrier selection. As parcel shipping volumes grow, the ROI from improving the process grows as well. And the best time to implement a new solution or process is before your volume grows too large to easily transition to a new solution, and also before any customer service issues can damage sales.

TMS with automated rate shopping / carrier selection: who is this for?

Not every TMS supplier offers automated rate shopping to find the best carrier and service for parcel shipments. But this is critical for shippers who handle large volumes of shipments and are looking to streamline their process and lower costs, as well as shippers with smaller volumes who could benefit from 3^rd party rates. Companies shipping across multiple modes also clearly benefit from a solution that automatically can choose between Full TruckLoad (FTL), Less-than-TruckLoad (LTL), and parcel options.

Unnecessarily high costs and too many steps

Transport planners have to consider a large number of options, such as the costs and lead times associated with a particular transport mode. But planners are rarely aware of all the potential options. With manual processes some shipping options must be disregarded in order to reduce the labor involved in planning. In these situations, regional carriers or zone skipping providers may be excluded even though they could be a lower cost choice. Another disadvantage of working manually is that planners have to log in to different carrier systems to ship and track their parcel freight. A TMS with integrations to multiple carrier systems provides planners with a single, clear overview of their shipments within one system next to automating the process and achieving lower rates.

Automatic insight into choices made

Choosing a TMS equipped with automated rate shopping/carrier selection for parcel shipments means access to all shipping options and preferences. Taking advantage of direct API connections with parcel carriers and real-time retrieval of shipment prices based on contract agreements is crucial. Some TMS providers include their own negotiated rates with carriers that customers can use if they prove to be cheaper than their own rates with carriers. With all the options available, users can then set up the rules the system adheres to per type of shipment, such as costs and transit times.

Different workflows can be set up for different end-customers; for example, you may require a certain customer or department to pay the freight in advance or include a reason code on a carrier or service selection for tracking compliance. Additionally, the TMS keeping track of which shipments have been booked with which account, helps prevent fraud. Also, as a transport manager, you get a picture of planners’ and customers’ preferences. Perhaps a particular business unit always chooses an expedited service, not knowing the associated costs, or potential alternate services with the same lead time on certain lanes.

Increased control with lower costs

Parcel rate shopping and automated carrier selection for parcel shipments from a TMS means increased control over transport shipments and lower costs. This type of control boosts resilience and agility. For example, you can automatically turn off certain carriers for a specific period because their service is inadequate, or their price is too high. Cost savings can be achieved precisely because the TMS makes decisions based on established negotiated agreements. In addition, some TMS vendors with their own rates have been known to save shippers significant costs versus the parcel rates they used before.

Efficiency thanks to templates

Finally, there is the efficiency boost provided by a TMS equipped with templates, especially if you often ship on the same lanes. Templates allow for sets of rules to be used across different users and for creating the shipping logic more easily for new business, which increases compliance and reduces shipping errors. Moreover, automation from templates allows new employees to get up to speed with a system faster. Using a TMS with automated rate shopping/carrier selection and tracking is much easier than learning to use all the different carrier applications and portals.

Everything in one TMS

There are many ways to rate shop/select carriers in an automated way, but it is nice when all those ways are available from one TMS. More so, if that TMS also covers other modes so it can truly automatically optimize your required transports over the different transport modes and automatically select the optimal rate/carrier. With the Descartes Shipper TMS, companies can plan across multiple modes, carriers, and service levels in a single platform to pick the right option for their business. Descartes Shipper TMS has been successfully deployed on top of SAP, NetSuite, Oracle and many other ERP and back-end systems making it a great choice for shippers of all sizes.

In summary, automated rate shopping and carrier selection via a (TMS) offer significant benefits for parcel shipments. It streamlines processes, reduces costs by automatically selecting the most economical carriers, and provides real-time insights into shipping options. This efficiency boost is valuable for both large volume shippers and smaller operations aiming to optimize logistics without extensive manual effort. By integrating with multiple carrier systems, a TMS enhances control and decision-making, ultimately improving operational efficiency and customer service levels across the board.

We hope you found this article insightful and that it helps you to choose the right TMS to optimize your logistics process and benefit from the advantages! At Descartes we are passionate about logistics and support our global customers with our modern, complete and world leading shipper TMS. If you have any feedback or questions about this topic, please let us know via info@descartes.com or get in touch via the button.

Author: Edo De Ruiter