Sept. 22 2014 03:15 PM

Talk to any shipper and with few exceptions, each will disclose (in a bit of a panic) how important it is for their companies to achieve pre-negotiated tier discount levels with their preferred parcel carrier. Tiers, by design, reward shippers with bigger discounts in exchange for higher shipping volume. Carriers, eager to expand their businesses and maintain customer loyalty, have utilized this model quite effectively for many years. However, the latest logistics paradigm could prove to be the catalyst that helps shippers obtain a life without "tiers."

Demanding consumers are motivating ecommerce companies to migrate to a multi-functional, multi-carrier shipping model that guarantees their delivery objectives will be met, regardless of which carrier is used. This mandate is rapidly changing the world of ecommerce.

Consider: a 50m Distribution Company (DC) utilizes UPS as its preferred small package carrier; however, John Jones (customer of DC) wants the order he placed today delivered tomorrow, and he doesn't want to pay a surcharge for expedited shipping. The DC has three choices: either it or the consumer will have to pay for upgraded expedited/air shipping charges to UPS (increasing shipping costs), use an alternative carrier that can get it delivered on time without higher costs, or lose the customer. What would you do? Do they pay the cost of air service (increasing their costs), charge the consumer more (and risk losing the business) or utilize the carrier that gets it there in one day, potentially lowering their tier discounts and consequently increasing overall shipping costs? For many shippers, the choice is clear: Satisfy the customer and select a shipping company that can get it delivered on-time, at ground prices.

Eastern Connection, LaserShip and OnTrac, among others, have found a niche and are competing effectively and overcoming concerns about not achieving desired tier levels. No, they aren't Joe's messenger service or a mom and pop shop; these carriers deliver to tens of millions of people all over the US and they do it reliably enough to deliver for some of the most recognizable brands.

Many executives mistakenly believe using regional carriers can potentially lower the coveted tier discount levels, resulting in an overall increase in transportation costs. But deploying a carefully developed strategy can have the opposite effect. Ask Nina Hegyi, Corporate Account Manager at OnTrac, and she will set the record straight. "First and foremost, we solve problems. We never ask a company to move all of its business, just what makes sense. In many cases, not utilizing a regional carrier hurts a company's bottom line and we prove that time and time again."

Hegyi continues, "Today everyone wants faster delivery that is cost-effective. Companies that give their customers what they want will win more business. And as an added bonus, more efficiency in the logistics processes means less package movement, less handling and fewer damaged shipments, and that equates to happier customers."

A companywide analysis evaluating the overall benefits of adding regional carriers to the mix will help make an informed decision while potentially lowering overall shipping costs.

If your company has invested in TMS technology, fear not. OnTrac (and many other regional carriers) works with most major shipping solutions including ShipStation (, ShipWorks ( and enterprise applications provided by companies such as Neopost (, Pitney Bowes (, Kewill ( and Agile Network (

With ecommerce shipments quickly approaching 50% of overall parcel delivery in the US, and with consumers demanding free shipping and immediate delivery, it may be time to rethink your ecommerce company's carrier portfolio. That could mean increased revenue, lower shipping costs and a life without "tiers." Please let me know what you think. I hope this information helps your company Ship Better and Save Money.