5 Benefits of Effective Carrier Contract Management

Expenses, service inconsistencies, and compliance risks can quickly erode ecommerce shipping operators’ profit margins and customer satisfaction. Without sufficient oversight of how your mix of carriers operates, your business can miss out on potential cost-saving opportunities, not to mention open itself up to potential legal liabilities.

Effective carrier contract management optimizes shipping operations, reduces costs, and ensures reliable service. Let’s explore the five key benefits of properly managing the terms and conditions of your carrier relationships.

1. Greater parcel cost savings and efficiency

Streamlining carrier contract management can increase operational efficiency and reduce expenses. A well-defined process can also improve customer experience by facilitating consistent refinement of fulfillment operations. 

Shippers who enhance the way they manage carrier agreements experience savings through:

• Negotiated rates: Leveraging data-driven insights and high shipping volume can help secure a lower parcel spend.
• Streamlined processes: Automating elements of your operations, from order routing to handling split shipments, reduces errors and operational overhead.
• Cost visibility: Analyzing data continuously, from managing surcharges to packaging fees, helps identify cost-saving opportunities and track expenses in real time. 

Employing carrier contract management software, like Green Mountain, when combined with an end-to-end platform like Shipium, can help ensure your strategies translate to bottom-line savings by:

• Automating tracking 
• Optimizing per-shipment expenses across your entire network
• Analyzing carrier contracts, manifest orders, and even package scans 

2. Improved delivery service quality and reliability

Better carrier management can help you evaluate and improve the overall quality of your operations, providing the insights and feedback loops necessary to optimize your logistic process. 

With a clear and robust solution in place, you get:

• Defined metrics: Established performance indicators and service level agreements (SLAs) set expectations, helping evaluate your carrier mix.
• Real time and predictive analytics: Streamlined monitoring to assess network performance and proactively adjust your processes.
• Issue resolution protocols: Documented procedures for efficiently addressing service failures or disputes within your carrier network.

3. Enhanced flexibility and scalability of shipping operations

With a system in place for managing the existing contracts within your network, you can ensure your operations stay malleable enough to pivot along with the growing demands of your business and your customers.

Enhancements include:

• Adaptable shipping processes: Adjust shipping strategies intuitively in response to macro-environmental changes that can disrupt operations, like the August 2024 Pitney Bowes’ closure of its ecommerce logistics. 
• Capacity management: Optimize carrier utilization to minimize idle capacity and accommodate volume fluctuations when necessary, helping you scale your business.
• Multi-carrier options: Leverage relationships with multiple carriers to select the best option for each shipment based on cost, speed, and reliability. Using solutions like Shipium’s Carrier Selection to handle this process improves delivery speeds while reducing shipping costs by up to 20%.

An optimized process for managing your carrier network helps you offer better delivery promises. Using Shipium, for example, ecommerce brands can provide accurate promises before their customers even click the buy-now button, resulting in a conversion rate improvement of 4% on average. 

4. Strengthened risk management and compliance

Carrier contracts detail the process for addressing potential legal issues, such as carriers violating hours-of-service regulations or failing to maintain proper hazardous materials documentation. Violations of federal hazardous materials regulations, for example, can result in maximum fines of up to $500,000.00 for corporations.

Proper management of contract terms protects you, providing:

• Risk assessment data: Conduct audits to identify risks within carrier relationships and supply chain operations.
• Regulatory compliance measures: Ensure adherence to industry regulations and contractual obligations to avoid penalties and legal issues.
• Liability and insurance provisions: Define terms for protecting sensitive data, trade secrets, and managing financial responsibility for lost or damaged shipments.

Beyond legal considerations, effective carrier management also mitigates operational risks, optimizing spending across diverse shipping scenarios. For example, a Green Mountain case study showed that a shipper facing a 15% contract increase with their primary carrier used the software’s intelligent planning to diversify their network, resulting in $5.5 million in savings. 

5. Increased visibility and control of the fulfillment process

The key to an optimized logistics process is access to insights that allow you to make data-driven decisions. Adopting a carrier management system that automates the process of handling your contracts gives you:

• Real-time tracking: Advanced shipping solutions provide up-to-date information on shipment and carrier status, as well as network-wide metrics.
• Increased data accessibility: Centralized shipping insights from multiple carriers within a single platform simplify analysis and reporting.
• Proactive alerts: Automated notifications for key shipping events or exceptions ensure that you promptly address potential issues, such as transit delays or warehouse bottlenecks.

Explore how data-driven, closed-loop parcel fulfillment enables informed decision-making about your supply chain.

Streamline your carrier management with Green Mountain and Shipium

The Shipium platform’s multi-carrier parcel management — combined with Green Mountain’s intelligent services and carrier relationships — makes it easy for ecommerce businesses to simplify their shipping operations. In fact, when switching to Shipium from a legacy platform, users see a cost reduction of up to 24% on shipments delivered in 3 days or less. 

With Shipium, you can unify your existing systems and intelligently move your orders through your supply chain. Fulfillment Engine automates the process of selecting the optimal warehouse and carrier for each shipment, increasing the speed and accuracy of your deliveries

Book a demo today and explore how Shipium and Green Mountain can help enhance your carrier contract management.

Frequently asked questions

What is a carrier contract?

A carrier contract is a legally binding agreement between a shipper and a transportation services provider outlining the terms for freight services. It typically specifies freight rates, service levels, liability, insurance requirements, and operational procedures. These contracts establish clear expectations and protect both parties' interests.

What is the difference between a common vs contract carrier?

Common carrier delivery services serve the general public, accepting any paying customer. Examples include trucking companies, airlines, and taxis. Contract carriers, however, operate under specific agreements with select clients, offering customized solutions. Examples include dedicated freight services and private logistics firms serving particular businesses.

What are the best practices for managing contractual carriers?

Best practices for managing your mix of contractual carriers include:

• Defining clear service expectations and performance metrics
• Regularly reviewing and updating contracts
• Maintaining open communication channels with carriers
• Implementing robust monitoring protocols
• Conducting periodic audits and assessments of your process
• Developing contingency plans for potential disruptions